|  | Healthcare Industry | Health Insurance

Reasons for an ERISA Change of Denial

The Employee Retirement Income Security Act of 1974 (ERISA) governs the administration of employee benefit plans. Part of administering these plans involves claims for benefits and the decisions plan administrators must make with respect to these claims. If your claim for benefits is denied, ERISA sets forth an appeals structure under which the plan administrator may change his decision.

  1. What is ERISA?

    • ERISA was enacted to protect participants in employee benefit plans by setting forth minimum standards. There is a natural tension in the ERISA structure because employers voluntarily sponsor benefit plans, but participants also need protection. So that employers do not arbitrarily deny claims for benefits, a major protection that ERISA provides to plan participants is the claims administration scheme, which provides for timelines and deadlines by which plan administrators must make decisions with respect to claims and that the terms of the plan are followed by all parties.

    ERISA Claims Administration

    • ERISA requires that each plan must establish and maintain reasonable procedures governing benefit claims and that those procedures cannot unduly inhibit or hamper the initiation or processing of claims. Claims must be made in accordance with the terms of a plan and the claimant must be notified as soon as possible, but no later than five days, if a claim fails to follow proper procedures. Otherwise, a plan administrator must notify a participant of a benefit decision within a reasonable period of time but no later than 90 days after receipt of the claim unless special circumstances require an extension. The benefit determination must be written in a manner that can be understood by the average participant. This determination must explain the specific reason that the claim for benefits was denied and include a reference to the specific plan provision upon which the determination was based. Moreover, the determination letter must describe any additional material or information that would be necessary for the individual to have a successful benefit claim.

    Appeals Under ERISA

    • Appeals must afford a plan participant a full and fair review. Accordingly, participants must have at least 180 days following the receipt of a notification of an adverse benefit determination. This level of review will take into account all comments, documents and other materials submitted by the claimant. During the appeal, an expert shall be consulted who was not involved in the initial review. The review will not give any deference to the initial review. Generally, appeal decisions must be given to the participant no later than 60 days after receipt of the request for appeal.

    Reasons for a Change of Denial

    • Changes of denial at the appeal level tend to occur for several reasons. If the participant did not follow proper procedures under the plan, the participant could refile his claim, and it is likely that the denial would be changed. If a participant can show that the plan supports their claim and a mistake was made at the initial review level, that will often provide for a positive appeal. Secondly, if medical evidence can be provided that was missing from the initial review, this will often change the minds of the reviewers.

Health Insurance - Related Articles