Louisiana ERISA Information Center
Louisiana ERISA lawyer Gary Koederitz has represented several individuals that have legal issues resulting from ERISA disputes throughout Louisiana for more than twenty years.
ERISA
ERISA is an acronym for a federal law properly named the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. This law sets certain minimum legal standards for the health and pension plans of most private employers in the United States, whether insured or self-funded. Amendments to ERISA have included laws related to health insurance coverage, such as the Consolidated Omnibus Budget Reconciliation Act of 1985, 29 U.S.C. §§ 1161, et seq. (COBRA) and the Health Insurance Portability and Accountability Act of 1996, 29 U.S.C. §§ 1181, et seq. (HIPAA). In general, COBRA sometimes allows a worker who is losing his eligibility for group health insurance coverage to continue that coverage for himself and his family for a certain period, while paying the reduced group price rate for the coverage. HIPAA limits the ability of group health plans to exclude coverage for preexisting conditions, prohibits discrimination against employees and dependants based upon their health status, makes health insurance coverage more available to individuals, and provides privacy protection and other rights.
ERISA applies to almost every employee benefit plan except those covering public employees, certain church plans, and insurance purchased privately by individuals. ERISA is an extremely important law because it affects the rights of many millions of Americans to obtain benefits from their group health plan, disability plan, life insurance, and retirement plan.
One of the most significant features of ERISA is that the benefit plan administrator is usually authorized to decide wether or not your claim for benefits should be paid. In the event the administrator decides that you should not receive benefits, the typical breach of contract laws of each state usually do not apply and your right to have that decision changed is extremely limited. In effect, you must ask your benefit plan to review its own decision, and if your benefits are still denied, your sole remedy is to ask a federal court, without jury, to determine whether the decision of the benefit plan was without any basis. Many consumers have been unable to obtain their benefits when their physical condition or need for medical treatment is in dispute because the plan hires its own physician to support its denial of benefits. Even though the physician paid by the plan may never see or examine the patient, his opinion in support of the plan effectively precludes the federal court from finding that there was no basis for the benefit denial. It is extremely important for the consumer to understand that ERISA claims are often won or lost at the administrative level when the benefit claim is made and appealed to the benefit plan, rather than after suit is filed. In general, the court does not receive any new evidence after the suit is filed, but simply reviews the information that was provided to the benefit plan before the final denial of the claim.
ERISA is a complex law, with thousands of court decisions interpreting various portions of the law, applicable regulations, and benefit plan provisions. As noted above, your rights may be affected or even lost if you do not present all of the necessary evidence at the time you make your claim and appeal it to the benefit plan. The Koederitz Law Firm has experience representing individuals entitled to health, life, and disability benefits from ERISA plans.
The following paragraphs provide a more detailed description of the various aspects of ERISA, its application to claims for benefits, and the rights of plan beneficiaries.
Section A. Introduction
The Employee Retirement Income Security Act (ERISA) is a statute passed by Congress in 1974 governing a wide range of employee benefits including pensions, health, life and disability benefits. The provisions of Title I of ERISA, which are administered by the U.S. Department of Labor, were enacted to address public concern that funds of private pension plans were being mismanaged and abused. ERISA was the culmination of a long line of legislation concerned with the labor and tax aspects of employee benefit plans. Since its enactment in 1974, ERISA has been amended to meet the changing retirement and health care needs of employees and their families. As amended, ERISA includes health insurance coverage continuation (COBRA), and the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Some commentators have estimated that two-hundred million Americans are subject to ERISA, although most may be unaware of its existence.
The administration of ERISA is divided among the U.S. Department of Labor, the Internal Revenue Service of the Department of the Treasury (IRS), and the Pension Benefit Guaranty Corporation (PBGC). Title I, which contains rules for reporting and disclosure, vesting, participation, funding, fiduciary conduct, and civil enforcement, is administered by the U.S. Department of Labor. Title II of ERISA, which amended the Internal Revenue Code to parallel many of the Title I rules, is administered by the IRS. Title III is concerned with jurisdictional matters and with coordination of enforcement and regulatory activities by the U.S. Department of Labor and the IRS. Title IV covers the insurance of defined benefit pension plans and is administered by the PBGC
An ERISA covered employee benefit plan must comply with a wide range of fiduciary, reporting, and disclosure requirements. Additionally, many state laws are preempted, and federal law provides certain claims procedures and remedies.
Section B. Overview
ERISA is codified at 29 U.S.C. §§ 1001, et seq
What constitutes an ERISA Plan?: A court decision providing a list of the expected features of a “plan” is Donovan v. Dillingham, 688 F.2d 1367 (11th Cir. 1982)(en banc). Generally, elements are identification of the intended benefits and beneficiaries, the source of financing, and a procedure for obtaining benefits. It must also be established by an “employer”; this term includes certain organizations and associations other that direct payroll employers.
Statutory Declared Purposes: National public interest, commerce, and tax revenues affected by employee benefit plans; inadequate benefit protections in effect; beneficiaries often deprived of benefits. 29 U.S.C. 1001(c).
Judicially Declared Purposes: Include protection and promotion of plan beneficiaries, protection of plan assets from unanticipated claims and claims outside of the terms of the plan, to provide remedies for victimized employees and beneficiaries, and other purposes. See, e.g., Boggs v. Boggs, 520 U.S. 833, 117 S. Ct. 1754, 138 L.Ed. 2d 45 (1997).
Some Plans Exempt from ERISA: Examples are governmental plans, certain church plans, plans maintained solely to comply with workers’ compensation, disability or unemployment laws, plans maintained outside of the U.S. primarily for the benefit of non-resident aliens, and excess benefit plans which are unfunded. 29 U.S.C. 1003.
Who is a Plan Sponsor: The employer or other organization, association, etc. that establishes or maintains the plan.
Who is a Plan Administrator: The person designated by the instrument creating the plan. This person has statutory obligations for timely filings with the federal government and for disclosure of information to participants. Other responsibilities will depend upon the plan documents.
Who are Fiduciaries: Under ERISA, anyone who exercises either discretionary authority or control respecting management of the plan, or exercises any authority or control with respect to management or disposition of its assets, or renders investment advice for any fee or compensation, even indirect, concerning moneys or other plan property, or has any discretionary authority or responsibility in the administration of the plan. 29 U.S.C. 1002(21). (Note: This is a broad and general working definition only).
Test for Fiduciary Status - Discretionary Authority: The hallmark of an ERISA fiduciary is the exercise of discretion over the management of the plan or its assets, or over the administration of the plan itself. See, e.g., Curcio v. John Hancock Mut. Life Ins. Co., 33 F.3d 226 (3d Cir. 1994).
Administrative Function Only: Merely performing administrative functions does usually render on a fiduciary. Third party administrators who simply process claims or perform other mechanical duties are not by those actions alone fiduciaries.
Extent to Which Plan Administrator is a Fiduciary: Administrators are almost always fiduciaries because their duties typically require the exercise of discretionary authority and responsibility However, if they are performing only administrative functions and do not have the authority to exercise discretion, they are not fiduciaries. See 29 C.F.R. 2509.75-8; Gelardi v. Pertec Computer Corp., 761 F2d 1323 (9th Cir. 1985).
Extent to Which a Plan Sponsor is a Fiduciary: Usually not a fiduciary, because it does not exercise discretionary authority and responsibility. If it does retain those functions, the sponsor can become a fiduciary. Also, if the sponsor retains the authority to select plan fiduciaries, it can have a fiduciary duty with respect to that function and must prudently select and monitor those fiduciaries. See Sandoval v. Simmons, 622 F. Supp. 1174 (C.D. Ill. 1985); 29 C.F.R. 2509.75-8.
Liability of a Fiduciary: A plan fiduciary is personally liable for breaching any ERISA responsibilities, obligations, or duties. However, such claims are limited to those that result in benefit to the plan as a whole, and exclude those benefiting only individual plan members. 29 U.S.C. 1109(a).
Summary Plan Description
Contents of Summary Plan Description: ERISA contemplates that the SPD will provide plan participants with a plain-language description of the terms of the plan and its benefits. It should provide sufficient information for them to enforce their rights and know their obligations. The SPD cannot mislead, misinform, or fail to inform participants of the requirements of the plan. See 29 U.S.C. 1022, et seq.
Format of Summary Plan Description: ERISA and U.S. Department of Labor regulations provide for the style and format to be used in the SPD. In general, the document must be written in a manner that can be understood and easily interpreted by a layperson. 29 U.S.C. 1022(a).
Duty to Disclose: The plan administrator must disclose the SPD to plan participants and beneficiaries within certain time periods. 29 U.S.C. 1022(a). The duty of disclosure owed by a fiduciary is discharged by furnishing the SPD.
Liability for Incorrect Information in Summary Plan Description: If participant or beneficiary is harmed by violation of ERISA related to SPD requirements, may bring an action to recover benefits due and to enjoin the violation.
Construction of Summary Plan Description with Plan: The SPD must be read as a whole, and ambiguous provisions must be resolved in favor of the participant. The SPD should control if its terms conflict with those of the plan document. See, e.g., Hansen v. Continental Ins. Co., 940 F.2d 971 (5th Cir. 1991).
Section C Practice and Procedure
Exhaustion of Administrative Remedies: Although exhaustion of remedies is not required by ERISA, all plans are required to have appeal and claims procedures. 29 U.S.C. 1132, 1133. For requirements of claims procedures, see 29 C.F.R. 2560.503-1. Most courts have required exhaustion of administrative remedies before allowing suit to be filed. See, e.g., Hall v. National Gypsum Co., 105 F.3d 225 (5th Cir, 1997) (recognizing general rule while allowing exception).
Standing to Sue in Private Civil Action: ERISA provides a specific list of those entitled to bring a civil action. A party must be a participant as defined by ERISA to have standing to sue. However, a fiduciary can sue another fiduciary for breach of his duties. This action is for injunctive or other equitable relief, rather than an action for benefits. 29 U.S.C. 1132.
Causes of Action Provided: ERISA provides several causes of action for enforcement of rights. 29 U.S.C. § 1132(a). For a cause of action to arise under this section, the claim must relate to an “employee benefit plan” covered by ERISA. Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134 (1985). Additionally, only a participant or beneficiary is authorized to bring such an action. 29 U.S.C. § 1132(a)(1)(a).
Failure to Provide Information: 29 U.S.C.1132(c)(1) provides that a participant or beneficiary may bring a suit for penalties for the failure of the administrator to provide certain documents. The penalty is up to $110.00 per day. However, the penalty is discretionary with the court, and most have required bad faith by the plan or actual damage to the claimant. See, e.g., Ames v. American Int’l Can, 170 F.3d 751 (7th Cir. 1999).
Denial of Benefits: 29 U.S.C. 1132(a)(1)(b) provides for a civil action to recover benefits due to a participant or beneficiary, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan. The remedy may be payment of benefits due or a declaration that future benefits are due; only the plan itself is liable for payment. No punitive or extra-contractual damages are allowed. Attorney fees may be awarded to a prevailing party.
Breach of Fiduciary Duty: 29 U.S.C. 1132(a)(2) provides that the Secretary of Labor, plan participant, fiduciary, or beneficiary may sue for relief under 29 U.S.C. 1109. Section 1109 provides for the personal liability of a fiduciary that breaches his duty to a plan for all losses to the plan and to restore any profits make by him from the plan assets. Additionally, the fiduciary is subject to any equitable or other remedial relief the court may order. Other relief can include removal from office, being ordered to provide an accounting, being subject to injunction, etc.
Actions by Secretary of Labor: Note that the Secretary may also bring civil actions to collect various civil penalties, some of which are fixed dollar amounts and others which are percentages of amounts involved. 29 U.S.C. 1132 (a)(6).
Class Actions: ERISA does not prohibit class actions, provided they meet the requirements applicable to other class actions, i.e., that questions of law or fact common to class members predominate over those affecting only individual members of the class, etc.
Law Applicable to Private Actions
Preemption: ERISA contains one of the broadest preemptions found in any federal law, and it supersedes all state laws relating to employee benefit plans subject to its coverage. 29 U.S.C. 1144(a). “State law” includes any law, regulation, or court decision. A state law “relates to” an employee benefit plan, and is therefore preempted, if it has reference to or any effect upon the plan, and even if it was not designed or intended to have such effect. Generally, only those state laws that are peripheral or indirectly related to a plan will be saved from preemption.
State Laws Saved From Preemption: As an exception to ERISA’s broad preemption, states are still allowed to regulate insurance, banking, or securities. 29 U.S.C. 1144(b)(2)(A). Thus, some state laws affecting insurers may be saved from preemption by this exception. However, a significant limitation on this exception to preemption is the “deemer clause”. ERISA provides that no employee benefit plan or trust established under such plan shall be deemed to be an insurer or engaged in the business of insurance for purposes of any state law purporting to regulate insurance companies, contracts, etc. 29 U.S.C. 1144(b)(2)(B).
Other Exceptions to Preemption: ERISA also excludes from preemption other federal laws, plans maintained solely to comply with workers’ compensation laws, criminal laws of any state, acts and omissions prior to January 1, 1975, and some state laws applicable to “multi-employer welfare arrangements”.
Miscellaneous Legal Issues
Jury Trial: Almost every court to consider the issue has held that ERISA does not provide a right to trial by jury. Thus, ERISA claims tried in court are heard by federal judges alone.
Statute of Limitations: ERISA does not provide a specific statute of limitation. In general, courts have applied the limitations period of the appropriate state for the state law claim most analogous to the federal claim. See, e.g., Doe v. Blue Cross Blue Shield United of Wisconsin, 112 F.3d 869 (7th Cir. 1997); Gluck v. Unisys, 960 F.2d.1168 (6th Cir. 1992). However, note that the plan itself may shorten this period of time.
Subrogation Claims by the Plan: U.S. Supreme Court rules that a subrogation claim by a plan seeking reimbursement from its participant or beneficiary of amounts they had recovered from a third party was not an action for equitable relief; further, ERISA does not authorize a claim for money damages in these circumstances. Great-West Life & Annuity Insurance Company v. Knudson, 534 U.S. 204, 122 S.Ct. 708 (2002).
At Koederitz Law Firm, LLC if your case is accepted, an experienced Louisiana ERISA attorney, supported by qualified staff and experts in numerous fields, will fully investigate your Lousiana ERISA claim without obligation to you. If we believe that your claim has merit, our Lousiana lawyers will aggressively enforce your rights.
Meet Louisiana ERISA Attorney Gary Koederitz
