Published by The Pellegrin Firm August 20, 2019

In 1974, Congress passed the Employee Retirement Income Security Act (ERISA), which granted claimants a cause of action in federal court for benefits wrongfully-denied pursuant to employer-sponsored retirement plans, disability insurance, life-insurance plans, and other various types of employer-provided benefits.

To prevent being overwhelmed, and to narrow disputes coming up through the court system, the federal courts ultimately started to require exhaustion of administrative remedies as a prerequisite to filing suit. This means that claimants must follow the insurance company’s internal appeal system in disability, health, and life insurance cases before a lawsuit may be filed.

This seems like to many people a waste of time. However, insurance appeals are sometimes successful, and even if they aren’t, putting together the best possible case during the insurance company’s appeal process is essential to winning in court.

Depending on the insurance policy at issue, the forum hearing the case, and the kind of decision made, the court may simply review the reasonableness of the insurance company’s decision. Sometimes courts give a whole new review from the top down, but many times they simply look at what the insurance company had before it and the arguments the claimant made on appeal.

Failing to exhaust administrative remedies in a timely manner can cause delay once suit is filed, or even loss of rights under an insurance policy. The review process is confusing, even for the most experienced attorneys, and every insurance company is a little different.