ERISA Claims: Why Are They So Complicated?

ERISA is a simple acronym for the Employment Retirement Act of 1974, but that’s probably the only simple thing about it. The act was passed to protect employee benefits, but it also opened loopholes for insurance companies to act against employees’ best interests.

How Insurance Companies Wrong Employees

Although the law was meant to protect employees’ rights when filing insurance claims, ERISA protects insurance company wrongdoing in several ways.

Traditionally, if an insurance company refuses to pay a claim, the insured party can file a claim in state court for breach of contract. The insured has the right to discovery to find out what information the insurance company used to deny their insurance claim.

The claimant gets to put on a court case to prove the case to the jury. The claimant’s attorney can cross-examine witnesses to find out what they knew and didn’t know when denying the claim. The jury is often sympathetic and finds in favor of the claimant. The jury can assess bad-faith penalties against the insurance company in addition to making the company pay the claim.

Filing the same case under ERISA is often a bureaucratic nightmare. You must first

file an appeal to the insurance company’s decision, which results in the

insurance company reviewing its own decision. This takes between 6 and 9

months. During this time, the claimant is receiving no benefits, which is a

harsh situation for most people applying for disability benefits.

The claimant can’t actually file suit until the administrative appeal is completed.

There is no discovery or jury, and the matter is brought before a federal

judge. The judge makes the decision based solely on paperwork, which the

insurance company’s legal team makes sure is in their favor.

Even when the judge ruled for the claimant, there is no option for awarding bad-faith payments if the judge feels the insurance company acted in bad faith.

Determining Whether ERISA Applies to Your Case

ERISA governs most health, life, and disability insurance plans provided by

employers, but there are exceptions that include government employers, school

districts, churches, and church-owned facilities like hospitals.

Congress specifically excluded these employers when writing the law, so there’s no recourse for claims based on ERISA.

Claims for Medicare, Medicaid, and Other Government Assistance

Unfortunately, you can’t file ERISA claims for Medicare or Medicaid or on behalf of federal employees under the auspices of the Federal Employees Health Benefits Program. According to, no federal, state, or local government programs qualify for ERISA claims.

When it Makes Sense to File an ERISA Claim

ERISA claims have no statute of limitations, so it makes sense to file under ERISA if

the Statute of Limitations for your case has expired. It is your only chance

not to have your case be adjudicated in state court. Filing an administrative

appeal might be in your interest if you have new and compelling evidence in

support of your claim.

Consulting an Experienced Attorney

Your first step is to consult an attorney to see whether your case qualifies for

making an ERISA claim. The Underwood Law Office has experience in handling these types of cases, which can be complicated. If you work for one of the employers exempt from ERISA claims, you can seek legal redress under state laws that include breach of contract and bad-faith laws.

Regardless of the employer, your case might fare better by taking the insurance company to state court. Getting expert advice is the first step when considering whether to file a claim under ERISA or take your chances in court.

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