“Whenever I felt confused about any topic I first looked it up in the yellow book. Then I could go deeper based on what I read. Or I knew when to call it good.”
Employee Retirement Income Security Act
The Employee Retirement Income Security Act ("ERISA") is a federal law, passed in 1974, which sets minimum standards for voluntarily established group insurance and pension plans. The intent of the law was to prevent marketplace abuses. If you recieve health, disability, or life insurance through you employer, it is likely governed by ERISA. This means that the plan administrator must comply with federal regulations and if you have a claim dispute and it proceeds to litigation it must be in federal court. What this also means is that if you live in a state with strong consumer protections for insurance, your rights and remedies are limited by ERISA. It is difficut to recover attorneys fees in ERISA disputes and compensatory and punitive-type damages are not available.
Another result of this well-intentioned regulatory framework, is that insurers who administer ERISA plans have saved a tremendous amount of money in claims and litigation costs (see, e.g., this internal memorandum from a major insurer expousing the virtues of ERISA related to potential litigation cost-savings) by avoiding protections afforded under state law. These so-called "unintended consequences" have made ERISA claims challenging for policyholder lawyers and their clients, creating many headaches for consumers regarding denials, offsets, benefits, and other related issues. In 2016, noting the large percentage of ERISA-governed disability claims and "the economic incentive for insurance companies to deny otherwise valid claims and because plans are often able to secure a deferential standard of review in court," the U.S. Department of Labor adopted some claim handling reforms recommended by UP and others. Below you will find helpful information related to UP's ERISA advocacy work and practical guidance on handlng health, disability, and life insurance claims and disputes.