ERISA Insurers Love Frustration

You don’t have to be overly smart to understand why ERISA insurance companies do things in the most frustrating way imaginable.

Frustration is the primary tool of the insurance companies.  If they can get a claimant thinking he or she is battling an impenetrable wall of bureaucracy, they are more than halfway home to getting the claimant to give up the claim.  And that’s where a good part of the money insurance companies make can be found.
 
Insurers have a wide variety of arrows in their frustration quivers:
 
  • They deny even the most obviously valid claims. 
  • They “lose” claimant paperwork.
  • They hire doctors who believe it is more important to keep their relationship with insurers than it is to “do no harm” when it comes to claimants.
  • They deny, deny, deny because they know that denying claims is and insurance company’s best friend.
It doesn’t take a superior intellect to know that a certain percentage of people don’t have the stomach or personality to fight with others.  So, if the insurance company denies a claim it knows that a certain number of claimants will just fold up their tents and give up.
 
Such conduct results in immediate cash in the insurer’s pocket.  And, after 35 years of fighting with insurance companies, we know that such an outcome is the primary goal of most insurers.
 
Whether you are a claimant or an attorney pursuing an ERISA claim, the one thing you have to have is “stick-to-it-iveness”.  Without it you fall prey to frustration.  Once you lose your cool, the insurance company has you right where it wants you.
 
To be able to fight insurers, you should be familiar with their tactics and know what to expect.  No move by them should surprise.  They will do whatever it takes to try to discourage the lawyer or the client from continuing the claim.  They will use the sometimes complex rules and law of ERISA to delay claim progress.  They know that most of us have limits that prevent clear thinking about a problem.
 
While many people become angry because of such conduct and vow to keep going, that very anger is also the insurer’s friend because many times anger prevents clear thinking and clear thinking is required in pursuing an ERISA claim.  Keeping an eye on the ball is difficult when you are steaming.
 
Stay cool and smart.  Don’t be distracted by insurance company tactics.  Pursue what is necessary to prove the elements of your ERISA claim.  
 
Frustrate the insurer for a change.
 

Housework Is Not ERISA Bar

With all of the specialized, technical ”legalese” an ERISA attorney must know to do a proper job for a client, you wouldn’t think that knowledge of cooking and laundry would play a part. But, you would be wrong.

In Hannon v. Unum Life Insurance, 2013 W L 6821263 (S.D.Ind.), Unum tried to stop LTD benefits after paying them to an ERISA beneficiary for 10 years. One of Unum’s excuses for claiming the beneficiary was no longer entitled to benefits was that she could perform certain household chores and , therefore, was not disabled.

Battling insurance companies to get sick and injured people what is due them is a time-consuming and tiring occupation. Insurance companies fight ERISA claims like the devil. They assume that each claimant is a malingerer trying to get money without working for it. Nothing could be further from the truth.

The vast majority of people want to work. They wouldn’t know what to do with themselves if they didn’t have a job to go to. So, rather than stress the relatively few who are malingerers, insurers should consider each case as if the claimant would rather work than sit at home.

In Ms. Hannon’s matter, Unum began paying benefits to Ms. Hannon, a registered nurse, in March, 2001, when she became unable to perform her duties because of chronic pain. She was diagnosed with a rare disease that affects a person’s connective tissues, joints and blood vessel walls.

All of her seven doctors had found her disabled and unable to work for more than 4 hours at a time at a sedentary job. A theater company was able to give Ms. Hannom a flexible schedule to accommodate her disability, so she took a part-time job with it as a seamstress. When Unum discovered that claimant had a part-time job it sent an investigator to find out more.

When Unum learned that Ms. Hannon performed household chores in addition to working at the theater, Unum halted her LTD payments.

Unum said that the fact that she could do housework in addition to working at a part time job made it evident that she could perform 8 hours a day of sedentary labor, so LTD payments were terminated.

The Court disagreed stating that equating the ability to do casual household work to the requirements of performing the duties of full time employment was in error. Not only is household work different, but the ability to take breaks when needed is not part of an ordinary job description, sedentary or not.

The Court noted that Ms. Hannon’s daughter helped her mother with the housework and that claimant, at home, could take breaks whenever she felt it was necessary to rest because of pain.


In agreeing with Ms. Hannon that Unum cherry-picked her doctors’ reports, ignoring their clear finding that she could do no more than 4 hours a day in a sedentary job, the Court clearly distinguished the difference in the rigors of doing housework in your own home and working for a third party employer at a place of business.

That difference seems obvious to all but an ERISA insurer.

 

 


 

ERISA Is An Acquired Taste

When you write a blog, you write into a void. You think you have something to say that people want to read. But, do they really? 

This is our 200th blog post. We should mark it in some way. How?
Maybe by trying to express why we blog?

Why do we write?

Because most people and many lawyers are not familiar with ERISA and disability insurance law. These people and these lawyers’ clients are usually in deep trouble when they come up against ERISA. They and their family’s future depend on the outcome.

What is our goal in blogging?

To make attorneys and clients aware that ERISA is a serious business which requires total attention to detail in prosecuting a claim. A single overlooked item is enough to sink an ERISA claim for good.

Why is ERISA such a bear?

Who likes to go into a fight to the finish in which the referee holds your opponent’s coat?
ERISA puts the right to determine the validity of a claim in the hands of the plan administrator, which is often the insurance company which will have to pay the claim if approved. Not only that, but Firestone v. Bruch, 489 U.S. 101(1989) demands that courts give deference to a plan administrator’s ruling. To overturn such a ruling a claimant must show the ruling was “arbitrary and capricious”, a very tough legal hill to climb.

So?

We want to do what we can to give ordinary people and attorneys who have never handled an ERISA case a fighting chance to overcome the odds and establish their right to benefits when a disability strikes. Insurance companies and their lawyers fight disability claims a thousand times a day. Employees and their attorneys get only one chance to receive benefits in a difficult and convoluted legal environment.

What We Have Learned

We started practicing disability law almost 35 years ago. We learned early on that the employee, whom ERISA was supposedly designed to help, starts each case as the underdog. We learned that meticulous and accurate attention to detail is a prime requirement of the practice. We learned that alertly digging through policy language is a must. We learned that knowledge of the effects of injury and disease are required. We learned that establishing the link between a disability and consequent work restrictions and limitations are absolutely essential.
Insurance companies have the funds and the personnel required to fight ERISA claims. Employees, disabled and unable to earn, have little to fight with. What they need most is knowledgeable help with ERISA claims. We have always represented the insured, never the insurance company. We like it that way.

Fighting insurance companies is an acquired taste. We’ll never tire of it.

 

 

 

 

 

 

 

 


 

ERISA Benefits Straitjacket

We have warned several times before that ERISA disability cases are not to be trifled with. The presently ongoing matter of Gearlds v. Entergy Mississippi, Inc., 2012 WL 1712441 (S.D., Miss 2012) adds new emphasis to this warning.

The big problem with being unsure of how to proceed is that ERISA law is that sometimes the ERISA statute requires a decision which is counterintuitive to what ordinary common sense (even legal common sense) would indicate.

Gearlds, which at this writing is an undecided appeal, involves an employee who was thoroughly misled by his employer, Entergy, into early retirement in 2005, based on the assurance that he would continue to be covered by the employer’s health insurance plan. He was actually covered for those benefits until 2010, at which point his coverage was terminated by Entergy. After several years of paying, the plan “discovered” it had been mistaken in 2005 and that Gearlds was not an eligible employee under the plan after he retired.

To add insult to injury for Mr. Gearlds, his wife retired from her employment between 2005 and 2010, and he could have received benefits under her policy but turned them down because he believed he was covered under Entergy’s plan.

This case clearly illustrates the importance of knowing ERISA law before claiming a benefit. ERISA rights result from Federal statutes and regulations issued by the U.S. Department of Labor. If a claimant doesn’t meet what’s required in that law and those regulations, the claimant is most likely going to fail in seeking benefits.

Gearlds is a prime example of ERISA litigation that seems to defy common sense. Mr. Gearlds was clearly misled, whether by intention or negligence, by his employer, to do an act which he would not have done if he were properly informed. Yet, because ERISA requires strict interpretation of an employer’s plan, he has so far been denied relief while his employer is permitted to deny him benefits which the employer told him he had.

In ERISA, the plan is the lodestone for benefits. Not only that, under ERISA, the plan administrator interprets the plan and decides what the plan covers. And, courts give deference to the administrator’s decision so long as it is not “arbitrary and capricious”.

What a person can ordinarily do with his property may not hold true if the property is an insurance policy or benefits covered by ERISA. To be certain that your wishes are carried out, the plan administrator’s approval must be obtained.
 

Otherwise, the administrator may reject what you want to do and your beneficiary may be forced to go without your largesse.

 

 

ERISA Changes Require Care

In the ordinary course of business, many financial planners and attorneys advocate renunciation clauses in wills to alleviate the bite of inheritance taxes. But, they may get bitten themselves if they try to renounce a benefit which is covered by ERISA and they do not follow the procedure necessary to accomplish such a renunciation.

Not that these benefits cannot be renounced under ERISA. They certainly may be. But they must be renounced properly, in accord with the requirements of the ERISA plan under which the benefits are offered to the employee. To fail to obtain prior written approval of the administrator of the ERISA plan to renounce may very well take this estate tax option away from the employee, and thereby wreck the tax advantage sought.

The same holds true for changes in the beneficiary of a life insurance policy issued under the terms of an ERISA plan. Many times the owner of the policy wants to change the beneficiary (divorce, death, etc.) and the advisor tries to do so in a formal legal document setting forth the details. Such an attempt might even be included in a separation or support agreement. But, if the proposed change is not in the form of a qualified QDRO, or it has not been run by the ERISA plan administrator and has not received the plan stamp of approval, there is no guarantee that the renunciation or the beneficiary change will ever go into effect.

Those familiar with ERISA litigation are aware that the most important third party to any transaction involving plan benefits is the plan administrator. The administrator has the “go” “no-go” say on any change which is not permitted by the clear language of the plan.

If there is a dispute, courts generally defer to the decision of the administrator because the administrator is held by law to have discretion in ERISA matters. Even though in a non-ERISA situation, the policyholder would have an absolute right to make a policy change in accord with the terms of the policy, the policyholder can’t take a chance under ERISA. If the ERISA administrator says “no”, it probably will be “no”.

If faced with the problem of trying to alter a benefit of an ERISA plan, you must read the plan documents before determining the action you want to take. If your client does not have the latest copy of the ERISA plan, (the usual situation), obtain one from the Human Resources Department of the employer. You have the right to get one on behalf of your client, the employee.

Read the plan carefully, particularly as it pertains to the action you want to take. If you have to run what you want to do by the administrator, follow the procedure set forth in the ERISA plan documents and make sure your intended change is accepted and acknowledged by the plan. Only then may you feel comfortable that you have effectively accomplished your goal for your client.

Estate and financial advisers who are aware of this required difference in approach to renunciation and other ERISA plan changes, will most certainly have taken the proper precautions.

Those who are not completely aware should immediately become familiar with the procedures required so their suggested strategies for ERISA clients are approved by the plan administrator.

Otherwise, the best laid plan may turn into a disaster.