ERISA, the federal law governing most employer-sponsored benefits (e.g., health, disability or life insurance, or pension or retirement benefits) gives participants the right to appeal the Plan or insurer’s denial of payment or benefits (in legalese, an “adverse benefit determination”). Plans and insurers are required to be transparent about participants’ appeal rights. Unfortunately, adverse benefit determination notices often fail to adequately explain participants’ appeal rights and important deadlines.
Below is a “cheat sheet” listing some of the issues relevant to participants’ rights to appeal an adverse benefit determination under ERISA:
- You must appeal before filing suit. ERISA generally requires participants to exhaust their administrative remedies before filing suit. This requires going through the Plan or insurer’s internal appeal process before bring a lawsuit. If you sue before exhausting the appeal process, the court will likely dismiss the lawsuit and your claim could be barred. Note that ERISA typically requires only one appeal – while Plans often provide for multiple levels of appeal, participants are generally free to file suit after the first appeal is denied. Indeed, in most cases, successive rounds of appeal serve no purpose other than to permit the Plan or insurer to bolster its position with several rounds of supposedly “independent” review that typically rubber-stamp the original adverse benefit determination.
- You must appeal within the deadline. Once the Plan or insurer renders an adverse benefit determination, the deadline starts running in which to appeal the decision. The deadline is often short, depending on the details of the Plan documents. Failure to timely appeal will often irrevocably destroy your right to dispute the adverse benefit determination or file a lawsuit.
- Your appeal must contain all relevant information. If the appeal is denied and the participant files a lawsuit, the evidence that can be presented in the lawsuit is often limited to the information submitted to the Plan or insurer during the appeal process. Thus, it is critical to submit all potentially relevant information during the appeal process. Even information that might seem irrelevant at first could potentially become relevant in a lawsuit.
- Your appeal must account for the Plan documents and the Plan or insurer’s investigation. Despite federal regulations requiring transparency in ERISA claims, adverse benefit determination notices often fail to contain important information relevant to the dispute. This includes the full Plan documents setting forth participants’ rights under the Plan. It also includes the Plan’s or insurer’s claim file, which often contains internal notes or other evidence reflecting the true basis for the adverse benefit determination. Acquiring this information and addressing it with rebuttal evidence is critical to prevailing in any appeal or lawsuit challenging the denial of payment or benefits.
ERISA appeals can be complex, and failure to follow the appropriate procedures can be fatal to participants’ rights to coverage or benefits. It is critical to carefully scrutinize all correspondence with the Plan or insurer, the governing Plan documents, and the applicable evidence before submitting an appeal.