ERISA Disability Claims

Long Term Disability and the Two Prongs of the Miller Test

Published on April 11, 2014 by

Last time, I talked a lot about discretionary clauses and how they can hurt your ability to effectively challenge your insurance company on a denied claim and win. These clauses basically allow insurers to “construe” the language of your policy however they see fit when deciding whether or not to award your claim, which gives them quite a bit of wiggle room to deny benefits unless they are very clearly and expressly offered in your specific situation – and sometimes even when they are!

I mentioned how states are trying to fight back against these clauses, but also how – in legal battles with insurance companies –they’re currently losing. The courts are siding with insurance companies because the Employee Retirement Income Security Act has a “saving clause” that it’s hard to get around. Rules were laid down in the 2003 Supreme Court Case Kentucky Association of Health Plans v. Miller, and courts have continued to abide by the “Miller Test.”

What Exactly Is the “Miller Test”?

In deciding the outcome in Miller, the Supreme Court created a two-pronged test that defendants had to meet in order to remove discretionary clauses and have a better chance at getting benefits from their disability claim. It’s a test that’s so far proven difficult to beat. What are the two prongs?

  1. The state law being violated by the discretionary clause needs to be “specifically directed” towards insurance companies and self-insured plans.
  2. The state law has to greatly impact the “risk pooling arrangement” that exists between the insurance company and those they insure.

By far, the second part of the law is the one that’s causing the most hang-ups. In order for the state law to affect the “risk pooling arrangement,” the argument seems to be, it would need to be addressed when the contract’s created and not after someone makes a claim. At that point, it comes down to “administrative factors” and doesn’t affect risk pooling at all.

What this means for you is that it’s pretty useless for claimants to fight against discretionary clauses. However unfair they might be, that was a battle that needed to be undertaken when the plan was being drawn up. Essentially, you’re too late to do anything about it.

Luckily, there are other ways to get the benefits you need from your ERISA plan, and if you’re unsure how to go about it, you should contact a firm experienced in these kinds of cases.

Check out our free e-book for more details about ERISA disability and be sure to stay up to date on new long term disability information through our weekly blogs!

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ERISA Plans, Discretionary Clauses, and Long Term Disability

Published on April 7, 2014 by

More and more over the past several years, states have been trying to fight back against one of the more frustrating inclusions to ERISA policies. What is this inclusion? It’s called a discretionary clause, and basically it’s language in the policy that says insurers have sole discretion in construing the terms of the plan when they’re deciding whether or not to award a claim.

In theory, states still have the power to regulate insurance policies for their citizens, but their recent attempts to get rid of these discretionary clauses have proven to be less than successful so far. Why are discretionary clauses so important?

The Importance of Discretionary Clauses

Just because an insurer includes language that says they can decide what the policy really means when choosing to accept or deny your ERISA claim doesn’t mean that their word is irrefutable – just mostly irrefutable. Why? Because when a court is reviewing a policy and it includes discretionary language saying that the insurance company has the power to interpret the plan, they have to defer to this except in situations where it seems very clear that the insurer abused their privilege.

In contrast, policies that don’t give insurance companies this advantage may be looked at and interpreted solely by the court. To put it another way, when a plan includes a discretionary clause, the judge is lawfully required to assume that the insurance company is within their rights unless it can be proven otherwise. Without a discretionary clause, he or she can begin from a truly neutral position.

Doesn’t that sound fairer? More like actual justice? Unfortunately, when states have tried to keep these clauses out, most courts so far have prevented them from doing so because ERISA plans have a “saving clause” that allows them to preempt such attempts in many cases.

Still, it’s important to see that more people are trying to fight back against some of the more restrictive parts of ERISA and calling for change. Until then, if you have an ERISA policy and need to sue your insurer, you’d better make sure you work with a disability attorney who knows this area of the law.

Check out our free e-book for more details about ERISA disability and be sure to stay up to date on new long term disability information through our weekly blogs!

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5 More Ways to Avoid ERISA Preemption in your Disability Claim

Published on March 28, 2014 by

Recently we told you about how your lawsuit against your insurer can be “preempted” by ERISA if the type of policy you have falls under the guidelines for that law. This means that your case would be pulled out of a normal state court and tried in a federal one where the laws are far less friendly towards people fighting against insurance companies behaving badly.

Obviously, this is not something that you want, but there isn’t much you can do to keep it from happening. Whether or not a lawsuit will be tried under ERISA depends wholly on the type of policy that you have, and far too few of them in the US are exempt from ERISA.

Last time we mentioned five kinds of policies that ERISA can’t touch:

  • Policies from a government agency
  • Policies from a church
  • Multiple Employer Trusts
  • Plans set up by the insurance industry
  • Plans only created to comply with disability laws, worker’s compensation, or unemployment
  • Insurance through family businesses, sole proprietorships, closely held corporations, and partnerships – but only sometimes

Below you’ll find five more potential ways to avoid preemption.

Additional Plans Not Covered By ERISA

“Pass-through” plans. Sometimes the employer is just a “conduit” through which employees pay for their insurance – ERISA does not cover these plans.

Plans with no ERISA intentions. Employers have to follow the statutory directives of ERISA to set up a plan covered under the law. If they mess up or simply don’t intend to do this, ERISA won’t cover it.

Union and other professional plans. If you get your insurance through a labor union, an employee organization, or a professional association, it is not governed by ERISA.

Plans sold by entrepreneurs. If an entrepreneur sells you an insurance plan, it’s not an ERISA policy.

Plans for employers and dependents. ERISA preemption sometimes won’t occur in the case of complaints from actual employers or their dependents, but it depends on the circumstances.

As you might imagine, there’s quite a bit of nuance and complication in the law. Anyone who’s ever unsure what kind of policy they have should talk to an expert so that they know what they’re dealing with if they decide to sue.

Whatever you do, make sure you work with a disability expert you trust who knows this area of the law. Don’t play games with your health. Check out our free e-book for more details about ERISA disability and be sure to stay up to date on new long term disability information through our weekly blogs!

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Avoiding ERISA Preemption with a Disability Claim (Part 1)

Published on March 21, 2014 by

Most people don’t know that they have an insurance policy that’s covered under ERISA law until they experience a problem with their insurer and decide to try to fight a denied claim. Instead of being allowed to sue for bad faith and get damages above and beyond what their policy is supposed to cover like someone with a non-ERISA plan, their case will be “preempted” and forced into courts that handle ERISA matters.

This means that that the actions available to you will become far more limited – as will the amount that you can expect to get if you win your case. ERISA regulations only call for claimants to get the original benefits that they were entitled to under their policy and possibly have the insurer cover the cost of their long term disability lawyer. But what about your pain and suffering? What if the insurer deliberately denied benefits they should have paid? Shouldn’t they be punished for their actions above and beyond what the policy calls for – and you rewarded for taking them to task? Not under ERISA.

Ways You Can Be Excepted from Preemption

What it boils down to is that you really want to avoid having your case preempted by an ERISA court if at all possible. Sadly, most employer-based insurance plans can’t avoid this fate, but there are some exceptions to the rule.

If you work for the government. Any policies “issued or obtained through a governmental agency” don’t fall under the ERISA umbrella.

If you are employed by a church. Religious organizations are not covered under ERISA.

If you have a Multiple Employer Trust. This type of policy is not considered an ERISA plan.

If the insurance industry set up your plan. ERISA won’t cover these policies; if you’re not sure whether or not your plan falls into this category, an ERISA lawyer should be able to tell you by looking at it.

If the policy is only maintained for compliance. Some employers keep insurance policies just to make sure that they comply with laws on disability, unemployment, and workers’ compensation. If your plan falls under this category and you can prove it, ERISA won’t touch it.

Additionally, some specific types of businesses are also sometimes exempt from ERISA laws. These can include: family businesses, partnerships, closely held corporations, and sole proprietorships.

Next time we’ll continue with five more ways to avoid ERISA preemption. If you’re ever unsure about the type of policy you have, set up a free consultation with a disability attorney. Check out our free e-book for more details about ERISA disability and be sure to stay up to date on new long term disability information through our weekly blogs!


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