ERISA Regulations and Restrictions
After an ERISA disability insurance denial, typically a policyholder may:
- NOT sue an insurance company for breach of the insurance contract
- NOT sue an insurance company for insurance bad faith
- NOT sue an insurance company for any consequential damages caused by the wrongful denial of benefits no matter how egregious, outrageous or malicious the conduct of the insurance company is
- NOT sue for punitive damages no matter how egregious, outrageous or malicious the conduct of the insurance company is
- NOT have the right in many instances to admit any evidence in a trial against the insurance company
- NOT get a jury trial
- NOT get any kind of trial in many instances
- NOT sue in state court. In most instances the policyholder must sue in federal court, which is generally more conservative than state courts.
- NOT be entitled to insurance benefits, sometimes even if the policyholder proves that the insurance company was wrong when it denied the claim
- NOT be entitled to insurance benefits, unless it is proven that the insurance company acted in an arbitrary and capricious manner
- NOT be entitled to conduct any pre-trial discovery, such as taking depositions of insurance company witnesses in many cases
Policyholders whose claims are not affected by ERISA regulations enjoy all of the rights above that are denied to those filing ERISA claims.
California, like many other states, has laws that are specifically intended to protect the rights of policyholders to sue insurance companies that unreasonably deny benefits. Called insurance bad faith, this type of law provides many important and powerful tools to protect policyholders against abusive conduct by insurance companies.
Unfortunately, ERISA regulations completely nullify these protections as well as nearly all other laws in California that are designed to keep insurance companies from acting improperly.
In essence, ERISA completely immunizes insurance companies from the consequences of abusive behavior and in so doing it encourages insurance companies to deny claims in bad faith. Why? Because there is no penalty for doing so!
To learn more about how ERISA regulations affect your disability insurance claim, please contact an attorney at Pillsbury & Levinson, LLP in San Francisco today. Our lawyers represent clients in ERISA disability insurance litigation throughout California.
