System rigged? No, not the election…but employee benefits sure are.
It’s election day, and we are hearing all about the alleged system rigging from politicians. While I have faith in our democracy, let me tell you about something that is rigged – your employee benefits at work. The word “rigging” has been used since 1775 to describe the process of swindling or tricking someone. As an employee benefits attorney representing individuals like you, I am here to tell you that if you make a claim under one your employer’s group benefit plans and it is denied, your ability to get that claim reversed is rigged worse than any banana republic’s election.
The federal employee benefits law called “ERISA” and federal judges have stacked the deck against you.
Employers offer group benefits like Short Term & Long Term Disability (LTD) Insurance, Health Insurance, Life Insurance, Accidental Death, Pensions, or more commonly 401k plans to entice potential employees and to keep them on board once they are hired. Job postings, hiring managers, and human resources departments talk up their company’s great employee benefits plans all the time, yet they rarely know what the plans even cover, much less what types of exclusions or limitations would prevent you from recovering benefits.
You are told by your employer that you have “great coverage.” But it is highly likely that they do not even know how judges have twisted a little known law called ERISA – the federal Employee Retirement Income Security Act – into a maze of dead ends and traps for employees. Not just rank-and-file employees either. Federal judges appointed by Presidents have interpreted ERISA in ways that have caused highly paid employees, even executives, to lose as often as their lower paid counterparts.
Let’s talk about 3 key ways that ERISA is rigged against you.
1. If your claim is denied, you must appeal…to the same people that denied it.
It seems fair that the U.S. Department of Labor has a regulation that requires you to file an appeal if your claim is denied. BUT, it is not fair that you have to send that appeal right back to the same claim office that just denied your claim! Even though the law requires someone else at the LTD insurance company to review your appeal, that person likely sits right down the hall…or even just a few chairs away…from the adjuster that denied your claim.
What is the likelihood of getting your claim decision overturned by a co-worker of the adjuster that denied your claim in the first place? In our practice, even though we have great success getting claims overturned, most people do not have that type of result. Without an attorney, it is extremely rare that someone gets their claim overturned. The problem is that the insurance company will not tell you that you need an attorney. They also will not tell you the types of evidence you need to send in to get your claim paid.
As you will read below, this is crucial, because most ERISA employee benefit cases are judged in court based solely on the paper that was contained in the claim file. What you send in during your claim and the claim appeal, combined with the evidence the insurance company is creating to deny you, is ALL of the evidence in your case. You will not get to have your doctors testify at a trial. You will not get to bring a vocational expert to testify about why you cannot work. You will not be allowed to get a test to prove your disabling limitations and introduce that test in court. If you do not send in every type of required evidence before your claim appeal is finally decided, you are tying the hands of a lawyer that you hire later to file a lawsuit.
2. If you have to file suit, a federal judge, not a jury, decides your case…and they do not take new evidence.
ERISA was passed in 1974, but very early on, federal judges started taking away employees’ right to a jury trial in ERISA benefit lawsuits. The theory was that Congress passed ERISA as a type of fiduciary law, drawn from 18th Century and early 19th Century equity law, where courts had to enforce rights as opposed to award money, rather than the common law which typically covered any action seeking an award of money damages. They did this because ERISA was passed originally created as a pension protection law, based on enforcing fiduciary rules to keep people from stealing.
Courts view a win in an ERISA case as an Order requiring the plan fiduciary to act properly, i.e. to pay a claim they should have. Drawing on this old law, federal judges declared over and over that ERISA was created under equity law, not common law. Because they viewed it as an equity law, they took away your Seventh Amendment right to a jury trial, which guarantees you a jury in “suits at common law.” Nothing like losing one of your constitutional rights without knowing it, is there?
Not only that, judges decided that ERISA cases would never be tried like any trial you have ever seen on TV. They decided that your evidence would be limited to the paper in the claim file. In twisting the law to view it as actions to require fiduciaries to act properly, the federal judiciary decided that they only needed to look at a paper record to decide if the pension plan administrator or insurance company had acted properly.
Judges ignored how companies will sanitize their files and destroy records. They ignored the fact that few employees of a company will put paper in their file that does not support their decision.
Hopefully, you can see by now that the information you send to the insurance company or other ERISA fiduciary is crucial. If you do not send it in, the judge who looks at your case will likely never see it. You cannot go to court and refer to facts which never made their way into that claim file. Of course, no one ever told you that at the beginning of your claim. Why would they if they wanted the system to be fair to you? No, the fix is in, and there is one more thing they did not tell you that will destroy your claim if you do not know about it. So, read on…
3. Little-known law allows benefit plans to raise how much proof you must show to win in court.
Rigging the system does not end with the federal judge limiting the evidence only at the paper in your claim file. In most ERISA employee benefit cases, you have a higher standard to meet than typical civil cases. In most civil (non-criminal) lawsuits, you have to prove you are entitled to win by showing a “preponderance of the evidence.” That means that you have to have a simple majority of the evidence on your side.
Compare that to the state’s burden in a criminal trial, i.e. beyond a reasonable doubt. In criminal cases, the state has to prove with an overwhelming majority of the evidence that a crime was committed. The prosecutor has to convince a jury that they cannot have any reasonable doubt about guilt. Some have said this is like having to prove a case is a slam dunk or over 99% definite.
In an ERISA employee benefit case, most plaintiffs have to prove something like the standard in a criminal case. It is called “arbitrary and capricious” by some courts, and “abuse of discretion” by others. One court has said that you have to prove that the ERISA fiduciary ignored your appeal and threw it in the trash before affirming their decision.
In the late 1980’s, the U.S. Supreme Court made up this standard and applied it to ERISA case out of whole cloth. Nothing in the statute says that this standard should apply. However, in a decision written by Justice Sandra Day O’Connor, the Supreme Court decided that this severely high bar had to be applied to ERISA cases, claiming it was Congress’s intent. And they made the trigger for this standard so easy that it is laughable – all the employer has to do is insert a few words in their plan.
You will have to climb this high mountain of “arbitrary and capricious” review if the plan document contains a sentence that says something similar to this: “the plan’s decision maker is vested with discretion to decide claims.” This simple sentence makes getting the the plan fiduciary’s decision to deny your claim a herculean task.
Instead of having to prove the fiduciary was wrong by offering just over 50% of the evidence on your side, you must offer an onslaught of proof. Your must a mountain of evidence, compared to the insurance company’s anthill. You must show that the evidence the ERISA fiduciary relied upon was unreasonable. You cannot just show they were wrong. You must show they were so wrong, that no reasonable human being could agree with them.
I bet no one ever told you any of this when you signed up for the health plan or the disability plan at work. And you thought you did not need to buy private insurance, because your employer had lots of benefits?
ERISA is rigged against you. So, how do you beat it?
Unfortunately, if your ERISA claim is denied, plan fiduciaries have put you in a position where it will cost you money to win. You must hire an experienced ERISA attorney immediately. Make sure you hire an attorney that will develop the evidence in your case. You want an attorney that will think outside of the box, and use creative ways to prove your claim. An inexperienced ERISA attorney likely will not be able to do this. You want an ERISA law firm that has handled hundreds or even thousands of ERISA claims, particularly if your claim involves a lot of money.
Without knowledgable ERISA counsel, the fix is in… and you have little chance of winning your claim in a system that is rigged against you.
Now….quit reading this, log out of your computer, and GO VOTE!