ERISA is a federal law that governs most disability plans offered through employers and was enacted in part to make it more affordable for employers to offer long-term disability coverage and health insurance for employees. Unfortunately, ERISA tends to be an unfair law for disability insurance claimants.
The limitations and obstacles inherent to an ERISA regulated disability policy do not present themselves oftentimes until a claimant is faced with the unfortunate occasion of becoming disabled and unable to work. One such limitation is that an ERISA governed policy requires a claimant to exhaust administrative remedies before filing a lawsuit. This oftentimes only serves to prolong the time a disabled claimant must wait to receive benefits to which he or she is entitled. In the event that a claimant does file a lawsuit, under ERISA, a claimant is not entitled to a jury trial. The decision is therefore up to the judge who is usually limited to a review of the "claim file" under a standard requiring the judge to determine simply if the administrator acted unreasonably even if the judge thinks the claimant is in fact disabled.
Not surprisingly, disability insurers fight to have ERISA be the governing law over disability policy disputes.
In the case of Healy v. Minnesota Life Insurance Company, Dr. H. was a member of a medical group through which he obtained a disability policy administered by Minnesota Mutual. When Dr. H. and his disability lawyer sued Minnesota Mutual seeking long-term disability benefits, it was unsurprising when Minnesota Mutual argued that ERISA governed the policy.
Dr. H. argues his disability policy is not covered by ERISA
Dr. H. argued that his disability policy is not an "employee welfare benefit plan," and therefore not subject to ERISA, because the plan was not "established or maintained" by the employer. Specifically, Dr. H. argues that his employer:
- Did not negotiate the terms of the policy;
- Did not pay any portion of the premiums;
- Did not participate in Dr. H’s application for the policy; and
- Had no involvement in the administration or submission of the claims.
According to Dr. H, his employer’s only responsibility with regard to the policy was to forward his premium payments to the insurer. Ultimately, the court agreed with Dr. H. explaining that there was no evidence that Dr. H’s employer had established or maintained the program with the purpose of providing benefits to its employees as required by the ERISA statute.
About the author: Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. To request a free legal consultation call 800-411-9085.