Insurance Company Liens
Here is an excellent video of how insurance companies use ERISA to swoop in and take injury victim's recovery money.
The Employee Retirement Income Security Act (ERISA) of 1974 is a federal law that protects employee benefit plan participants and their beneficiaries. Although it was initially aimed at safeguarding retirement plan benefits, it has seen a significant evolution over the years and now encompasses a variety of benefit plans, including health insurance. The complex nature of ERISA, however, has been widely exploited by insurance companies to deny injury victims their rightful benefits.
ERISA's heart lies in its preemption clause, which supersedes all state laws relating to the employee benefit plans. Unfortunately, this has allowed insurance companies to bypass the more favorable state laws and regulations designed to protect injury victims. Since ERISA litigation happens at the federal level, it makes it extremely challenging and costly for claimants to fight against insurance giants.
One of the major ways insurance companies use ERISA to deny claims is by utilizing the law's ‘discretionary clause'. This clause gives the insurance provider the absolute discretion to interpret the terms of the policy and decide whether the claimant is eligible for the benefits or not. Insurance companies can thus manipulate the presence of this clause to their advantage and unjustly restrict or deny benefits.
Additionally, insurance companies may delay proceedings claiming they require additional evidence or paperwork to process the claims. However, under ERISA guidelines, once a claim is denied, a claimant cannot introduce new evidence or testimonies at a later appeal stage. This tricky loophole allows insurance providers to avoid paying benefits.
Insurance companies may also capitalize on ERISA's lack of punitive damages. ERISA does not provide emotional distress compensation or penalties for insurance bad faith. Even if an insurance company is found guilty of wrongfully denying a claim, it is not held accountable beyond paying the original benefits owed – making it more profitable for them to attempt to deny valid claims.
ERISA, therefore, although formulated with the intention of safeguarding employee rights, its complicated provisions have been misused by insurance companies to delay, reduce, or deny rightful claims of injury victims. It is advisable for individuals to navigate this complex system alongside experienced ERISA lawyers to ensure they are not stripped of their rightful benefits.
