Why ERISA May Not Protect Your Rights
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UPDATED: Aug 5, 2019
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ERISA, the Employee Retirement Income Security Act, was created to protect employee benefits. However, it sometimes protects employers more than employees. But, why?
ERISA was enacted in 1974 in order to protect employee benefits. Unfortunately, employers frequently use it to their benefit in denying claims and courts are often limited in their abilities to provide adequate relief. That’s because many courts in the past have ruled that employees cannot sue employers for large sums of money under ERISA. This has created precedent in the legal system – and short of a Supreme Court ruling or an act of Congress – the situation is likely to remain unchanged. Unfortunately for employees and their beneficiaries, neither has acted to correct the problem.
Case in point
A recent article in the Insurance Journal, www.insurancejournal.com, reported on one family who fought an uphill battle to collect valid ERISA benefits – and lost. Thirty year old Thomas Amschwand was diagnosed with a rare cancer. Knowing that he would not survive, he made sure that his wife would be taken care of after his death. However, after he passed, his employer refused to pay the benefits because it had changed insurance carriers and the new carrier required an employee to work one (and that is not a misprint) day in order to receive benefits. The problem was that the company never told him about the requirement.
Although his widow sued the employer for benefits of over $425,000, it refused to pay. Various courts, following older legal precedent, also refused to force the company to pay. In fact, even the U.S. Supreme Court – the highest court in the nation – refused to hear the case. According to the article, many others have experienced the same treatment and believe that ERISA does very little to protect those who the Act was supposed to protect.
Employers have thumbs on scaled of justice
Ron Dean, a California attorney who has been engaged in employee benefits litigation primarily on behalf of participants for over 30 years, says that the scales of justice have slowly but surely tipped in favor of employers. He explained some of the changes that have been made to ERISA over the years that are less than employee-friendly:
Courts did away with jury trials in ERISA cases and let the judge decide the case. Since many judges over the years have been appointed from a pool of corporate interests, this is not a good thing. It was also decided that all these cases should be in federal court instead of state court, but few lawyers who represent employees instead of employers are familiar with federal court.
In addition, they did away with “trials” and now most cases are decided just on the evidence that was given to the insurance company during the claims process, even before a lawsuit was filed. It was also decided that efficiency was more important than fairness, so instead of getting a level playing field in court, you would only win your case if you showed the denial of your benefits was not just wrong or unfair, but you had to show it was ridiculously wrong or ridiculously unfair.
If you’ve been denied valid benefits that are subject to ERISA, contact an attorney whose practice focuses in this area of the law. Consultations are free, without obligation and are strictly confidential. To contact a qualified attorney to discuss your situation, please click here.