Corinne Chandler Anatomy of an ERISA case
Procedural pitfalls create a minefield that has frustrated reaching the goals of the 1974 statute In 1993, the Honorable William
Acker, Jr., U.S. District Court Judge for the Northern District of Alabama, wrote the following regarding the Employee Retirement Income Security Act of 1974, 29 U.S.C. Section 1011, et seq. (“ERISA”): A hyperbolic wag is reputed to have
said that ERISA stands for “Everything Ridiculous Imagined Since Adam.” This court does not take so dim a view of the Employee Retirement Income Security Act of 1974. Instead, this court is willing to believe that ERISA has lurking some- where in it a redeeming feature.
(Florence Nightingale Nursing Services, Inc. v. Blue Cross & Blue Shield of Alabama (N.D. Ala., 1993) 832
F.Supp 1456, 1457). Five years later, Judge Acker had
changed his mind: Since writing Florence Nightingale, I
have changed my mind. ERISA is beyond redemption. No matter how hard the courts have tried, and they have not tried hard enough, they have not been able to elucidate ERISA in ways that will accomplish the purposes Congress claimed to have in mind.
(The Honorable William Acker, Jr., “Can the Courts Rescue ERISA?,” 29 Cumb. L. Rev. 285 (1998-1999)) Judge Acker is not alone in feeling
frustration with ERISA. When faced with this statute, practitioners, jurists and claimants, are often left with the feeling akin to banging one’s head up against the wall: It only feels better when you stop. If you are an ERISA practitioner, you
will undoubtedly argue (depending upon the nature of your practice) that the Congressional goals of ERISA were to: (1) ensure that employees would receive the benefits they had earned or (2) provide efficiency in claim resolution by encour- aging claim resolutions through the administrative process as opposed to liti- gation. (Conkright v. Frommert (2010), – U.S.– [130 S.Ct. 1640, 1648-1649].) Due
56— The Advocate Magazine JUNE 2011
to the confusing nature of the Act and judicial interpretation, neither goal has been accomplished. This article will discuss the procedur-
al pitfalls of litigating an ERISA case and provide an illustration of how the special procedural rules have frustrated the stat- ed goals of ERISA. The procedural hoops that plaintiffs must deal with will surprise any litigator who takes discovery and de novo judicial trial review for granted. The author will present this informa-
tion by focusing on a particular ERISA case in which the plaintiff ultimately pre- vailed. What makes this ERISA action interesting is that after trial, the defen- dant insurance carrier desperately sought to remove trial evidence from the public domain. Why? Because it does not want other ERISA litigants and their attorneys to have access to the same information. Secrecy of procedures utilized by insur- ance companies and administrators who administer employer-provided insurance plans is one of the keys to their success.
An ERISA primer
The statute: ERISA and its remedies In short, ERISA applies to most
“employee benefit plans” provided by employers to provide health, life and dis- ability benefits to their employees. Under the Act, a claimant has the right to bring a civil action to recover benefits under an ERISA “plan,” however, the federal courts have been granted concurrent jurisdiction to review claim denials. If you file litigation in state court, there is almost a 100 percent chance it will be removed to federal court, on the basis of federal jurisdiction. 29 U.S.C. Section 1132(a) provides
that a “participant” or a beneficiary may bring limited claims for relief under the statute. The remedies provided have been held by the Supreme Court to be the “exclusive” remedies available under the Act. (Pilot Life Ins. Co. v. Dedeaux (1986)
481 U.S. 41 [107 S.Ct. 1549, 1556]). 29 U.S.C. Section 1144(a) provides that all state claims for relief “related to” ERISA benefits are preempted.” Therefore, if your employer-provided insurance claim is denied, your remedies are limited to that which you can obtain under ERISA. In most instances, a successful plaintiff will only be able to recover benefits that are due, and his or her attorneys’ fees, if approved by the court, plus interest. The litigation minefield created by judicial interpretation While the underlying goals of ERISA
might have been sound, judicial interpre- tation of the statute has laid a veritable minefield for the unwary. The foremost hurdle which an ERISA claimant faces in litigation is that judicial review of a denied claim is not focused on the merits of the claim, but rather, is usually directed to whether the insurer acted “unreason- ably,” and/or abused its discretion in denying a claim. (Abatie v. Alta Health & Life Insurance Company (9th Cir., 2006) 458 F.3d 955 (“Abatie”).) This “abuse of discretion” review is
the product of a U.S. Supreme Court decision, Firestone Tire & Rubber Co. v. Bruch, (1996) 489 U.S. 101 [109 S.Ct 948], in which the Court held that if the documents creating the plan granted dis- cretion to the plan’s administrator, then the administrator’s claim decision must be granted “deference” in subsequent judicial review. It was not surprising that after the Firestone decision, insurers rou- tinely included language in their policies that provided them with the “discretion” to interpret the terms of the ERISA plan and to determine eligibility for benefits. As a result, claimants who file litigation disputing a claim decision, have to prove not only their entitlement to benefits, but also that an administrator abused its dis- cretion in its claims decision. This is not an easy standard to meet.
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