What is ERISA?
A federal law, ERISA covers essentially all benefits that an employer provides to its employees. This typically includes insurance and retirement benefits, but the most important first ERISA question is: was the benefit offered by you or your spouse’s employer? By design, it was meant to protect the employees, but it has become a law that protects the employer and insurance company. It is complex in nature and requires an attorney who regularly handles this type of law.
Most people are familiar with the phrases “bad faith insurance denial” or “breach of contract” in terms of talking about the claims that an individual would assert against an insurance company for not providing insurance benefits. Those terms are referring to state law claims. For example, in Alabama, the claims would normally be governed by Alabama law.
Back in 1974, Congress enacted a law that was originally intended to protect employee benefits from unscrupulous employers who may want to take away pensions or other promised benefits. That law is the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA.
As an example, if you had a group disability policy provided as part of your employment benefits package, your insurance rights would be governed by ERISA and ERISA would preempt all your state law claims that would typically apply otherwise. This preemption means you would have to sue under the federal statute and assert an ERISA claim against that insurance carrier and you normally cannot sue under any of the numerous state laws that would apply to the same conduct.
Due to its complexity, few plaintiff lawyers are well-versed in ERISA. In these cases, there is an escalated urgency during the time before a claims adjuster formulates a decision. For this reason alone, you should seek legal counsel at first indication your benefits will be terminated, or a claim denied.
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