Suing your health plan

Suing a health plan is possible after a final denial, but it is a legal step with strict rules, and the rules depend on what kind of plan you have. This page explains what federal law says so you can ask a lawyer better questions. It is not legal advice. Talk to a lawyer as soon as you have a final denial, because your plan documents may set a shorter time limit than you expect.

What this means

If your coverage is a private employer plan. Most job-based plans are covered by the Employee Retirement Income Security Act (ERISA), a federal law about employee benefit plans. ERISA lets a participant or beneficiary sue “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits”. It also lets a court award “appropriate equitable relief” for violations of ERISA or the plan. A benefit suit may be filed in federal or state court, and the court may award reasonable attorney’s fees and costs to either side.

That last point matters. You could be ordered to pay the other side’s costs in some cases, though the law lets a court decide.

How the court looks at the denial. A court reviews an ERISA benefit denial fresh, from the beginning, unless the plan gives the administrator discretionary authority to decide eligibility or interpret the plan. Where it does, the court applies a more deferential standard and treats any conflict of interest as a factor. This comes from the Supreme Court’s decisions in Firestone Tire & Rubber Co. v. Bruch and Metropolitan Life Insurance Co. v. Glenn. Whether the plan gives that discretion is written in the plan document, which is why you need it. We have not confirmed whether your state restricts such clauses in insured policies.

When a plan that is not grandfathered fails to strictly follow the appeal rules and you sue, the claim is treated as denied “without the exercise of discretion”, which supports fresh review. See when the plan misses its deadline.

What ERISA suits do not usually give. For ERISA plans, state-law lawsuits seeking damages for a wrongful benefit denial are generally preempted, which means federal law displaces them. The remedy is the suit for the benefit itself, plus possible equitable relief and fees. Online claims that you can sue an employer’s insurer for bad faith and punitive damages are an oversimplification for ERISA plans.

If your coverage is not under ERISA. ERISA does not cover government plans (federal, state, local, school district), church plans that have not chosen ERISA coverage, or individually bought policies. For these, ERISA’s limits on remedies do not apply, and state-law claims such as breach of contract or insurance bad faith may be available. Which claims exist depends on each state’s law, and we have not checked them. See government and church employer plans and the page on marketplace and individual appeals.

What to do

1. Get a lawyer’s view early. Do not wait for the final denial if the case is large or the care is serious. See legal aid, paying for help and where to get free help.
2. Get the plan documents. Ask the plan administrator in writing for the latest summary plan description and the plan instruments. These must be furnished on written request. See how to get plan documents and the plan documents request letter.
3. Find any time limit for suing. ERISA sets no deadline for benefit suits, and a plan document may set its own, even one that starts running before the internal appeal ends, if the period is reasonable. Highlight the sentence and its date in your copy.
4. Finish the internal appeals unless an exception applies. Courts generally require it, subject to the exceptions in the rules. A voluntary extra appeal level pauses any time limit on a lawsuit while it is pending. See second-level internal appeals.
5. Weigh external review with your lawyer. For an insured employer plan, a state external review procedure is not part of the plan’s required internal review, so you need not use it before suing. It can still be a free route, and its decision binds the plan “except to the extent other remedies are available”. See what to expect from an external review decision.
6. Keep everything. Your denial letters, appeals, the claim file, records, emails and a call log. A court decides on the record.
7. Ask the lawyer to explain cost, risk and alternatives. Include what happens if you lose.

What the plan may say, and what to say back

“The time to sue has passed under our plan terms.” Ask which document and which date. Pass the answer to a lawyer straight away. A plan document may set a reasonable limit, so the written text is what matters.

“You gave up your right to sue.” Ask the plan to point to the sentence in writing. Consider having a lawyer read any agreement about your claim before you sign it.

The rule

A participant or beneficiary in an ERISA plan may bring a civil action “to recover benefits due to him under the terms of his plan”. ERISA sets no deadline, and a plan document may set a reasonable one, even one that begins before the internal appeal ends. See ERISA section 502 and Heimeshoff v. Hartford Life & Accident Insurance Co..

Watch for

• Plan documents can shorten your time. Ask for them now and have a lawyer read the time limit.
• Costs run both ways. A court may award attorney’s fees to either side.
• Do not rely on this page for your state. Court rules and state law vary and change.
• Other remedies may be faster. External review is free under the federal processes, and its decision binds the plan. A complaint to a regulator costs nothing.

What next

• After a final denial: every option left: the full list, including the bill.
• Legal aid: where to look for free legal help.
• How to get plan documents: the first thing a lawyer will ask for.