ERISA Claims Lawsuit: When Is It Necessary?
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ERISA claims are often settled through the administrative process. However, additional action, such as a lawsuit, is sometimes necessary when valid benefits are denied or when plan administrators breach their fiduciary duties to plan participants.
General causes of action
For the most part, there are only two kinds of claims – a benefit claim and a breach of fiduciary duty claim, according to Ron Dean, a California attorney who has been engaged in employee benefits litigation primarily on behalf of participants for over 30 years. He explained each:
Benefit claims. Dean provided the following information on benefit claims:
- Health. With health care becoming ever more expensive, insurance policies become ever more restrictive – with language even lawyers have trouble understanding. Unfortunately, the courts again have not been very sympathetic to the patient’s point of view and again, usually put the judicial thumb on the insurance company’s side of the scales of justice. Despite the media coverage of a series of sad and sympathetic cases where medical coverage was inappropriately denied, there doesn’t seem to be much change in the immediate future.
- Disability. Proving that you can’t work given a particular condition is not a very easy task, especially to an insurance company that hopes to save money by paying fewer claims. Not only do you have to show that you have a serious medical condition, but you have to show that that condition prevents you from working. Most medical conditions as such that some people with them are able to work and others with the same condition cannot. You have to be able to show that you belong in the second category.
- Life. Unfortunately, life insurance is also subject to the inappropriate thumb on the scales which makes them more difficult to win. In addition, we see cases involving accidental death, appropriate beneficiary designations, and whether death was excluded as “self-inflicted.”
- COBRA (Consolidated Omnibus Budget Reconciliation Act). When, for certain reasons, you lose coverage under your medical plan you’re entitled to continue that coverage for a period of time but have to pay the premiums yourself. It’s important that you make sure the plan or insurance company gets your payment timely, and that they get your election notice timely. Considering the amounts of money involved, they’re not likely to be forgiving about untimely submissions.
- Vacation. Vacation benefits generally require a lawyer’s counsel if the employer is claiming coverage by ERISA. Usually, that means the employer is trying to limit your benefits.
Fiduciary breach claims. Fiduciary breach claims come up when the people running the plan make imprudent investments, fail to follow instructions, make misrepresentations to plan participants or engage in unlawful acts, according to Dean. He said, “Sometimes it harms the whole plan in which case one provision of ERISA applies with its own set of claims and remedies. Sometimes it just hurts one person when an entirely different section of ERISA applies with a different set of claims and remedies.”
ERISA limits damages
One of the major drawbacks of ERISA is that it limits damages. Dean explained, “In a benefits case, you are limited to claiming the benefits themselves, interest on past due benefits, and in some cases and some courts, you can get part of the attorney fees it cost you to get there. You can get fees only if you win (with few exceptions) and only for the time spent in litigation, not for the time spent on your administrative remedies.”
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.