Who thinks it’s a good idea to write a Christmas-themed ERISA blog post? Why we do, that’s Who!

In our practice, we deal with all manner and sort of insurance companies while advocating for our clients’ benefit entitlements under ERISA-governed group long-term disability (LTD) plans and private, individual disability income (IDI) plans. Alas, it’s an ongoing battle with the ERISA Grinch. And it’s not always a pleasant experience, to be sure.

They slither and slink, with a smile most unpleasant.
They deny your benefits and snatch your Christmas pheasant.

And believe us when we say that cutting off claims is good business these days. Like plump roast beast for the Christmas feast good business. Here are the recent gross annual revenues of a dozen or so of the LTD insurance carriers we see regularly.* And yeah, those B’s stand for BILLIONS.

  • MetLife 62.3B
  • Aetna 60.5B
  • Prudential 59.7B
  • Cigna 41.6B
  • Liberty Mutual 39.4B
  • Sun Life 28.6B
  • Mass Mutual 29.6B
  • Northwestern 28.2B
  • Hartford 17B
  • Lincoln 13.8B
  • Unum 11.3B
  • Mutual of Omaha 8.7B

* We do not aver to the completeness or accuracy of these numbers, as they were largely gathered from self-serving insurance industry press releases and, well, Wikipedia. So, I guess, take them only as illustrative.

Nevertheless, despite such a clearly booming time for the industry, the ERISA Grinch continues to strive to increase their advantage over ERISA claimants. For instance, in 2015, the Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) published proposed rule changes to the claim regulations applicable to ERISA-governed LTD plans that would moderately improve the bare protections for ERISA disability claimants.After receiving dozens of comments from ERISA practitioners, including from your favorite ERISA practitioners (us, of course), the EBSA issued its final rule in late 2016 implementing modest, but nevertheless important, new due process protections for disability claimants (check out our recent three-part article about those very changes on the NC Bar’s Labor & Employment Law blog page here: Part One; Part Two; Part Three). But the ERISA Grinch was not happy and needed an idea. An awful idea. A wonderful awful, sneering idea.

So they puzzled and puzzled til their puzzler was sore.
They have it all, but alas, now they want even more?

Taking advantage of an Executive Order issued by a certain new, Lorax-hued president, the ERISA Grinch wrote to the EBSA and protested that these rule changes would be financially ruinous for the industry and that they needed more time to provide data to show the EBSA that these rule changes simply should not be implemented. All this after a lengthy comment period had come and gone in which the ERISA Grinch could have provided any such arguments (as we did), but did not. So, it’s hard to say why, with such healthy revenues and bottom-lines, the industry would again so aggressively look to further increase their profit margins by fighting against minimal due process for disabled Americans, the very people whose premiums pay for ERISA Grinch skyscrapers and blimps, but that’s where we were.

I think the most likely reason of all,
Is that their actuarial calculations are two points too small.

And more time and another bite at the apple is exactly what the ERISA Grinch got when the EBSA pushed back the implementation date of the new regs by several months and reopened the comment period, providing them with an opportunity to compile and produce the promised compelling information. But alas, the ERISA Grinch was better at sewing together faux Santy suits and teaching a small dog to wear antlers and pull a massive sleigh (that’s clearly animal abuse, right?), as the additional information they compiled wasn’t so interesting. It certainly didn’t provide any support for the laughable premise that providing disabled Americans with some basic level of due process could bankrupt the disability insurance industry.

Not a bloof, a spoof, a klingler, or a muzzle,
Not a bazooka, a shooka, a gnaffler, or a spuzzle.

Essentially, the ERISA Grinch’s “data” showed estimated costs of only about $19.2 million to start-up and an additional $31.6 million in annual litigation costs attributable to the regulatory changes. Mind you, those cost estimates are across the whole industry, not per insurer. Lest us not forget all those B’s listed in the chart above. And that’s just twelve companies. It doesn’t include LINA, Principal, the Standard, Guardian, Reliance Standard, USAble, or the rest of the 290 industry members that signed on to that letter to the EBSA. It simply wasn’t enough, however, as despite the ERISA Grinch’s worst efforts to convince the EBSA to undo all that went into implementing the Final Rule, it finally went into effect on April 1, 2018.

Yahoo yorays, bahoo borays, frabble dabble, yipple yude,
Yahoo yorays, bahoo borays, finally a win for the little dude.

So, this has all been leading up to a tidy, happy dappy ending that’s all wrapped up in a festive bow, right? It is Christmas after all. Redemption always comes at the end of Christmas tales. Clark Griswold’s boss learns the importance of being kind to the people upon whom he relies, Buddy the Elf’s dad finally accepts him and finds his Christmas spirit, and yeah, you probably will shoot your eye out fool. Those principles apply here too, right? Claimants are now better protected, the industry is healthier and more viable not just for the insurance titans, but also for the regular people ERISA was designed to protect, and the ERISA Grinch’s heart grew three sizes that day, right? Wrong.

Yahoo yorays, bahoo borays, frabble dabble, yipple yude,
Yahoo yorays, bahoo borays, ERISA claimants are still screwed.

Indeed, a new article out just this month in Law 360 discusses new data compiled by Lex Machina Inc. to the effect that “workers who file [ERISA] lawsuits have been scoring money damages less and less frequently since 2010 and that overall ERISA damages dipped by nearly 40 percent to $392 million in 2018 from $647 million the year before.” In fact, a chart accompanying the article shows an annual decrease in each and every one of those nine years (2010-18). The article goes on to state that “[l]ess than 700 plaintiffs scored damages in ERISA suits between Jan. 1 and Nov. 15 of this year.” Auch.

Grim, right? Not really so much a town full of cuddly Whos down in Whoville holding hands and full-breathed singing around the Christmas tree as it is catching that deadbeat Earl in a Cheeto-stained, whiskey-soaked Santa beard making out with your mom after last call at the four junction econo budget motor inn’s hard times lounge and smokery just off Route94 on Christmas Eve.

What can we say? If you’re called the Grinch, you just seem to have a lot of lives. You star in three movies over the course of a half century (clearly, Jim Carrey’s version was best, that much is indisputable, and you can stop reading this blog right now if you disagree). Likewise, if you’re the ERISA Grinch, you bounce back and figure out a way to somehow take even more away from ERISA claimants than ever before – even in the face of new protections you argued would somehow cripple the industry.

So, what’s left? I guess what we can take from all this tomfoolery is that sometimes things suck, but you have to keep on keeping on and find a way to somehow level the playing field. Otherwise the ERISA Grinch wins.

Yahoo yorays, bahoo borays, frabble dabble, yipple yude,
Yahoo yorays, bahoo borays, give us a call and we’ll see what we can do.

Wishing you a joyous holiday season and coming year from all of us at Essex Richards.

Disclaimer: We are ERISA attorneys, but we are not your attorneys and this article does not create an attorney-client relationship. The information in this blog post is provided for general information purposes only, and may not reflect the current law in your jurisdiction. No information in this blog post should be construed or seen as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter.