The Employee Retirement Income Security Act of 1974 (ERISA) provides employees with some protection for their employment benefits. ERISA is a federal law that establishes the minimum standards under which employee benefit plans should be administered.
Generally, ERISA covers employee “plans,” such as health care benefits and retirement programs. Employee benefit plans are the single largest sources of equity capital and undisclosed corporate liabilities. ERISA protection is available to employees in all industries, including financial services, healthcare administration, retail, telecommunications, and manufacturing.
ERISA explicitly preempts any state law on the subject under most circumstances, meaning that in questions involving employee benefit plans, federal law usually controls. Accordingly, many ERISA cases, particularly those against healthcare insurers, are filed in federal rather than state court.
Types of Benefit Plans Covered
Benefit plans covered under ERISA include:
- Pension plans
- 401(k) plans
- Long term disability benefits
- Medical benefits such as health insurance
- Stock benefits
- Death benefits
- Severance benefits
ERISA claims may be filed by individuals, such as when a corporate executive claims he has not been properly compensated under his employee benefit plan, or by groups of covered employees via class action lawsuits.
ERISA Class Action Lawsuits
Because of the complexity and ambiguity that imbues the administration of benefit plans, plaintiffs must often band together to file class action lawsuits against the sponsoring employers, the benefit plans themselves, and their fiduciaries.
One of the more common ERISA claims is breach of fiduciary duty. Plaintiffs may claim that the plan administrators selected and retained investment options on improper bases. Sometimes the administrators may have been improperly motivated for their own benefit, other times they may have failed to exercise proper care in selecting holdings.
In other class action ERISA claims, plaintiffs may allege that a medical benefit plan failed to comply with federal or state insurance laws, to the employees’ detriment. Such a claim may be brought under a theory that the insurance company failed to fulfill their duty of good faith and fair dealing toward the employees who they have insured.
Remedies in ERISA Disputes
ERISA provides that plaintiffs disadvantaged in violation of the Act be compensated or “made whole.” When an ERISA lawsuit is an action to collect unpaid benefits, the Act allows the prevailing party to collect attorney fees. Since ERISA does not allow for consequential damages (damages beyond the benefits of which the plaintiff has been deprived), and generally precludes punitive damages, the ability to collect attorney fees is particularly important.
David A. Axelrod & Associates: Proven Results in ERISA Disputes
David A. Axelrod & Associates has successfully represented clients in ERISA and employee benefit plan disputes. In one such case, David A. Axelrod & Associates obtained a $3.6 million dollar judgment against a client’s former employee who had embezzled millions from the company’s pension plan.