On May 12, 2022, the “Employee Retiree Access to Justice Act” was introduced in both chambers of Congress.
If enacted, the new bill would have significant implications for Short-Term Disability and Long-Term Disability claimants who are denied benefits under a disability insurance plan that is covered under the Employee Retirement Income Security Act (ERISA).
ERISA disability insurance plans, otherwise known as “group” insurance plans, are provided by employers as a benefit of employment based on an agreement they have with your disability insurance carrier. Group disability insurance coverage typically comes at no cost (or reduced cost) to you, as your employer is generally responsible for paying premiums.
Currently, most ERISA disability insurance plans contain clauses that provide that the insurance company administering a Long-Term Disability policy has the “discretion” both to interpret the terms and conditions of the insurance policy and to decide whether the evidence submitted establishes that the employee meets the definition of disability. Insurance companies include these “discretionary clauses” because they give the insurance company much broader discretion to deny claims.
If there is a discretionary clause in your policy and you file for judicial review of your claim in federal court, the courts will basically assume the decision by the carrier is correct and will only reverse the denial decision if it is arbitrary or capricious or if the decision is not supported by substantial evidence in the record. If there is no discretionary clause in your policy, the courts will review your claim de novo – that is, entirely based on the merits of whether or not you meet the definition of disability in your policy. Currently, twenty-three (23) states have issued bans on discretionary clauses, deeming them a violation of public policy. However, up until this point, there has not been a federal law banning the use of discretionary clauses in disability insurance policies.
If the Employee Retiree Access to Justice Act is passed by Congress, courts will no longer be bound to defer to the decision of the claim administrator when reviewing adverse benefit decisions. Courts would review every case under a de novo standard – meaning leveling the playing field for disabled employees and greater accountability for plan administrators.
If you have any questions regarding discretionary clauses, or Long Term Disability insurance claims in general, please contact my office today for a free consultation.
About Andalman & Flynn, P.C.: Founded in 1998 in downtown Silver Spring, Maryland, Andalman & Flynn has forged a distinguished reputation for legal excellence. The firm represents individuals seeking disability benefits throughout the country and practices family law throughout Maryland and the District of Columbia. The firm focuses on cases that impact the rights of everyone, and are there for clients when responsive legal help is most critical. The firm has provided legal analysis on national and local television and radio, and their attorneys often testify before legislative bodies and are routinely invited to contribute to prominent legal publications. For more information about Andalman & Flynn, please visit the website at andalmanflynn.com or call 301.563.6685