Someone Else Learns About ERISA the Hard Way

Seen on the AP wire:

But Spherion Corp., the temporary staffing company where Amschwand worked, told Amschwand-Bellinger she would not receive any of the $426,000 in benefits she believed she was due. When she went to court, Spherion succeeded in getting her lawsuit thrown out. The Supreme Court on June 27 refused to review the case.

Amschwand-Bellinger received a refund of the few thousand dollars in insurance premiums she and her husband dutifully had paid. The total, she said, would not cover the costs of his funeral.

The story has played out often under the federal Employee Retirement Income Security Act. Designed to protect employee benefits, the law has been used by employers as a shield against suits.

Federal appeals courts, interpreting Supreme Court decisions dating to 1993, consistently have said companies that offer health, life and retirement benefits under ERISA cannot be sued for large amounts of money, or damages. Instead, they can be sued only for typically smaller sums such as Amschwand’s insurance premiums.

Several federal judges have bemoaned the unfairness even as they have felt constrained to rule in favor of employers.

"The facts … scream out for a remedy beyond the simple return of premiums," Judge Fortunato Benavides of the New Orleans-based 5th U.S. Circuit Court of Appeals said in the Amschwand case. "Regrettably, under existing law it is not available."

I started this blog as a result of a gripe I have with the health plan I have at work.  My employer’s been great through my family’s difficulties, but the runaround we’ve received from Aetna, acting as a TPA, has sucked.

They can get away with it, thanks to their ability to hide behind ERISA – they have no reason to behave.

The story quoted above provides a different example the problem with ERISA – an employer is able to hide behind the protections in the law; there is no incentive to treat employees fairly.

It’s a shame that folks don’t learn about the problems with ERISA usually until it’s too late.  It’s such a nasty side of the employee benefits world which never has the purifying light of public sunshine directed its way.

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