5/27/2004, Law is called stacked deck for insurers


Susan Ackerman was vice president of a financial services company in San Rafael. She ran 30 to 40 miles a week on the Mount Tamalpais trails. Once her daughter was grown, Ackerman’s work became her life. But in the mid-1990s, her body began to deteriorate. The diagnosis was post-polio syndrome. The polio she had as a child had damaged nerves that were now giving out, cutting off energy to her muscles.

She could no longer run. The fatigue was so oppressive at times she had to pull over on the highway for 10-minute naps just to make it home at night. She cut back to four days a week at work. Then three. Her speech slowed. Her left arm eventually became useless. Finally, in 2000, she couldn’t work any longer.

But her insurance company rejected her claim for long-term disability benefits, and she made a dismaying discovery — one that ought to be stenciled in bold letters across the policies of all 130 million of us who have health and disability coverage through our employers. It is a clause in a well-known 30-year-old law — the Employee Retirement Income Security Act, or ERISA…

If an insurance company is found to have improperly denied a claim, it is required to pay only what the claim would have been in the first place, plus attorneys fees, in some cases. The insurers are not liable for damages caused by their decisions. In other words, ERISA allows insurers that provide insurance through employers to reject claims with virtual immunity…

Ackerman said the insurance company sent her to physical therapists hired and paid for by the insurance company. After four hours of testing, the therapists confirmed that she was too disabled to work. Unum dismissed the report as irrelevant. It rejected Ackerman’s appeal.

“At the time she left her employment, she was not under a doctor’s care for her claim of disability,” Unum spokesman Jim Sabourin said from the company’s Tennessee headquarters. “We didn’t feel the evidence supported her claim.”

“If there are no consequences for denying a claim, what incentive do insurance companies have for treating you fairly?” Levinson said. “The deck is completely stacked in favor of the insurance companies.”

A U.S. district judge in Massachusetts, William G. Young, summed up his frustration in having to dismiss a wife’s suit against Travelers Insurance a few years ago because ERISA prohibited any kind of legal or financial redress. Travelers twice denied 30-day alcohol rehab stays for the woman’s husband, whose employee-benefits policy expressly provided for it. The man’s addictions soon led to his death.

“It is … deeply troubling,” Young wrote in his decision, “that, in the health insurance context, ERISA has evolved into a shield of immunity which thwarts legitimate claims of the very people it was designed to protect.

“What went wrong?”

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