Understanding ERISA

ERISA stands for the Employee Retirement Income Security Act. The Act was passed by the U.S. Congress in 1974 and applies to most insurance obtained as an employee benefit from one's employer.

Unfortunately, ERISA is one of the worst and most poorly understood laws ever passed by Congress.

As interpreted by the United States Supreme Court, ERISA gives insurance companies enormous advantages that induce them to deny claims unfairly. In large part, ERISA gives insurance companies almost complete immunity against lawsuits no matter how outrageously they act or how malicious the denial of benefits.

Where does this leave disabled employees? They pay for insurance coverage, but if they need to make a claim, they are unlikely to receive benefits. Legitimate disability claims are routinely denied, leaving disabled employees unable to work, without an income and without the protection they believed their insurance would provide.

How Did ERISA Happen?

The devastating effect of ERISA is, in reality, a fluke of legislative history. It was originally passed for a single purpose to protect retirement and pension benefits. Prior to ERISA, many employers were promising lucrative retirement and pension benefits, but when it came time for the employee to draw down on these benefits, either the money was not there or the employer was bankrupt or out of business. ERISA was intended to fix this problem by requiring appropriate segregation of pension and profit sharing funds, insurance for these funds and proper vesting requirements.

However, when ERISA was passed in 1974, certain amendments were made in conference that were not debated on the floor of either the House or the Senate. They were then rushed through Congress so that President Ford could sign the bill on Labor Day in 1974. These amendments were later the subject of a variety of opinions by the United States Supreme Court. Without any legislative history as reference and without adequate briefing by any of the parties of concern, the Supreme Court adopted interpretations of ERISA, which, rather than protect consumer rights, strip insureds of all rights granted them under state law. The history of how ERISA was adopted, and how it has been interpreted and misinterpreted, is described in detail in "The Tragedies of ERISA".

Despite the challenges it poses for employees seeking to protect their right to insurance coverage from their employers, ERISA is also a complex body of legislation that provides opportunities for the skillful lawyer. To learn more about how ERISA law and ERISA regulations apply to your long-term disability claim, please call our office at 415-655-1549 or send an email to the attorneys of Pillsbury & Coleman, LLP in San Francisco, California, today.