ERISA vs. Non-ERISA Claims

The Employee Retirement Income Security Act (ERISA) is a federal law that regulates employee benefit plans offered by employers. The intent of ERISA is to protect employees’ rights to receive employment welfare benefits. Because of this, Congress developed a streamlined, minimalistic litigation path to suing to obtain benefits under ERISA. Unfortunately, that streamlined path also resulted in insurance companies facing no penalties for wrongful denial of benefits. If an insurance company denies benefits governed by ERISA and is forced to pay them by a court, the insurance company simply has to pay the benefits it owed.

Not all employee benefit plans fall under ERISA’s jurisdiction. Some are considered non-ERISA plans and are governed by state law, which may enable you to seek punitive damages. As an employee, it’s important to understand the differences between these two types of plans and how they can affect your benefits. This page explains what an ERISA plan is, what a non-ERISA plan is, and when to consider contacting an attorney regarding violations related to your benefits.

What is an ERISA Plan?

An ERISA plan is an employee welfare or pension benefit plan that is offered by an employer and subject to the rules of ERISA. These plans can include retirement, health, and life insurance benefits, as well as disability coverage. ERISA plans are governed by federal law and must comply with certain regulations, such as providing participants with a summary plan description, a plan document, and annual reports. Under ERISA, if your insurance claim is denied, you are required to appeal the denial before bringing suit and have six months to do so. If your appeal is also denied, you can file litigation in federal court.

Under ERISA, the ability to obtain any sort of discovery is extremely limited, and the court is largely limited to looking at the evidence in your insurance claim file. This is one reason that it is so important to seek out an attorney before you file an insurance appeal – your lawyer can help make sure all the information to support you at trial is in the file through the appeal.

There is no jury in an ERISA case, only the judge, and the “trial” is usually a hearing with no witnesses. Under ERISA, a judge cannot order the insurance company to pay future benefits. The court can only order payment of benefits already owed and, if appropriate, reinstatement of your claim so long as you qualify for the benefits. The insurance company can terminate benefits again at any time. Also, under ERISA, the insurance company is not liable for damages related to emotional distress, consequential damages, or punitive damages. The most the insurance company will pay will be the insurance benefits it already owed and possibly attorney fees.

What is a Non-ERISA Plan?

A non-ERISA plan is a benefit plan that is not covered by the ERISA law. This includes benefits offered to government employees and church employees, as well as to employees of employers that offer self-funded plans. It also includes any insurance you obtain yourself, outside of your employment, including through a group plan offered by an entity such as a bank or a trade association. Non-ERISA plans can include life insurance, disability insurance, and long-term care insurance. Non-ERISA plans do not have to follow the rules of ERISA. For example, they may not be required to provide a summary plan description or annual reports. Instead, they are subject to the laws of your state.

There is not necessarily a need to appeal the denial before filing suit in non-ERISA claims, though there are often still benefits to doing so. If you are required to file a lawsuit, it is governed by state law. It will involve discovery, and both you and the insurer will need to provide the requested information and be deposed. It will also involve a jury trial with witnesses. Under state law, depending on the state, you may be able to seek additional damages from the insurer, such as punitive damages or damages for elder financial abuse. These questions are specific to the facts of the case and the state where you live, and the answers can be determined by a competent attorney.

Do I Need an Attorney If My Employer Has Violated ERISA?

If your employer has violated ERISA, you may be entitled to legal remedies, such as benefits or damages. ERISA is a complex law, and proving a violation can be difficult. For this reason, it’s advisable to hire an experienced attorney who can guide you through the process and advocate for your rights. An attorney can help you understand the legal requirements of ERISA, investigate your employer’s actions, and file a lawsuit if necessary. Additionally, an attorney can negotiate with your employer or the plan administrator to potentially resolve the issue without going to court.

Understanding the differences between ERISA and non-ERISA plans is crucial for employees who participate in employer-sponsored benefit plans. ERISA plans offer important protections and regulations, while non-ERISA plans may provide more flexibility and different rules. If your employer has violated ERISA, it’s essential to seek the guidance of an experienced attorney who can help you navigate the complicated legal landscape and fight for your benefits. Contact ​​Monahan Tucker Law, and we can help.