ERISA is Turned on Its Head
Attorney
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ERISA (Employee Retirement Income Security Act) was passed in 1974 to protect the cash in your pension fund. Today it protects the insurance companies from lawsuits for disability benefits. In fact, your employer's disability insurance policy may be providing only illusory benefits.
Ninety-nine percent of all disability insurance plans offered to employees are governed by ERISA. Under ERISA, you have the right to file suit in federal court if your claim for benefits is denied. But, unlike almost any other legal proceeding, one side goes into court with all of the "good cards." That side NOT you.
The Insurance Company's "ACE" card is the "reservation of discretion."
The most important card held by the insurance companies is something called a "reservation of discretion." Don't bother looking in the ERISA statute for this "ace" - it's not there. The reservation of discretion is something that the federal courts have given to the insurance companies - for free! Here is what this "special card" means:
The courts have ruled that if your claim for disability benefits is denied, you will lose your lawsuit against the insurance company, even if you are right and it is wrong, if there is ANY evidence that supports the insurance company's decision. In any other legal proceeding, you can only win if you have a preponderance (i.e. more than 50 percent) of the evidence in your favor.
Under ERISA, however, the claimant can have 85 percent of the evidence, and the insurance company can have 15 percent of the evidence, and if the insurance policy contains a "reservation of discretion," they win!
Great Law!
Thanks so much, Congress!
By the way, Congressional employers are not covered by ERISA so don't be thinking that this law will change to your benefit any time soon.