What Are the Main Duties Employers Owe Their Employees Under an ERISA Benefits Plan?
Under ERISA, an employer must fulfill certain obligations they owe to their employees. First, any individual who manages plan assets, such as the assets of a retirement plan, must satisfy all of the fiduciary duties they owe to participants who fall under the plan. Moreover, employers must provide plan participants with all of the necessary financial information about their plan—including information about how the plan receives funding. Employers must also supply this information to plan participants and beneficiaries regularly. Finally, employers must have various procedures and protocols in place so employees can file a grievance or appeal. As such, ERISA allows plan beneficiaries and other aggrieved individuals to access the federal court system in some situations. An ERISA violation occurs when an employer breaches one of these three primary obligations under the ERISA statute. It can be difficult for employees to recognize when an employer has violated their rights under ERISA. If you have concerns about how your employer or an insurance company is handling your benefits, never hesitate to discuss a possible violation of your rights with an ERISA attorney.What Are the Potential Penalties for an ERISA Violation?
While some employers violate various provisions of the ERISA statute by accident, others willfully violate the statute, causing employees and policy beneficiaries to suffer severe consequences. When an employer violates ERISA, they may have to pay criminal or civil penalties, depending on the circumstances. The amount the employer will have to pay is very case-specific. However, the fines may range anywhere from several hundred dollars to several thousand dollars per day. The amount of the fine will typically depend on the type and severity of ERISA violation the employer commits. Violations can be more severe when they affect many employees instead of just one, or if they involve ongoing conduct instead of a single instance. In most situations, the criminal penalties an employer might receive for an ERISA violation are significantly higher. In some instances, those penalties may even include a certain amount of jail time. Criminal charges and penalties are prevalent in cases where an employer knowingly and intentionally violates specific provisions of the federal ERISA statute.What Are the Most Common ERISA Violations Employers Commit?
There are several ways an employer may violate the federal ERISA statute. First, the employer may violate the statute itself, or in the alternative, they may not follow the various provisions of an employee benefit plan.
One common violation occurs when an employer denies benefits to a current or a former company employee. For example, the employer might unlawfully withhold certain benefits from the individual or provide them fewer benefits than they are entitled to recover under a group plan. Next, an employer might violate ERISA by failing to fulfill or maintain the various plan terms. Specifically, an employer may not reduce the multiple benefits they initially promised to pay an employee. They must ensure the plan has sufficient funding at all times. Next, employers violate ERISA when they stop health insurance coverage too early. According to the Consolidated Omnibus Budget Reconciliation Act, or COBRA, an employer must provide additional health insurance coverage even after an employee leaves the company and will otherwise lose their health insurance benefits under an employer-sponsored plan. According to the COBRA statute, employees can continue receiving various group health insurance benefits for a specified time after leaving their company. If an employer does not provide this type of coverage to an employee who is eligible to receive it, then the company may violate the ERISA statute. An employer may also commit a violation when they do not provide mental health insurance coverage if the group benefits plan provides for those benefits. The same is valid for health plan coverage pertaining to substance abuse. When an employer offers one of these types of plans, it may not charge employees additional costs or impose treatment limits when compared with the other available types of health insurance coverage the program provides. In addition, an employer may commit a violation when they retaliate against an employee for enforcing their legal rights under the written terms of their benefit plan. Specifically, an employer may not discriminate against an employee, fire them, suspend them, or impose monetary fines if the employee attempts to enforce their legal rights under the benefit plan’s terms. Next, some employers violate ERISA when they breach one or more fiduciary duties or act in bad faith under the plan. This is a severe violation because the primary purpose of the plan must be for the benefit of employees who are the plan participants. Likewise, companies commit an ERISA violation if they do not follow the terms of the plan. For example, a company may not attempt to change the available benefits or withhold the benefits it legally owes to participants under the plan. This is true whether or not you are a former employee or a current company employee sponsoring the plan. Finally, an employer commits an ERISA violation if they do not provide plan participants with the required notices. Specifically, the company must provide employees with information about limits on distribution and blackout periods, which are times when an employee may be unable to receive a distribution under their policy or plan. In addition, employers must send plan participants a summary of material modifications, including information pertaining to recent plan changes. Companies must also provide these notices to employees promptly. If you believe a company committed an ERISA violation, you should retain skilled legal counsel to assist you as soon as possible. Your attorney can review the plan documents and determine whether or not the employer likely committed an ERISA violation. Your attorney can also help you take legal action in pursuit of the monetary benefits you deserve to recover. What Are Your Options if an Insurance Company Denied Your Claim for Benefits Under an ERISA Plan?
ERISA plans include many types of employer-sponsored benefits, including retirement benefits, life insurance benefits, and long-term disability benefits. If you are the beneficiary under one of these policies and you receive a claim denial, a skilled ERISA attorney in your area can take appropriate legal action on your behalf and help you secure the benefits you deserve to recover. The first step in the process is to file an administrative appeal with your employer’s insurance company. However, before actually appealing the claim denial, you should thoroughly review the denial letter. If an insurance company is going to deny your claim for benefits, it must let you know the reason or reasons for that claim denial in writing. In addition, the insurance company’s letter must provide information about how to file an administrative appeal—and the time deadlines for filing such an appeal. If you do not file your administrative appeal in a timely manner, it is almost certain the insurance company will send you a second denial letter. As soon as you learn of a benefits denial under an ERISA-governed policy, your first call should be to an ERISA lawyer to begin the appeals process.Administrative Appeals Under ERISA
ERISA requires denied claimants to start with an administrative appeal directly with the insurance company. When filing an administrative appeal, your lawyer can submit additional documentation for the insurance company to review. For example, in a life insurance claim denial, the aggrieved beneficiary can include copies of the deceased individual’s death certificate or medical records from recent treatment the decedent received before their death. Your lawyer should submit supplemental documentation during the administrative appeal process. This is because if you must later file a lawsuit against the insurance company in federal court, you cannot supplement the record with additional documentation. Once the insurance company receives your administrative appeal filing, they will review any additional documentation you provide. They will then decide whether or not to award you benefits under the policy. However, if they still fail to award you the benefits you deserve, you may have additional legal options to consider. When filing an administrative appeal, an ERISA attorney is highly beneficial. First, your lawyer can help you gather and organize all necessary documentation to prove your administrative appeal. Your attorney can also help you decipher all of the language and statutory provisions in the initial denial letter, ensuring you remedy this situation and provide additional documentation that puts you in the best position to ultimately recover benefits. Finally, your attorney can continue following up with the insurance company for regular updates on the status of your administrative appeal.Litigating an Appeal in the Federal Court System
If your insurance company denies your administrative appeal, you can consider litigation in the federal court system as a means of resolving your dispute. However, before you or your lawyer file a lawsuit in federal court, you must have exhausted all the administrative appeal options the insurance company provides. Federal litigation begins when your ERISA attorney files a lawsuit on your behalf in the federal court system. A discovery period may also ensue when the parties exchange information about the case. The federal court will also typically schedule a hearing date, during which all parties and their attorneys must appear. Once the case is in litigation, the individual filing the appeal may not submit any additional documentation. Instead, the judge will decide the case outcome based on documentation already part of the administrative appeal record. Suppose the judge determines a violation occurred. In that case, the appellant may receive all the benefits they are entitled to recover, such as benefits under an insurance policy if they are a designated beneficiary. Navigating the federal court system, as well as federal statutes, can be extremely difficult to accomplish on your own. Therefore, you should have a knowledgeable ERISA attorney advocating for you every step of the way. First, your attorney can help you file a lawsuit in the court system and represent you in all legal proceedings throughout your case. Your attorney can also review ERISA case law before attending the hearing and bring up favorable cases at oral argument.Contact an Experienced ERISA Attorney in Your Area Right Away
J. Price McNamara
Attorney
Losing my own brother, then my father and sister after long, disabling illnesses just a few months apart drove a career change for me. Before that experience, I never truly understood the place you’re in. I never understood the dramatic impact that receiving (or not receiving) the disability and life insurance benefits you paid for and counted on can have on your life especially when you need to focus on family and healing. What I experienced with my own family now drives the way I view my clients and my work, and I will never forget it!
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