In a series of previous articles we’ve examined the analytical steps an attorney must take in deciphering whether a viable Accidental Death & Dismemberment (AD&D) case can be asserted. That analysis begins with threshold considerations, turns next to whether or not an “accident” occurred and then turns to consideration of one or more policy exclusions. Since most AD&D policies are issued in the context of a package of employee benefits the impact of ERISA becomes a key consideration. While a detailed consideration of ERISA is far beyond the bounds of this article it will hopefully nonetheless prod readers to look further into the role it can play in a particular case.
ERISA (the Employee Retirement Income Security Act of 1974) is a confounding Federal act that is often construed in favor of insurance companies against policyholders. Accordingly, in the AD&D context, what otherwise might seem like a strong case could be turned on its head. The key to understanding ERISA is an appreciation of the role played by insurance companies in the benefit determination process. That role is tantamount to being a trial judge meaning that insurance companies typically act in the dual role of a “trial judge” over a benefit claim and at the same time as the defendant ultimately responsible for paying the claim.
First, we need to understand when and if ERISA applies to a claim. Generally, the Act applies to any private sector claim (other than those pertaining to churches or religious organizations). If an AD&D claim is denied, ERISA provides an opportunity to appeal the adverse determination within 60 days. It is critically important that practitioners understand that the appeal submission constitutes the “trial of evidence” in the case. Therefore, one must jump on an AD&D appeal project and be prepared to do a quick but thorough investigation that meets every point asserted in the claim denial.
If the appeal is denied, suit can then be filed in Federal or state court (state court filings are almost always removed to Federal court). What makes ERISA litigation so hard for claimants is that most plan decisions are entitled to deference under the “arbitrary and capricious” standard of review. All it takes to invoke that standard is for the carrier to draft appropriate language in the plan document. The impact of deferential review is that even if the carrier gets the “accident” or policy exclusion question(s) wrong it will still win if the court finds that its decision was not arbitrary and capricious.
Proving arbitrary and capricious behavior is often a difficult task for claimant’s counsel. Strategies to prove such behavior may include showing a complete failure to pursue key evidence or making blanket conclusions in an inappropriate way. For instance, in some jurisdiction it may be arbitrary and capricious to follow a per se rule that an intoxication-related death was necessarily non-accidental. (Such jurisdictions courts have imposed a causation requirement). Also be aware that the degree to which the inherent conflict of interest presented by insurance carrier’s dual role as “trial judge” and “defendant” can skew the analysis towards less deference if claimant’s counsel can show that the conflict affected the appeal decision.
The lesson is that an attorney can do the most good for an AD&D claimant by handling his appeal. Laypersons simply don’t grasp the degree to which ERISA places a thumb on the scales of justice in favor of insurance carriers. Practitioners must make sure clients understand that.
