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Another trap for the uninformed is


the judicially-created rule that the evi- dence that a trial court reviews regarding the merits of the claim is limited to the claim file created and maintained by the administrator, i.e., the insurance company. (Alford v. DCH Foundation Group Long-Term Life Ins. Co. Of Am. (9th Cir., 2002) 311 F.3d 955, 959). Too often, a client approaches counsel after the claim process has been exhausted with evidence that a former attorney withheld during the claim process “for trial.” With very few excep- tions, that evidence will never see the light of day in an ERISA trial courtroom. If the evidence was not in the insur-


er’s possession at the time of the final claim decision, it should not be consid- ered by the trial court when reviewing the merits of the claim decision. (Ibid.) Moreover, attempts to get third-party evi- dence into the claim file is often unsuc- cessful. There is no subpoena power or similar mechanism during the ERISA claim process for a claimant to utilize to obtain relevant documents from third parties. A third procedural pitfall is the


“exhaustion of administrative remedies” rule created by the judiciary rule govern- ing ERISA claims. 29 U.S.C. Section 1133(b), provides a claimant with the right of a “full and fair review” of a claim denial, under the plan. In interpreting this section, a universal judicial rule has evolved that a claimant must appeal an adverse claim decision and his failure to do so within the time period specified in plan documents results in a waiver of his right to bring a civil action. (Diaz v. United Agric. Employee Welfare Benefit Plan & Trust (9th Cir., 1995) 50 F.3d 1478, 1483). The result of these judicially created


rules? Claimants who do not “appeal” the denial of the claim to the same entity who denied it lose their statutory right to bring a civil action to recover their benefits. In a subsequent civil action, the only evidence that the trial court will consider on the merits is that which was compiled by the insurance company during the claim process. Since there is limited discovery in ERISA actions, a plaintiff’s attorney must often rely on the insurer’s representation


that the file it produced with its FRCP Rule 26 Initial Disclosures is complete. Finally, when there is a judicial review of the claim decision, the trial court must give “deference” to the insurer’s decision, despite the fact that the insurer is finan- cially motivated to deny the claim. It is lit- tle wonder that an ERISA practitioner often feels like he/she has fallen into the Rabbit’s Hole in Alice in Wonderland. The “exception” that may swallow the judicially-created rules With the cards stacked in their


favor, insurers fully embraced ERISA and its limited consumer remedies and discovery. Without meaningful discov- ery, the insurers’ claim processes were not open to scrutiny. Judicial review was limited only to the evidence that was in the carrier’s claim file. In Saffon v. Wells


Fargo & Co. LTD Plan (9th Cir., 2008) 522 F.3d 863, 867, the Ninth Circuit noted that there was a “nationwide vote of no confidence” for insurance carri- ers. At least one carrier had boosted its profits by repeatedly denying benefits claims it knew to be valid. The carrier’s internal memos revealed that the com- pany’s senior officers relied on ERISA’s deferential standard of review to avoid detection and liability. (Id., citing, John H. Langbein, Trust Law As Regulatory Law: The UNUM/Provident Scandal and Judicial Review of Benefit Denials Under ERISA, (2007) 101 NW. U.L.Rev. 1315, 1317-21.) Similar patterns of claim abuse by other insurance carriers have been exposed by the media on televi- sion programs such as 20/20 and Good Morning America.


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JUNE 2011 The Advocate Magazine — 57


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