If you’re making a disability insurance claim, the type of plan you have may matter more than any other fact in your case. Consider, for example, two plaintiffs who have the same occupation and suffer from the exact same disability, only Plaintiff “A” has an employer-provided plan governed by the Employee Retirement Income Security Act (ERISA), while Plaintiff “B” has an individual long-term disability policy. Plaintiff A may have a far more difficult time collecting her disability benefits.
The reason is straightforward: In an ERISA case, the standard of review (the amount of deference a court will give to a plan administrator’s denial) is high and the plaintiff must show that the denial of benefits by the plan administrator was “arbitrary and capricious.” Making matters more difficult for our Plaintiff A, the court will usually examine only the record which was before the plan administrator in determining whether the plan administrator’s decision should be overturned.
In contrast, a claim brought under an individual disability policy for failure to pay benefits is a claim which will be brought pursuant to the Tennessee common law of breach of contract. Therefore, Plaintiff A can take her case all the way to a jury decision by merely showing that there is a triable issue as to whether she suffers from a disability as defined in her policy.
A recent federal case from the Southern District of Ohio illustrates the sharp differences between an ERISA and non-ERISA claim. In Dunham v. Grp. (S.D. Ohio Nov. 6, 2015), the plaintiff had an ERISA plan through his employer, Ohio State University, where he worked as a fundraiser. The plaintiff had to argue—or so he thought—that the plan administrator’s denial of his benefits was arbitrary and capricious based on the administrative record.
In fact, the plaintiff in that case gave himself too high a burden. Even though the plaintiff had an ERISA plan, the plaintiff’s governmental plan was exempted from ERISA. So, the court held that the plaintiff had a state law breach of contract claim and that the insurance company could not invoke the arbitrary and capricious standard.
Adjusting the standard of review in favor of the plaintiff, the Dunham court denied the insurance company’s motion for summary judgment. The plaintiff did not submit a lot of evidence which was not also in administrative record, but he did produce an affidavit detailing his disability—chronic back pain— along with a deposition from his supervisor discussing how the plaintiff’s condition prevented him from meeting with donors and attending fundraising events. Based on this evidence, the court held that a juror could infer that he was not able to perform the duties of his job, so summary judgment against the plaintiff was not appropriate.
If Dunham had been an ERISA case and the “arbitrary and capricious” standard had applied, the insurance company’s motion might well have been granted. The insurance company had some facts in its favor. For one, its two physicians who reviewed the record concluded the plaintiff could still “perform the physical requirements of his job.” Given that the plaintiff’s work as a fundraiser was not physically taxing—and that he did initially return to work after his injury—a court might well have upheld a decision by the plan administrator denying benefits under the arbitrary and capricious standard. Fortunately for the plaintiff in Dunham, the provisions of ERISA did not apply. In the Dunham case, the type of plan the plaintiff had may well have been the most important fact in his case.
ERISA cases can be won. In Helfman v. GE Grp. Life Assur. (6th Cir. 2009), the court found that the ERISA plan administrator’s denial of benefits was “arbitrary and capricious” in part because the administrator relied on a medical file review conducted by an independent physician, instead of actually interviewing the treating physician. Just because you have a disability policy governed by ERISA, do not assume that you cannot recover benefits until you have consulted with an experienced disability insurance lawyer.