ERISA, the statute that governs lawsuits for benefits due under employer sponsored group health or disability plans, is generally protective of insurer rights. Until now, however, many practitioners believed there was a considerable advantage to be had in some cases if a plan participant could prove that she was entitled to so-called "de novo" court review. De novo review applies when the governing plan documents lack certain boilerplate language or the plan administrator did not follow reasonable claim procedures. Many believed in such cases the plan participant would be able to introduce new evidence in court, present live testimony, and perhaps even have a jury trial.

On the contrary, on April 15, 2005, the United States Court of Appeals for the First Circuit decided in Orndorf v. Paul Revere Life Ins. Co., that even in cases of de novo review, courts should normally not hear live testimony or see new evidence other than the administrative record upon which the benefit plan (usually an insurance company) decided to deny or discontinue the benefits in question. The moral of the story is that consumers, especially professionals who can afford it, should consider purchasing individual health or disability policies from insurers outside group health or disability plans. Disputes under these individual insurance contracts are governed by state law, which is much more favorable to the policy holder.

This Newsletter is designed to provide information of a general nature only and is not intended to replace or provide professional legal advice.