ERISA Claims & Employer-Provided Life Insurance
Texas or Federal Law?
This issue is critical, because it determines the available rights and remedies. Also, it often determines the outcome. Most commonly, it determines the rights of spouses and former spouses. It can determine jurisdiction and the right to a jury trial.
Many people purchase life insurance through their employer. The employer will often offer life insurance as part of a larger package of employee benefits.
Typically (but not always) such policies are not governed by Texas law. They’re usually governed by a federal law - The Employee Retirement Income Security Act of 1974 - commonly referred to as ERISA.
Most people, including most lawyers, do not know what ERISA is. If they don’t understand how ERISA impacts life insurance disputes, they will be unable to properly diagnose these claims. ERISA is the Employee Retirement Income Security Act of 1974. It is a federal law that governs employee benefits. The primary types of benefits governed are retirement benefits, such as pension plans, or welfare benefits. Welfare benefits include health insurance and life insurance.
A key difference between ERISA retirement benefits and ERISA welfare benefits is how spouses are treated. Spouses have certain protected rights to ERISA retirement benefits. On the other hand a spouse has much fewer automatic rights to welfare benefits, such as life insurance.
In many states, a spouse may have a community property interest in a life insurance policy. And many states have laws that automatically override designations in favor of an ex spouse that were made before the divorce. Not with ERISA policies. ERISA preempts those state laws.
Disputes over ERISA policies are also typically tried in Federal courts. This is fine for attorneys used to working in federal court, but many attorneys are not. And ERISA disputes are typically tried to the judge, not a jury.
ERISA also overrides most state bad faith and consumer protection laws.
If you are involved in a beneficiary dispute or a denial of benefits, be sure to consult a lawyer who is very familiar with ERISA and how it will impact your claim.
ERISA cases are governed by federal law
ERISA is a federal law, with different remedies and procedures than Texas laws that govern non-ERISA life insurance issues.
It is critical that you consult an attorney experienced in handling ERISA claims. Some attorneys who are not familiar with ERISA will waste valuable time pursuing recovery in Texas court instead of following proper administrative procedures.
The ERISA appeals process
It is often mandatory to exhaust the internal appeals process offered by the insurance company.
During the internal appeal, it is essential to collect all available evidence for the administrative record in case that appeal is denied.
If the internal appeal is denied, the next step is to file a federal lawsuit under ERISA.
In an ERISA lawsuit, it is a federal judge who will hear your case, not a jury.
The evidence that was gathered in the internal appeal and entered into the administrative record is the evidence the judge will consider.
The Judge has discretion to award you attorney's fees if it is determined the insurance company wrongfully denied the claim.
Capacity & undue influence
Capacity and undue influence challenges are possible for ERISA policies because they are not attacks on the designation based on reference to external documents or state laws regarding designations. Instead, they are attacks on the validity of the designation document itself.
ERISA claims are time sensitive
Time is of the essence if you are seeking life insurance benefits under an ERISA policy.
If you need help with an ERISA life insurance claim, contact us as soon as possible for a free review of your case. We can determine if ERISA or Texas law applies and the actions to be taken.
Consultations are free and confidential.