Most long-term disability case involve insurance coverage that falls under the Employee Retirement Income Security Act, often called ERISA. When a private, non-governmental employer offers a long-term disability plan as part of an employee benefits package, that plan is typically governed by ERISA. If an ERISA claim for long-term disability benefits is denied and the insured completes the insurance company’s required appeals, the final step is usually a lawsuit in federal court.

Certain ERISA claims can only be brought in federal court. ERISA’s statutory language requires ERISA breach of fiduciary duty claims to only be heard in federal courts. Under 29 U.S.C. § 1132(e)(1), district courts have “exclusive jurisdiction of civil actions” under ERISA, except those arising under subsection (a)(1)(B). Breach of fiduciary duty claims usually arise under other parts of the statute, so only federal courts can hear them.

In the context of a long-term disability plan, breach of fiduciary duty claims can occur if a plan fiduciary fails to act in the participant’s best interest. A participant might argue that the fiduciary misrepresented coverage or failed to provide complete and accurate information about filing a claim. Another example would be a fiduciary disregarding plan documents or ignoring important procedural safeguards when deciding whether someone qualifies for benefits.

State courts share jurisdiction over benefits claims brought under 29 U.S.C. § 1132(a)(1)(B). Those claims involve a participant or beneficiary who wants to recover benefits, enforce plan rights, or clarify rights to future benefits. (Most standard claims for denied long-term disability benefits are brought under 29 U.S.C. § 1132(a)(1)(B)).

Although a participant may file a long-term disability case in state court, the insurance company can typically remove the case to federal court because ERISA coverage provides federal subject matter jurisdiction. Once the insurer timely files a notice of removal, the case transfers to federal court.

Defendants often prefer federal court for ERISA long-term disability lawsuits. The federal rules for judicial review are usually more deferential to plan administrators, and ERISA preempts many state-level legal remedies that could provide a plaintiff with broader relief. (Insurance companies often believe federal courts will more reliably apply ERISA’s preemption provisions.) Also, federal judges are experienced in ERISA matters and can offer more predictable rulings. Finally, the limited discovery in ERISA matters and preclusion of ERISA jury trials in federal court encourage insurance companies and other defendants to seek to have these cases heard in federal court.