ERISA Benefit Claims

ERISA divides employee benefits into two broad categories: pension benefits and welfare benefits. Long-term disability benefits, health insurance, life insurance, dental insurance, and similar benefits fall under “ERISA welfare benefits.” If an ERISA plan participant or beneficiary is denied those benefits, the person must go through the ERISA plan’s required appeal procedures. If the claim is still denied, the person can then bring an action under ERISA § 502(a)(1)(B) (29 U.S.C. § 1132(a)(1)(B)).

Because ERISA preempts any state law remedies, a plaintiff may only obtain those remedies available under the ERISA statute and case law. Usually, this is a remedy to obtain the benefits that should have been paid under the plan, plus possibly attorneys’ fees, and interest. Other remedies, such as punitive damages, make-whole damages, bad faith damages, or similar remedies are preempted.

Additionally, when reviewing the limited record, courts usually review the decision under an arbitrary and capricious (abuse of discretion) standard of review that is deferential to the decision made by the plan administrator. According to the Supreme Court in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), the rule is that courts should review denials of ERISA benefits de novo, but that same decision held that if the parties agree to a deferential standard of review, then courts should apply that standard.  Id. at 115. As a result, most ERISA plans and group insurance policies contain language conferring the deferential standard of review, and that exception has virtually swallowed the default rule.