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ERISA M. Clayborn Williams and Th omas O. Sinclair Applies to Your Client’s Insurance Claim Lawyers are often surprised to learn how pervasive encounters with the Employee Retirement Security Act of 1974 (ERISA) can be. ERISA, codifi ed at 29 U.S.C. § 1001 et. seq., can impact a client in everything from fi ling for disability benefi ts after experiencing a serious illness or accident to dealing with medical liens after a successful recovery against a third-party tortfeasor. It can even impact a survivor’s entitlement to life insurance proceeds when a loved one has passed. If the benefi t is pursuant to coverage obtained at someone’s workplace or directly provided by the employer, your client’s rights may well be governed by ERISA. Th e most common question asked by non-ERISA practitioners is “how can I tell if ERISA applies?” Th is article identifi es the issues that must be resolved before answering this question or before addressing your client’s expectations as to how a court may decide it. Th e success of your representation may ultimately depend on your evaluation of this issue if employment related benefi ts are involved. What Is ERISA? ERISA is a comprehensive Federal statute that applies to many claims for employee benefi ts. ERISA is a complicated area of the law that, at the end of the day, creates a number of often-byzantine hurdles that an employee or employee’s How to Determine If ERISA benefi ciary (and their attorneys) must clear before they can obtain their benefi ts. Congress enacted ERISA in 1974 to address perceived problems of employee’s rights not receiving uniform or, in some instances, adequate protection by the laws of the diff erent states in which they worked. Due in part to rising reports of corporate mismanagement, Congress also sought to address corruption and selfdealing involving large pension plans. ERISA’s beginnings, therefore, arose out of Congress’s intent to aff ord employee pensions more protection from employers, to empower employees by addressing the disparity in bargaining power between employers and employees in the context of pensions, and to establish uniform national standards. Th us, ERISA was originally intended to apply only to “pension benefi ts.” Fatefully, at the last minute, ERISA was amended to include other employee benefi ts as well, including “employee welfare benefi ts” such as health, disability, and life insurance (those benefi ts implicated in this article). Th e language of the ERISA statute draws heavily from trust law as well as contract law. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111- 113 (1989). Accordingly, when enacting ERISA, Congress has called upon the courts to develop a common law of ERISA using both trust and contract principals. Th e Department of Labor also has authority to issue regulations governing the processing of ERISA claims. So what if ERISA applies? From your client’s perspective, the largest consequence of ERISA is the limitation on the relief available, a fact that many clients are surprised to learn. In a benefi ts case, ERISA may limit your client’s remedies to include only the recovery of the benefi t that should have been provided. Although in some instances it may be possible to recover interest on past-due monetary benefi ts and to recover attorneys’ fees (an event that can be unusual in Eleventh Circuit courts), no other award is typically permitted, including punitive damages.1 Furthermore, all state law remedies, including insurance bad faith and fraud, are (with very few exceptions) precluded. 29 U.S.C. § 1144(a).2 Th is “superpreemption” also means that even though ERISA grants concurrent juris- 1 In an interesting development, the United States Supreme Court recently suggested “surcharge” remedies should be available but the case law on such remedies in the context of ERISA claims is extremely limited. See Cigna Corp. v. Amara, ___ U.S. ___, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011). 2 Th e only state laws excluded from ERISA’s preemption clause are those qualifying under its savings clause, § 1144(b)(2)(A), which states, “nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulated insurance, banking, or securities.” 14 Birmingham Bar Association


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