Location, location, location: Your legal rights under ERISA depend on where your case is

ERISA is a mess of a complex and reticulated statute, and so it gets interpreted differently by different courts.

One example I have some familiarity with is what we clever lawyers call “post hoc rationales,” which is what normal people would call “First time I’ve heard of that” or more appropriately “WTF?” It arises when an ERISA “insurer” denies your claim, and then after you sue them, realizes its denial was a big fat lie. So now, finding itself in court, it comes up with another reason, which it never mentioned before you served your lawsuit, why your claim should be denied anyway.

One problem with that: it’s illegal. ERISA itself requires that when an “insurer” denies a claim, it ““shall” provide notice describing “the specific reasons” the claim was denied. Under Labor Department regulations as well, it “shall” provide not only “the specific reason or reasons” for a denial, but “the specific plan provisions on which the determination is based.” The Supreme Court says ERISA “insurers” “must” describe in writing “the specific reasons” for a claim denial. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 830 (2003).

Seems pretty straightforward, no?

Well, it all depends on where you live. The United States Courts of Appeals are divided geographically into circuits, and each circuit applies the law in its own way, pending the Supreme Court coming along and deciding for everyone how it’s to be done. Here, despite the fact the law requires “insurers” to provide “the reasons” and “the specific policy provisions” involved when they deny claims, in many parts of the country that so-called law is simply not enforced.

I had a case where the Eleventh Circuit ruled against my client based on a rationale the “insurer” never mentioned until we were already in court (the reason it cited at the time it denied the claim was, shall we say, not supported by the evidence). So the “insurer’s” utter failure to provide “specific reasons” and “specific policy provisions” when it denied my client’s claim, illegal though it was, made no difference whatsoever: the “insurer” still won.

Had this case been in any number of other circuits, the result would have been precisely opposite. The “insurer” would have been stuck with the reason it provided in the first place, and based on that it would have lost.

So I have asked the Supreme Court to step in and fix this, and establish one rule for the whole country about these after-the-fact rationales. The overwhelming odds are that it will decline to review the case, since that’s what it does in something like 98% of cases presented to it. But you never know.

Here’s the petition for certiorari, discussing how the different circuits apply the rule, and asking for Supreme Court review. Enjoy! /sarcasm

In the meantime, as noted had the Eleventh Circuit applied the rule other circuits apply, the result would have been the opposite. Like George Costanza, the Eleventh Circuit should …

 
…stick to the opposite.