Many employers in Colorado provide disability insurance for their employees. If the plan falls within the definition of “retirement plan” under the Employee Retirement Income Security Act (ERISA), the people who are responsible for administering the plan must abide by the duties prescribed in the statute. Employees who may have claims under the plan should be familiar with the basic outline of these responsibilities.
Plan documents
When a person joins a retirement plan, the person receives a number of important documents, including the plan itself, a summary plan description (SPD), and summary of benefits and coverage provided by the plan (SBC). These documents are usually referred to as the “plan documents,” and they are binding on the plan administrator, the plan’s investment committee, and plan employees. The SPD is an especially important document because its description of benefits and claim requirements is binding on both plan members and the plan administrator.
Administrator as fiduciary
ERISA makes the plan administrator a fiduciary with regard to plan members and their claims for benefits. This provision requires the plan administrator to give highest priority to the interests of the plan members and to act reasonably and prudently in all circumstances.
A person who is appointed as the administrator for a long term disability plan (LTD) must treat all claimants seeking LTD benefits as the beneficiaries of this fiduciary duty. A claim must be granted if the evidence shows that the employee is disabled according to the definition in the plan documents. An administrator cannot deny a claim if the evidence proves the existence of a disability.
What if a claim is denied?
If a claim is wrongfully denied, the claimant may wish to make an appeal. ERISA provides an internal appeal process, but this process is often unsuccessful. The next step is bringing a lawsuit in federal court against the plan and the plan administrator. In such cases, the assistance of a lawyer experienced in handling ERISA clams can provide valuable assistance.
