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Birmingham Bar Associations Bulletin Summer 2015

Insurance Law Jessica Brown Powers the claim administrator who denied the claim and review that claim decision under a highly deferential “abuse of discretion” standard. The court then will decide the case based on briefs or, in rare circumstances, upon conducting a bench trial. There is no right to a jury trial in ERISA. Because of the manner in which many courts limit – or altogether forbid – discovery, the actual “trial” in an ERISA case occurs during the administrative process with the insurance company, not the court, because that is where the “trial record” is made. This means that evidentiary defects committed during the administrative phase generally are set in stone. For example, if you fail to address a disability carrier’s vocational review during the administrative phase, you will not be able to correct that mistake later in litigation. It is wrong to assume that medical records alone are enough to support a disability claim. Evidence of a diagnosis, no matter how severe, almost always will not be enough, because the outcome of a disability case also depends on whether there is evidence of specific restrictions and limitations. How that evidence is presented is important, and is something that experienced ERISA attorneys are well-versed in doing. 4. Conceding “There Is No Discovery” in an ERISA Case. Litigating an ERISA claim almost always involves confronting a defending insurance company’s position that there is no discovery in an ERISA case. It also frequently involves a court that at least initially may operate under the assumption that the insurance company is correct. In the vast majority of instances, it is a mistake to succumb to this pressure. As an initial matter, nothing in ERISA supports the wholesale abolition of discovery. As the United States Supreme Court and Eleventh Circuit have made clear, discovery is not only permitted but is often required in ERISA cases to reach the heart of matters at issue.6 To this end, a number of courts have held that discovery seeking information such as the insurance company’s claims-handling procedures or evidence showing the insurance company’s financial motivation to deny the claim is proper.7 Conceding there is no discovery on such matters means you effectively have yielded to the insurance company’s nominal suggestion that the manner in which they handled the claim was above-board. While it remains true as discussed above that discovery into the merits of the claim itself is almost always prohibited, procedural concerns about the way the insurance company has decided the claim are another matter. If you have reason to believe the claim procedurally was handled improperly, concession of this point is a mistake. 5. Failing to Quickly Identify and Adhere to Plan Deadlines, Including Hidden Limitations Provisions for Bringing a Lawsuit. Nothing keeps attorneys awake at night more than the thought of having missed a deadline. And it just so happens that this is one of the more frequent mistakes – and the most serious – made by those who are relatively unfamiliar with the day-to-day aspects of handling ERISA cases. The first deadline (aside from the deadline for applying for the benefit at the outset) is the deadline for appealing the initial denial of the claim by the insurance company or plan. Claimants must submit their appeals on time and in writing strictly in the manner set forth under the governing policy or plan, though within the limits set forth in Department of Labor claims regulations at 29 C.F.R. § 2560.503-1. A failure to appeal within the time provided means the claim is forever abandoned – ERISA requires plaintiffs to pursue and exhaust all administrative remedies the policy or plan provides as a condition precedent to bringing a lawsuit.8 Assuming the appeal is unsuccessful, the next deadline requiring immediate attention is the limitations period for bringing a lawsuit. Unlike with the appeal deadline, there is no set standard about when that limitation period either begins or ends. ERISA does not have its own limitations provision for bringing a lawsuit to recover a benefit. Instead, it looks to the various states for their respective statutes of limitations that most closely resemble the ERISA claim for benefits, like states’ statutes for pursuing breaches of insurance contracts. But those statutes only apply in the absence of terms within the policy or plan itself that may establish its own limitations period. Depending on policy or plan terms, that statute can be as short as 120 days or as long as 6 years. It also possibly may start running as early as the day the disability arose (that being the loss event) or as late as the date the administrative appeal of the claim was denied. It simply varies. But in the end, the plan or policy controls, so it is critically important to locate the governing limitations provision within that plan or policy and calculate correctly the limitations date applicable to the claimant as soon as possible. Failure to do so can result in an outright loss of the claim. 24 Birmingham Bar Association


Birmingham Bar Associations Bulletin Summer 2015
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