Frequently Asked Questions About ERISA:
Q: What is ERISA and what benefits does it cover?
A: ERISA stands for the Employee Retirement Income Security Act. This set of laws were passed by the U.S. Congress in 1974 and regulates employee benefits for most employees in the United States (except for people that work for the government or a church). All entity types that wish to expense their contributions must comply with ERISA.
Nearly any type of group or employer sponsored benefit is covered by ERISA,
including but not limited to:
- Pensions and 401K Plans
- Health Insurance (including continuation coverage under “COBRA”)
- Long Term Disability (“LTD”) Insurance
- Life Insurance and Accidental Death & Dismemberment Insurance
Q: Are there any employers that are not subject to ERISA?
A: Yes, government entities and churches are not subject to ERISA. There are other very limited exceptions, but you will need to speak to an attorney that handles ERISA cases to discuss the specific facts of your case if you feel it may not be covered under ERISA. Usually, if you worked for a private employer and you participate in one of that employer’s insurance or retirement plans, it will be subject to ERISA.
Q:Does ERISA apply to individual insurance policies?
A:No. If you bought insurance through a private insurance agent and pay for the premiums yourself (i.e. by mailing your checks to the insurance company), it probably is not covered by ERISA.
Q: Does ERISA apply in insurance bought through non-work related groups?
A: Typically, no. If you bought insurance for yourself through a group like AAA, AARP, a professional organization, etc., it usually will not be covered by ERISA. However, if your employer is somehow involved in obtaining or paying for the coverage, it may be covered..
Q: What is the "Standard of Review", and how does it affect my claim?
A:
- The method a court uses to decide a case is called the “standard of review.” In ERISA cases, there are three (3) different types of review that a court may use, depending on key language which may be found in your plan document (that is, your benefit booklet or group insurance policy). They are: 1) de novo, 2) abuse of discretion (also called arbitrary and capricious), and 3) heightened abuse of discretion.
- The key to which standard may be applied in pArticular case is whether the administrator has been granted “discretionary authority to interpret the plan or decide claims.” In a case decided in 1989 called Firestone v. Bruch, the U.S. Supreme Court stated that ERISA claims would be reviewed using a de novo standard unless the plan documents state that, the administrator has this type of discretion.
Q: So, what are these different types of review?
A: De Novo: When a court takes a fresh look at a case, and pays no attention to what has occurred before the lawsuit was filed, it is called de novo or plenary review. This is what you might see on television in a trial, where witnesses are brought into court and the Judge or Jury makes a decision based on the evidence that is introduced at trial.
Abuse of Discretion and Heightened Abuse of Discretion: If the language of the plan gives the administrator discretion, and then a court must use a form of abuse of discretion review and the administrator’s decision will only be reversed if they were both wrong and that there is no reasonable basis for their decision. This gives the administrator’s decision a lot of deference, and it can make it very difficult (but not impossible if handled properly) for a person whose benefits have been denied to win. If the plan is insured, the court may apply the so called heightened abuse of discretion, which gives the administrator less deference because it has a conflict of interest (i.e. it benefits financially if it denies claims).
A key aspect of abuse of discretion review relates to what evidence the court considers. In these cases, the judge will usually not allow any witnesses. Instead, the judge will only review the claim file, which was created before the lawsuit was filed, and will make a decision based solely on those documents. In these types of cases, it is very important to have an attorney that is familiar with ERISA law to handle the pre-suit claim and appeal, as the contents of the claim file can make or break your case.
This is a very complex area of ERISA law, and it often takes lawyers a very long time to learn it. We understand if this is not clear, and more importantly, we understand that it is not necessarily fair. We would be happy to answer any questions you may have about the standard of review