When injured professionals are denied disability benefits, the reason for the denial is commonly unimportant. In these situations, they usually want the benefits they are entitled to. This is completely understandable from an individual's standpoint, and the feeling that an insurer should be held liable for denying benefits is understandable as well. However, if a lawsuit is initiated under ERISA, it is critical to understand the difference between legal remedies and equitable remedies.
Section 502(a)(1) allowed affected plaintiffs to bring lawsuits to seek legal remedies from an insurer based on the breach of the insurance contract between the insurer and the individual. Essentially, a legal remedy is realized in the form of compensatory damages, also known as damages (i.e. monetary payments) that would put the plaintiff back where he or she would have been if not for the insurer's breach.
Additionally, Section 502(a)(3) allows plaintiffs to seek equitable relief. Equitable remedies are not necessarily based on monetary damages that have been realized. Rather, they are based on the power to enjoin a practice that specifically violates ERISA or any provision of a plan subject to ERISA. The provision of 502(a)(3) that allows "appropriate equitable relief" has been subject to a great deal of scrutiny and challenges. In one corner, insurers and plan administrators claim that equitable relief excludes the award of money damages. Meanwhile, plaintiffs believe that monetary damages may be pursued under 502(a)(3) in limited circumstances, such as restitution based on plan violations.
So when first meeting with a disability attorney, it is helpful to know the difference between legal remedies and equitable remedies. If you have additional questions, we invite you to contact us.