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ERISA's Unintended Consequences

ERISA.JPGERISA is law that was supposed to help protect workers' pensions instead has become a tool to protect insurance companies from having to pay disabled workers.

The Employee Retirement Income Security Act (ERISA) was passed in 1974 initially to cover pensions. In the years since, it has come to cover all "employee welfare benefit plans"-including employer-sponsored health and disability insurance programs. One of the difficulties is that ERISA imposes "fiduciary duties" on plan administrators. That is, they are supposed to look after the fiscal health of the plan they administer above all else.

In principle, there's not supposed to be a conflict between sound fiscal management and fair compensation to a program's beneficiaries. In practice, the conflicts are expected and all but condoned.

It can create bizarre circumstances: People whose disability claims are improperly denied can't sue insurance companies for bad faith. But shareholders can sue insurance companies for not managing their money properly. (Just this month, a shareholder filed a class-action suit against Sears under ERISA.) The pressure all seems to push in one direction: Keep costs down.

Those pressures can come from the courts, too. In July, for instance, a federal judge in California denied a man's benefits claim because he was able to work part-time.

West Virginia has become a crucible for disability benefits. It's home to the nation's highest percentage of disabled people, and its disabled population has the lowest employment rate in the nation, according to figures kept by researchers at the University of New Hampshire. There's no telling how many disabled people are victims of these cost-cutting pressures.

Here at our firm, we've been fighting for workers' rights for decades. If you're thinking about filing a claim, or you're worried that a claim has been improperly denied, reach out to us for a free consultation, today.

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