Who Controls Your ERISA Claim: Employer or Insurer?

When your long-term disability claim is governed by the Employee Retirement Income Security Act (ERISA), determining who has the final say, your employer or the insurance company, is a critical question. This distinction directly impacts how your claim is reviewed and what level of deference a court will give to a denial. The answer lies in identifying the official “plan administrator” and understanding the concept of “discretionary authority.”

Key factors that determine control over an ERISA claim include:

• The designated Plan Administrator in the policy documents.
• Whether discretionary authority has been granted.
• How that authority is delegated to another party, like an insurer.

The Role of the Plan Administrator

Under ERISA, every employee benefit plan must have a designated Plan Administrator. This is the person or entity responsible for managing the plan, communicating with participants, and making decisions on benefit claims. While many people assume the insurance company is in charge, ERISA defaults to the employer as the plan administrator unless the plan documents name another party.

This role comes with significant legal responsibilities, known as fiduciary duties. The administrator must act solely in the best interest of the plan participants. When an employer retains this role, they are ultimately responsible for the final decision on your claim, even if they use an insurance company to process and pay benefits.

Discretionary Authority: The Deciding Factor

“Discretionary authority” is a legal concept that gives the plan administrator the power to interpret the terms of the plan and make eligibility determinations. If the plan documents grant this authority, a court will only overturn a denial if the decision was “arbitrary and capricious”—a very high standard to meet.

So, who holds this power?

1. Employer as Administrator: If the employer is the plan administrator and the plan grants them discretionary authority, they hold the power to make the final call.
2. Delegation to Insurer: The employer can legally delegate this discretionary authority to the insurance company. This is a common practice. When this happens, the insurer effectively steps into the administrator’s shoes, and their decision is given the same high level of deference by the courts.

What Evidence Do Courts Consider?

To determine who truly controls the claim, a court will review several key documents. These sources of evidence are crucial in establishing the chain of command and authority.

Courts will look at:

• The Summary Plan Description (SPD): This is the main document provided to employees that outlines the plan’s terms. It should clearly name the plan administrator.
• The Official Plan Document: This is the master contract that governs the plan. It often contains the specific language granting or delegating discretionary authority.
• The Insurance Policy or Service Agreement: This contract between the employer and the insurer details the roles and responsibilities of each party. It may specify whether the insurer is just processing claims or has been given full authority to approve or deny them.

If these documents are silent or ambiguous about who holds discretionary authority, a court is more likely to review the claim decision without deference, making it easier to challenge a denial.

Your Success Is Our Priority

Understanding the power structure of your ERISA plan is fundamental to building a successful appeal. At Bartolic Law, we analyze these complex legal documents to identify who is accountable for your claim denial. We know how to challenge improper delegations of authority and hold the responsible party to the high standards required by law.

If your ERISA disability claim was denied, contact us today for a consultation. Let our legal insight provide the guidance you need to secure the resolution you deserve.