ERISA Briefly

ERISA lawyers are in a position to be the bearers of bad news as it relates to persons having ERISA claims. Here are some paragraphs from a recent article on ERISA submitted to the State Bar of Texas.
ERISA, Employee Retirement Income Security Act of 1974. This is a federal program originally designed to be of benefit to employees who work in the private sector in this country. Although the primary focus is the protection of pension benefits, the Act’s application is broad, covering health, disability, and life insurance benefits offered to private-sector employees. Health, disability and life insurance benefits are collectively referred to as welfare benefits within ERISA, and the Act provides that those who administer welfare benefit plans are subject to some of the same fiduciary responsibilities as administrators of pension plans. The Act included the creation of pension insurance administered by the Pension Benefit Guaranty Corporation, providing employees a government guaranty that upon retirement they would receive at least some, if not all, of their vested pension benefits if their employer could not meet its pension obligations.
Congress explained its purpose in enacting ERISA within the first section of the Act:
It is hereby declared to be the policy of this chapter to protect interstate commerce and the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation
for fiduciaries of employee benefit plans, and by providing appropriate remedies,
sanctions, and ready access to the Federal Courts.

In the forty years since its enactment, ERISA has protected employees’ pension benefits and provided the assurance, through the Act’s creation of the Pension Benefit Guaranty
Corporation and a guaranty fund, that an employee will receive at least some of the pension benefits that were promised him or her upon retirement. However, claimants
with ERISA benefit claims, i.e., claimants seeking pension, health, disability, or life insurance benefits, do whatever they can to escape the Act that was created for their benefit. The preemptive reach of ERISA is broad, however, so that an attempt to avoid ERISA is a Sisyphean struggle. Employees try to escape ERISA’s long reach because the judicial decisions that have been made since ERISA’s enactment hold that an abuse of discretion standard of review will be used by the federal court to review their claim, i.e., the insurer or plan administrator of a self-insured plan who decides the review of their claim will be given the same deference given to administrative law judges. The administrator’s decision will only be overturned if there is not substantial evidence
to support it or, if the claim turns upon plan interpretation, the administrator’s interpretation of the plan is arbitrary. Damages will be limited to benefits that should have been paid, no matter the conduct of the plan administrator or the losses suffered by the claimant as a result of the wrongful denial of benefits. The claimant will not be given the chance to have a jury decide the issue, nor will she have the right to cross-examine experts or testify at the courthouse. Thus far, ERISA has not come close to providing the protections that Congress promised forty years ago.

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