GREGORY DELL: Hi, I'm Greg
Doyle with Attorneys Delland SchaeferAnd today, attorney
Steven Jessup and Iare going to talk about
the challenges of an ERISAthe disability lawsuitAnd there are a lot of
challenges in an ERISA lawsuit,and probably the
single biggest onecomes about from what's known
as a discretionary clauseSo let's start with
that, and then we'regoing to run through
probably six or sevendifferent things that
are different in an ERISAlawsuit versus one that's
not governed by ERISA
So just as a
background, I mean, thisis a very specific video that
we're doing on the challengesBut ERISA, the Employee
Retirement Income Security Actgoverns group policiesAnd for the purposes
video, we'regoing to assume that
ERISA applies, obviouslySo let's talk about first what
is this discretionary clausethat's in a disability policy?STEPHEN JESSUP: A
discretionary clauseis something that allows
the insurance company whenyou read it to
interpret the termsand provisions of the
policies as they see fit
And what that does then,
from a legal perspective,it creates what's known
as a standard reviewIn trial, a standard review
is what the judge the courthas to employ to determine
who essentially wins the caseThis discretionary clause will,
if it's located in the policy,will initiate what's known as
an arbitrary and capriciousreviewSo as a plaintiff, you
have to show that, one,that you're disabled,
which we find usuallythat's one of the
easier things to provethat, medically speaking,
there would be a disability
But then the second
step is the hard spotwhere, most times, the insurance
companies will prevailAnd that's whether
or not they hadessentially a reasonable
basis to deny the claimSo it's a situation
where a judge's handsare tied in finding that, yes,
they believe you're disabledBut if the insurance
company provides youwith a reasonable review
and had a reasonable basisto deny the claim, the judge
has to uphold that decisionto terminate your benefits
GREGORY DELL: So when we
speak to lots of claimantsaround the country and we
explain the process, whenERISA cases came about,
going back into the 1970sshortly after they
passed ERISA law,it used to be that when you
had in an ERISA lawsuit,the standard was
a de Novo reviewAnd a de Novo– review means,
like most people would think,it means newSo when you filed your lawsuit,
the judge would look at itThe judge would
review everything,and the judge would
make a determination
And if that judge thought you
were disabled, then you wonAnd if he didn't, then you lostIn a case that went to
the US Supreme Court,they put in these clauses in
the policy– like you said,these discretionary clauses–and the courts
basically said, look,with these discretionary
clauses in the policies,we now have to have an
arbitrary and capricious reviewAnd we have to defer to
the insurance companyunless they acted unreasonably
So that's really
tough in these casesAnd the reason that I'd
say 70% or so give or takeare won by the defense because
the court can get to the pointand say I don't agree
with your decisionBut the way in which
you reviewed the fileappears to be reasonableSo that's the challenge
here that we go through
Now many states– not many,
about 13 states give or takeright now–have abolished
discretionary clausesand made them illegal in
long-term disability policiesWe're tryingWe've been pushing through
lobbying at a federal levelto get the Department of Labor
to say, look, we're not evengoing to allow this anymoreIt's not happening
But it's a process where we're
lobbying in multiple statesand trying to get these
discretionary clauses to becomeillegalLet's talk about what's
another biggest negativeor challenge to
an ERISA lawsuit?STEPHEN JESSUP: I think
one of the biggest–and most people
have this concept,whether it's watching TV
or understanding and filinga lawsuit, going to trial,
having your day in court is–this concept that you'll
be able to tell your story,that a jury is going
to listen to youAnd they're going
to help decideUnder ERISA, you
don't get any of that
There's no live
testimony, so you're notgoing to speak to the judgeYour doctors aren'tNo one from your
insurance company isThere's not going to be a jury
It's all up to
this judge, like wewere saying, to make
the final determinationSo even in situations
where under these policies,since they make you apply
for Social Security,you may have that day where
you're speaking to the judgeor being asked questionsHere it's very, very
cold and methodicalAnd quite often, federal
judges don't even necessarilywant to hear from the attorneys
We file motions that
the judge decides uponSo there's not this
idea of a day in courtthat feeling of having
justice for what's beendone when your claim's deniedGREGORY DELL: Right, well,
not having the right to a jurytrial is very dishearteningA lot of people think,
well, I'm going to go in,and I'm going to
let a jury decide
And then we'll beat
up on the company,or at least I'll
get to have my dayBut you do get your day
in court and the senseof being able to present
your case and your lawyers–that's why your lawyer is so
important– gets to argue whatthey did wrong in their reviewAnd you have to have an amazing
understanding of the caselaw, which is always evolving,
in order to present thatBut there is no live testimony
More importantly, when we
take a case that isn't ERISA,we usually say your case is only
as good as your client, meaningthe plaintiff, if
you're a credible personand someone that
sounds believable,then a jury is
going to like youHere the judge doesn't even
get to see you or hear from youor understand what you've been
going through, feel your painThey just don't get to do thatYou don't even get
to sit in courtand let the judge look at you
So the judge doesn't
even really knowwho you are unless that's been
a part of how you've presentedyour appeal, which is
something we alwaysdo to let them get that
flavor of who the claimant isBut that's a whole
other animal in termsof how you present the appealNow we have plenty of cases
where we do the appealand then get to do the lawsuitAnd we have a lot of cases
where we just do the lawsuit,and we're married to the
record that were presented
And that's what has
to be presentedNow let's move on to
another issue with ERISAHow many people call you and
say this company screwed me?I've gone into financial debtI'm losing my car
I'm going to be homelessHow do I pay all my bills?I don't only want to sue
them and get my benefitsI want to hammer themI want punitive damages
I want compensatory damagesLet's go after themWhy is that a problem
through ERISA?STEPHEN JESSUP: It
doesn't allow for itUnder the law, you're restricted
to the past benefits due
So from the time of denial
to the time of decisionand that can be
capped even moreSay you were denied during
an own occupation periodA judge can award benefits
into any occupationSo at the end of
the day, the mostyou're ever going
to get in courtis the benefits that
are owed to you
That's itAnd then you're
placed back on claimAnd the insurance company
can start their reviewsand everything else
that they did to youAnd even coupling
upon that, there'sno immediate guarantee
of attorneys fees
In other areas of law, a
prevailing party by rightis able to get their fees paidIn this situation,
it's up to the judgewhether or not the court
wants to award feesand if so, how muchSo realistically, it
creates a situationwhere the insurance
company isn'tgoing to be financially
harmed by losingAll they have to do is
pay what they owe you
So it creates a scenario where
there's really no incentivenot to try to deny and terminate
as many claims as possibleGREGORY DELL: Right, so
when we use the expression,we say there's no
teeth in ERISA isthat there's no
punitive damages, whichmeans a penalty, a punishment
for the company for actingwrongfullyNo matter how egregious
their conduct was,there's no punitive
damages penaltyThere's no extra
contractual damages
There's no compensation for
anything that happened to youNo matter what, the insurance
company is not responsible,and the judge's hands are tiedIt's not even discretionary
with the judgeIt just cannot be done
You can get some interest
down the road on a judgmentThat in itself is really
not even all that muchbecause it's usually tied
to like a treasury rateAccording to the law, we're able
to argue and get around thatBut the treasury rate's
like 2% right now,and it's been as
low as almost zero
So it's not a fear
factor whereas whenwe have a non-ERISA
case and we knowthat we might have a case that
might be worth, say, I don'tknow, a $7,500 a month benefitThey owe the claimant
$100,000, but theycan get hit for
millions of dollarspotentially in punitive damagesAnd that's a factorThe attorneys fees
that you touched on–does that sway them?Yes, a firm like ours that's
going to get the much higherlevel of an hourly rate upwards
of $600-plus an hour awardedby the court is going to add up
when you have several hundredhours
But still, is a couple
hundred thousand dollarsattorney fee bill
going to sway them?Yes, it's going to sway
them, and that's the benefitto have a powerhouse
firm behind youbecause if the mountain
dispute's only $100,000in attorney's fees are
going to exceed that,then the insurance company
is fighting a stupid battleBut when you have cases
that are worth more,sometimes they just look
at it with that big picturelike we have a legal departmentWe have a teamWe have a budget of a couple
million a year to fight cases,and they lose sight
of the big picture
And they're fighting
little caseswhere the attorneys fees
are greater than what canbe recovered for the claimantSTEPHEN JESSUP: And
also on the flip side,ERISA is a prevailing partySo technically, the
insurance companycan petition the court to have
you pay their attorney's fees,so there is an insult to
injury that can even occurGREGORY DELL: Right, so in
summary, these are risky
Look, we win these ERISA
cases all the timeAnd then that
classifies what's a win?Not a ton of them go to verdictA true win is you get a verdict,
and everything gets paidAnother type of
option is that youreach an amicable
settlement, and a clientwalks away somewhat happy
The insurance company
walks away unhappybecause they paid
out a certain amountSo we're able to recover
benefits for a claimantSo you should never give up as
difficult as these laws can beBut important to understand
it's a tough standard of review
It can be an uphill
battle if youhave the discretionary clauseThere's no punitive damagesThere are no
compensatory damagesThere's no new evidence
that comes into the record
There's no guarantee
of interest if you win,and there's no guarantee
of attorneys feesSo you got to have a
real practical approachThat's always what we're
going to have on these casesBut if you've been
wronged, we'regoing to fight like
hell to win your case
I mean, that's the
bottom line no matterhow difficult the law can beSo feel free to call us
for a free consultationto review your claimWe've handled thousands
of these ERISA lawsuitsWe're always available
to discuss your claim
We look forward to the
opportunity to speak with you