If you are around my age you probably remember cooling your heels in the pediatrician’s waiting room (this was before ERISA so we had real insurance in those days), passing the time reading Highlights magazine. Highlights featured Goofus and Gallant, two characters depicting basic moral dichotomies. Goofus broke the rules; Gallant obeyed. But they never told us who came out on top.
Now we know, at least in ERISAworld. Goofus in a landslide.
ERISA imposes rules on both claimants and insurers. Claimants, for example, in response to a denied claim, generally have to appeal the denial back to the insurer within 180 days (often called an “administrative appeal”). Insurers, on the other hand, are required by statute and regulation to, among other things: either approve or deny a claim within a fixed time period; either approve or deny an administrative appeal within another fixed time period; and, when they deny either a claim or an appeal, tell you all the reasons and all the policy provisions the denial is based on.
If you don’t follow the “administrative appeal” procedure you probably can’t even get in the door at court; your case is over before it begins. And “don’t follow the procedure” doesn’t just include not doing it at all, it includes doing it even one day late. If you get your appeal in on day number 181, chances are you are out of luck from the get-go. You’d better be Gallant.
The insurers, on the other hand, get to blow deadlines and violate the rules with virtually no consequence. If they blow their deadlines, they just deny the claim or appeal late, and it usually doesn’t make the slightest difference. They can deny your claim for one reason, and then in court when it turns out that reason is bogus, they can just make up another one that they never mentioned before (nowhere does it approach actual fairness, but this does vary somewhat depending on what part of the country – what federal Circuit – you happen to live in, as the way the rules are applied varies some from Circuit to Circuit). They get to be Goofus.
And what Highlights magazine never told us is that it pays to be Goofus.
At least in ERISAworld.