ERISA in a Nutshell
The Employee Retirement Income Security Act of 1974 ("ERISA") is a complex federal statute that governs many types of employee benefits. Congress originally passed the ERISA law to preserve the integrity of pension plans. Over time, courts extended the scope of ERISA to cover other employee benefits, including disability coverage provided by insurance carriers.
ERISA has a huge impact on the way that disability claims are handled and decided. Judges decide ERISA cases based on the contents of the claims file. Trials, witnesses, and juries are usually not allowed. Likewise, punitive damages are not permitted. Instead, recoveries are limited to the denied disability benefits, along with attorney's fees and interest at the court's discretion.
Perhaps more importantly, ERISA disability claims are often decided under a legal standard that is favorable to insurance companies and plans. If the insurance policy contains certain language affording discretion to the carrier or plan to make decisions regarding disability, the court may be forced to decide the case under an "abuse of discretion" standard. Under that standard, the court generally will not overturn the denial of benefits unless the claimant demonstrates that the insurance carrier acted unreasonably or irrationally. On the other hand, if the policy does not contain the language affording discretion to the carrier or plan, then the more favorable "de novo" standard may apply. Under that standard, the judge will examine the claims file without giving the insurance carrier any benefit of the doubt. All other factors being equal, it is sometimes easier to prevail in a disability claim if the de novo standard applies.
An experienced ERISA lawyer can help you decide whether or not your claim is governed by ERISA and, if so, which standard of review applies. ERISA is a very complicated and rapidly evolving area of the law. Many claims are lost because claimants did not understand how to protect and pursue their rights without falling into one of the many, many traps presented by ERISA.