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What is ERISA and What Do You Need to Know About It?

— October 26, 2021

The term ERISA stands for the Employee Retirement Income Security Act, an employee welfare and pension benefit plan. ERISA’s pension plan is to offer retirement benefits to most employees in the private industry. The pension plan is also known as an employee pension benefit plan generated by employee or employer organizations. 

An employee welfare benefit plan is maintained by an employee or employer organization. It provides beneficiaries or participants with benefits such as unemployment, medical, disability, or accident coverage through purchased insurance. 

What Plans are Excluded from ERISA?

Government plans, foreign plans, compliance plans, and excess benefit plans are exempt from ERISA. Also, the ERISA statute does not accept unfunded plans that offer overdue benefits to highly remunerated administration employees.

What Strategic Litigation Advantages does ERISA Offer Employees? 

ERISA comes with a litigation scheme that is limited to the universe of claims. ERISA provides exclusive remedies and supersedes state and federal laws that relate to its plans. Under ERISA, most state actions can be transferred to a federal court of law even if there are no federal claims in that particular case. 

ERISA remedies are limited to its plans, implying that a plaintiff cannot recover damages for suffering and pain, corrective damages, and any other type of damages. However, any plaintiff challenging benefit denial is eligible to recover the due benefit amount under the plan’s terms. 

There will also be a reasonable recoverable attorney fee at the court’s discretion and the plaintiff’s satisfaction under ERISA’s legal standards. 

ERISA has no jury trials. If a lawsuit alleges wrongful benefits denial, it will be settled based on each party’s motions. The court will go through the administrative record and determine whether there were sensible reasons why the fiduciary denied benefits. 

The administrative record consists of information and documents gathered by the fiduciary during the process of administrative claims. ERISA restricts discovery and does not permit outside administrative record discoveries for wrongful denial of benefits claims.

Does ERISA Actions have a Statute of Limitation?

Yes. ERISA has a six-year statute of limitation for definite breach of fiduciary duty claims. However, it does not have a statute of limitation for other claims. It has led courts to apply for an equivalent statute of limitations under state law.

Who Can Sue Under ERISA?

ERISA is not clear on who to include as a defendant during a lawsuit. But only four types of plaintiff classes can sue under ERISA: 

  • Secretary of Labor
  • Plan participants
  • Plan fiduciaries
  • Plan beneficiaries.

The plan itself is the only defendant that can be sued for benefits denial under the ERISA plan. 

Other courts have allowed claims for benefits denial against insurance companies, employers, and third-party plan administrators. Employers cannot think of the ERISA plan being separate from itself.

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When businesses purchase a package of disability, life, and health care insurance for their workers, that doesn’t mean that it has created a discrete legal body that can sue or be sued. It is best to contact a specialized attorney in insurance for long-term disability and ERISA law to discuss your case if you are unsure how ERISA operates. You need to know that trust funds and large employers established under a joint bargaining agreement between employers and unions understand the worth of legal reality and how an ERISA plan is different from entities that fund the benefits. Nevertheless, a professional ERISA law attorney can help you walk the legal ERISA path towards a positive result.

Does ERISA Force Employers to Offer Certain Benefits? 

No. ERISA does not establish what benefits employers should provide, nor does it dictate employers to offer any benefits at all. An employer may modify or terminate an ERISA plan if it is subject to various limitations. 

Who is a Qualified Participant under ERISA? 

An ERISA participant is a company’s or entity’s employee, an employee organization member, or any employee who may be suitable to receive benefits under an ERISA plan and whose beneficiaries or members are eligible for acquiring such benefits. In general, the participant is an employee of an employer that sponsors an ERISA plan.

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