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Your long-term or short-term disability benefit claim is denied. You next proceed through more than six months of internal appeals mostly spent waiting for the insurance company to respond.

Then you receive it: the letter you’ve been waiting for that will state you have successfully appealed your long-term or short-term disability denial. Cinga, Lincoln, Prudential or whoever else is going to reinstate you and start paying your benefit again.

You open the envelope, remove the letter and…your appeal has been denied.

What now?

Next: File Suit at the Optimal Venue

ERISA law provides for a private cause of action against an ERISA plan administrator for the wrongful denial of disability benefits. It also provides for a lawsuit alleging breaches of the ERISA plan administrator’s fiduciary duty.

These two causes of action represent the enforcement arm of the ERISA statute and empower the plan beneficiaries to bring suit for wrongfully denied benefits or breaches of fiduciary duty – i.e. the insurance company put its interests before yours or did not properly protect your interests or right to long-term or short-term disability benefits.

Bringing suit starts with a choice of where to file it. ERISA is a federal regulation that supersedes state laws regarding breaches of contract. As such, a lawsuit concerning the wrongful denial of disability benefits under a plan governed by ERISA law must be brought in U.S. District Court.

ERISA law provides three options of venue or district in which a plaintiff or beneficiary can bring suit.

29 U.S.C. § 1132(e)(2) allows a beneficiary to bring suit in the “district where the plan is administered, where the breach took place, or where a defendant resides or may be found.”

This provision has been interpreted by courts to mean that suit can be brought in one of three districts:

1) the district court where the beneficiary lives

2) the district court where the policy was delivered (i.e. from the insurance company to the employer that sponsored or purchased the plan)

3) where the breach took place, which has consistently been determined to be where the right to benefits was denied

*Note that these three venues could all be the same and do not necessarily offer three separate districts as options for bringing suit.

Choice of Venue: A Vital Right

The ability to shop venues is one of the most important rights a beneficiary has when bringing suit under ERISA law. The reason is that each individual circuit (the appellate level of the federal court system) has interpreted and enforced various ERISA provisions in different ways.

Some circuits (7th Circuit, 9th Circuit) have interpreted ERISA law in ways that are more advantageous to individual beneficiaries, and others (8th Circuit) have interpreted ERISA law in ways that benefit the plan administrators or insurance companies. The right to choose the venue allows the beneficiary the chance to pick the one most favorable to their circumstances.

Aside from which circuit’s law will be applied to the case, the second most important matter decided by where the lawsuit is filed is whether a discretionary clause is enforceable.

A discretionary clause is a provision in a long-term or short-term disability insurance policy that gives the plan administrator (usually the insurance company) the authority to discretionarily interpret the terms of the insurance plan and determine who is entitled to benefits under the plan.

When an enforceable discretionary clause is included in the disability policy, the court is limited to determining whether the insurance company was reasonable in deciding on its denial of benefits.

When an insurance policy does not have a discretionary clause (or discretionary clauses are unenforceable), the court can decide whether the beneficiary is entitled to benefits. This is a broader and more equitable review standard that directly benefits disability plan beneficiaries. This broader standard of review is called de novo review.

Several states have banned discretionary clauses, making the de novo standard of review the only standard of review available. States that have banned discretionary clauses have many more instances of a disability benefit being enforced upon judicial review.

To identify which venues are available to bring suit in, the beneficiary must obtain a copy of the long-term or short-term disability insurance plan document, which the insurance company or plan administrator is required to provide upon request.

From that point, only an experienced ERISA attorney can determine which venue is best for your case and whether any of the options are superior to the others.

ERISA and Disability Lawyers: Contact Us Today

The seasoned ERISA and disability lawyers at Gallagher Davis, LLP support company employees in the review, filing and appeal of long-term and short-term disability insurance benefits claims.

With experience in all state and federal trial and appellate courts in the St. Louis metropolitan area, as well as throughout Missouri and the Midwest, our lawyers for disability provide you with vigorous advocacy and representation in justly receiving available benefits for which you are qualified as you recover.

If you have experienced a denial of long-term or short-term disability benefits, contact us today at (314) 725-1780. We offer free consultations.