The ERISA Beast
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By Scott B. Elkind, Esq.
In 1974, the United States Congress in its infinite wisdom passed the Employee Retirement Income Security Act (ERISA). This law was regaled as a simple, comprehensive, uniform application of law for employee welfare benefits (health, life, disability, pension) across the United States. ERISA was purported to be a means to reduce litigation based on varying state employee benefit laws and was touted to be a way to reduce premiums while protecting beneficiaries. The Congress could not be more wrong.
Why should this concern you? Most people have never heard of ERISA despite the fact that it affects nearly all employees in the private sector. If you take the time to actually read your company’s health, disability, or life insurance policy you will see it is covered by ERISA. Same goes for your private pension or 401K plan.
ERISA has become an all-encompassing complicated regulatory scheme which has only served to benefit administrators and insurers of employee welfare plan while depriving beneficiaries of their benefits. ERISA was purposefully designed to preempt state-based laws which included many consumer protection provisions. In doing so, people making benefit claims were subjected to a federal regulatory scheme which usually gives presumptive weight to claim decisions, requiring a beneficiary to prove a claim administrator was “arbitrary and capricious” in denying a claim. Of course, you are typically dealing with a claim administrator for the same insurer or company which is paying benefits. There is no greater conflict of interest than being denied benefits directly by a claim administrator for the entity charged with the responsibility of paying the benefits. This is only made worse by the fact that there are no compensatory or punitive damages available. Therefore, even if you win your claim, you just get your benefits. There is no penalty to the administrator for wrongfully withholding the benefits.
Can it get any worse. Sure. You do not get a jury trial and the case is decided solely on the claim file which is developed and maintained by the claim administrator. Welcome to the infamous ERISA “stacked decked” utilized to defeat employee claims by the thousands. And, to add insult to injury, approval by the Social Security Administration under another set of strict federal laws, does not compel a findings of disability under the ERISA administrative scheme. ERISA has become so notorious that a court opinion actually called it “Everything Ridiculous Imagined Since Adam1” I actually prefer another renaming of the Act: “Employee Ripoff and Insurer Scam Act.”
Given the complicated regulatory scheme, voluminous case law, unfavorable standard of review, lack of availability of compensatory or punitive damages, and no jury trial involved in litigating ERISA claims, finding an attorney who represents individuals against the empowered plans is extremely difficult. This is, of course, if the poor suffering benefit claimant chooses to get one.
Unbeknownst to a person claiming benefits, legal help, although possibly difficult to find, is available. Instead, the plan administrators tell the claimants that they do not need to hire an attorney and can appeal the claim by themselves. What the claimant’s do not understand is that at this point they are serving as their own attorneys. And, as the adage goes: “A person who represents himself has a fool for a client.” The administrators are required to decide the appeal. Of course, this is made easier when the typical claimant sends in a couple medical reports which will be reviewed by an in-house physician without benefit examination and deny the claim. Remember, you will need to prove the denial is arbitrary and capricious and many courts have held that perfunctory medical reviews as such are sufficient to deny the claim.
Since few people can afford private coverage for their health, disability, life, and pension needs, there is no other game in town. So, a word to the wise should be sufficient: Do not gamble with your benefits in a system that almost no one understands. Make sure you get legal advice from an experienced practitioner before you act as your actions may create adverse finality in your claim.
Scott B. Elkind is a Principal at Elkind & Shea, the Disability Benefits Law Firm. His practice focuses on assisting clients in receiving benefits and includes many ERISA cases. He is a frequent lecturer on ERISA matters.
1. Florence Nightingale Nursing Service v. Blue Cross & Blue Shield, 832 F.Supp. 1456, 1457 (N.D.Al. 1993)
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