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ERISA law: what to do if your ERISA claim is denied


This guide outlines the steps to take if your ERISA claim is denied and you want to appeal. The Employee Retirement Income Security Act (ERISA) mandates that workers can file appeals or bring suit against an employer’s health insurance carrier if they or covered family members are denied coverage.

ERISA: overview

The federal law that has regulated employee benefits since 1974 has formed a protective shield around health plans. Called the Employee Retirement Income Security Act, and known as ERISA, the law made it difficult for patients to win benefits denial suits, mainly because Congress wanted employers to define health and retirement pensions that would not expose them to costly litigation. However, that situation has changed and there are now steps you can take.

What to do if your ERISA claim is denied

Dealing with a denied ERISA claim can be a hassle, but there is a set procedure for fighting the denial. Read on to find out how to get started.

Step One: Hire a Lawyer

The first step most workers take after an ERISA claim was denied is to hire a lawyer. ERISA attorneys can help clients file further appeals, check the paperwork to ensure that everything is in order and all deadlines are met, and speak with insurance companies regarding their approval processes and procedures. If appealing an ERISA claim denial doesn’t work, a lawyer can also help clients understand additional legal options.

Step Two: Review the Appeal Procedure

When an insurance company denies an ERISA claim, it must send a written notice that informs the affected party not just of the reason for the denial and what information could change the company’s decision but also of how to submit the claim for an appeal review. When in doubt about what any of the information in the letter means, have it reviewed by an attorney before moving forward.

Step Three: Appeal the Decision

By law, the appeal procedure should be explained in a worker’s Summary Plan Description. However, not all insurance companies provide equal amounts of instruction and transparency. At the very least, the appeal procedure will allow the worker or an authorized representative to request a review, review the documents, and submit issues.

Insurance companies often set deadlines for appealing ERISA claims. The deadline will be at least 60 days from when the notice of claim denial was received, but it’s best to submit all of the required paperwork as soon as possible. The insurance company will make an appeal decision within 60 days of receiving the notice.

Step Four: File an Appeal Through the ESBA

Some insurance companies make provisions for filing a second appeal, but in most cases, a worker’s next step is to file a new appeal through the regional U.S. Department of Labor Employee Benefits Security Administration (EBSA). As with filing the initial appeal(s), it’s best for workers to consult an attorney before engaging with the ESBA.

The requirements for filing can be complex, with some claims subject to state review and others to federal processes. The request for an external review must be filed within four months of receiving a final determination, and only certain types of denials can go to an external review. They include:

  • Denials involving medical judgments where providers disagree with the health insurer
  • Denials that involve determinations that treatments are either experimental or investigational
  • Cancellation of coverage based on claims that workers gave false information on applications

No matter what type of denial a worker has received, he or she has the right to an external review that meets federal standards. They must be decided as soon as possible, with standard reviews completed within 45 days of receiving the request and expedited reviews completed in 72 hours or less.

ERISA case study

Patients and lawyers have found ways around a legal provision that allows patients to charge only the amount of denied benefits, not compensation or reimbursement for lost wages, pain or suffering.

For example, in 1999 the federal district court in Urbana, Illinois, authorized a woman to sue Health Alliance-Midwest because the plan’s nurses failed to diagnose over the phone that her husband was suffering from a heart condition. According to the lawsuit, a nurse told Gary Crum, 42, that the chest pain he was experiencing was likely a result of “excessive stomach acid.” Crum died of a heart attack a few hours later.

Judge Michael P. McCuskey said the widow, Kelly Crum, is questioning the “quality of medical care” and not the denial of benefits, so she could frame the claim under the willful death statute.

Until 1995, the US Supreme Court emphasized the broad scope of ERISA, which nullifies “any and all state laws that refer now or in the future to any employee benefit plan”. But since 1995 the court has given precedence to the assumption that states can exercise their “historical decision-making powers” in the “traditional fields of state regulation,” which include insurance and health care plans.

In an attempt to make plans more accountable, state insurance commissioners this month recommended that all states set up appeals procedures for people who want to challenge health plans’ denials of care. The model legislation, drafted by the National Association of Insurance Commissioners, would allow consumers to turn to a panel of medical experts.

Legal experts say that without a change in federal law, it is difficult to sue an insurer for failing to provide care to a patient under employee benefit plans. But plaintiffs are already using new arguments to win damages for insufficient quality of care, that is, for professional error.

Conclusion: There are options

The general takeaway here is that receiving a claim denial does not mean the person seeking medical care will automatically have to pay out-of-pocket. There is a set appeals process that workers can follow if they believe that claims have been denied unfairly. Because the appeals process can be complex and requires adhering to strict deadlines, it’s best to seek the help of a lawyer as soon as an ERISA claim gets denied.

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