Life Insurance And ERISA

Forest Hill insurance lawyers who handle ERISA claims can tell you horror stories about the rulings and statutes that govern ERISA. The Washington Post published an article not long ago giving reasons and examples about some of the issues with ERISA life insurance claims.
Life insurance companies want employers with life insurance plans governed by ERISA. So eager are the largest insurers to get ERISA contracts that they sometimes cross a line, according to prosecutors in California and New York.
MetLife and Prudential have made improper undisclosed payments to brokers to win business, according to settlements. Each company paid $19 million to settle accusations by the New York Attorney General’s Office in 2006 that they had illegally paid brokers to get new corporate clients. In a similar case, MetLife paid $500,000 and Prudential spent $350,000 to settle with three California counties in 2008. The insurance companies did not admit to any wrongdoing in the cases.
In April of 2010, in a SanDiego case, MetLife admitted that it broke the law by paying a dealmaker to win insurance contracts, and it agreed to pay $23.5 million to avoid criminal prosecution.
“MetLife made illegal payments that should have been fully disclosed,” said the U.S. attorney in the case. Because the payments were not disclosed, the transactions were illegal.
Insurance companies want to write ERISA policies because the statutes and rules governing ERISA are favorable to insurance companies. The statutes and rules were meant to protect employees but the end result has been to favor insurance companies at the expense of employees.
ERISA statutes and rules prevent compensatory and punitive damages.
Plus, a claimant who has been denied benefits, is not entitled to a jury trial. The claimant is not even entitled to trial before a Judge. An administrative committee decides whether or not a claimant is entitled to benefits. If the claimant is denied benefits, he can appeal, but the appeal is for the same committee to reconsider their earlier decision. In the appeal, the claimant can submit new information, if there is relevant new information. If the denial is repeated, then the recourse is to file suit in Federal Court.
Once the case is in Federal Court, then the Federal Judge’s role is to review the material that was before the administrative committee and to decide whether or not the administrative committee abused the discretion they had in rendering their decision.
This means that the Federeal Judge may think the claimant should win but cannot make a ruling in favor of the claimant rather the Judge has to see if the administrative committee abused the discretion allowed them by the law in rendering their decision. Though not impossible, this is a hard burden to overcome. There are “secrets” to making the appeal successful, or if not successful, for making the administrative record such that it is much more likely a Judge will consider an adverse decision an abuse of discretion. This situation is a must for an experienced Insurance Law Attorney who handles ERISA claims.