Erisa

Erisa is the magic word in employee benefits. It is an acronym for the Employee Retirement Income Security Act passed by the Congress in 1974. This legislation was supposed to make it easier for employees to obtain disability and retirement benefits, but the way the law was written, it hasn’t always worked out that way.

The benefits of a disability income insurance policy are usually governed by the law of Erisa if it is a group insurance policy (provided by your employer or by another group of which you are a member). An individual policy for yourself is not governed by Erisa law.

Erisa, despite what Congress said about it when it was passed, is not particularly claimant friendly when a dispute arises with an insurer. Giving the insurer the least little edge at the time of filing your notice of claim, provides the insurance company with a big leg up in resisting benefits payments to you. This is because the Erisa statute provides the insurer with the first opportunity to declare whether, in its opinion, your claim is valid or invalid.

This is important because you have to know that insurance companies hate to pay claims and they especially hate to pay long-term claims such as income disability, which can go on for years, if not decades.

It’s the same as in any contest, and you can be sure, filing a disability income claim with an insurer, will usually bring on a contest. The party starting off with a decision in its favor always has the advantage in that the other party, in this case – you, has the burden of proof to show that the original decision is faulty. In Erisa the burden is weightier because the appeal of the first “finding” is to a hearing officer whose compensation is paid by the insurer.
The appeal is heard by the hearing examiner who then decides if the insurance company was correct in its original denial of the claim. If the hearing examiner (whose compensation is paid by the insurance company) upholds the denial, then your last chance to overcome the denial is by appeal to a United States District Court.

The major problem with this is that Federal Courts feel bound by the decision of the hearing examiner if there is any fact ion the record which would support the examiner’s ruling. This standard of proof is bad enough. But, add to it that you, as the appellant, are not permitted to bring any new evidence into the trial before the Federal District Court and you can see what an enormous burden it would be to try to overturn the hearing examiner’s ruling.

On the other hand, should you be the beneficiary of an individual DI policy, your rights are the same as in any other legal dispute and you don’t have limitations which are imposed by Erisa. This means the insurer gets no early advantage and you proceed with the litigation as you would in any other suit.

The court is not bound by the hearing examiner’s ruling even though there was evidence supporting it if the evidence also shows the court you have me the burden of proof and are entitled to a judgment in your favor.