8 Things to Know About ERISA Violations
ERISA is a federal law that provides certain minimum standards for benefit plans provided by private employers. These standards include certain rights employees have against their employers. If you are a member of a group benefits plan, it is important to understand what ERISA is, common ERISA violations, and what your rights are under this law.
What Is ERISA?
ERISA stands for the Employee Retirement Income Security Act of 1974. ERISA entitles employees to certain rights concerning disability, retirement, and other group benefit plans.
Several government agencies enforce ERISA. The Employee Benefits Security Administration (EBSA) is responsible for enforcing the reporting and disclosure provisions of the Act, while the U.S. Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation enforce other provisions of the Act.
Employer Obligations Under ERISA
An employer has three main duties under ERISA. First, whoever manages the assets of the plan must uphold their fiduciary duties to the plan’s participants. Second, an employer must provide participants with information on the features of their plan and how it’s financed. And third, employers must have procedures in place for employees to file grievances and appeals. ERISA violations usually involve a breach of one of these obligations.
Penalties for ERISA Violations
An employer that violates ERISA may be subject to civil or criminal penalties. The specific amount will vary on a case-by-case basis, but in general, the civil penalties range from a few hundred to a few thousand dollars per day depending on the type of ERISA violation. Criminal penalties are much larger and may include jail time.
Common ERISA Violations
An employer can violate ERISA either by violating the Act itself or by failing to follow the terms of an individual benefit plan. There are several common ways an employer commits one of these violations.
1. Denial of Benefits to Current or Former Employees
ERISA requires employers to provide benefits to employees according to the terms of the group plan. An employer violates ERISA if it withholds benefits or provides fewer benefits than an employee is owed.
2. Reduction of Promised Benefits
Once a plan is in place, ERISA requires an employer to maintain and fulfill the terms of that plan. As a result, employers must ensure the plan is funded and cannot reduce the benefits originally promised.
3. Retaliation Against an Employee
Section 510 of ERISA prohibits employers from retaliating against any employee for enforcing their rights under a benefit plan. Firing, fining, suspending, or discriminating against an employee because they seek to enforce their rights are all ERISA violations.
4. Early Stoppage of Health Care Coverage
The Consolidated Omnibus Budget Reconciliation Act (COBRA) amended ERISA to provide additional health care coverage even after an employee loses their health benefits. Under COBRA, employees may be eligible to continue receiving group health benefits for a limited period of time. If an employer refuses to provide this coverage to an eligible employee, it is an ERISA violation.
5. Health Plan Coverage for Mental Health
Although group benefit plans are not required to provide benefits related to mental health and substance abuse, many do. Because of an amendment to ERISA, employers offering these plans may not impose extra costs or treatment limits on those benefits compared to other health coverage.
6. Failing to Provide Required Notices
Section 101 of ERISA requires plan administrators to provide notice to plan participants for a number of events related to the plan. These include funding-based limitations on distribution and information about “blackout periods” when plan participants are temporarily unable to obtain distributions from their plan.
The EBSA also requires employers to provide a “summary of material modifications” to plan participants. This summary contains information about major changes to the plan and must be sent to plan participants within 210 days after the end of the plan year when the changes were made.
7. Breach of Fiduciary Duties
Under ERISA, anyone who exercises discretionary authority over plan assets or plan management has a fiduciary duty toward the plan’s participants. As a result, fiduciaries must run the plan solely for the benefit of its participants, and failure to do so is an ERISA violation.
8. Failing to Follow the Plan
ERISA exists to protect the participants involuntarily with established retirement and health plans. Whether you’re a current or former employee, your employer may try to withhold or change the benefits it owes you. In addition to the other violations in this list, any other failure by an employer to follow through on the promises made in a plan may be an ERISA violation.
How Can I Challenge ERISA Violations?
Section 502 of the Act grants plan participants and beneficiaries the power to bring a civil action to recover benefits and enforce their rights provided by the plan. Before you can file a lawsuit, however, you must file an administrative appeal. Unfortunately, the appeals process is complex and involves working directly with the insurance company.
If you have had an ERISA claim denied, it’s important to speak with an ERISA lawyer as soon as possible. Depending on the nature of the claim, you may have a limited time to file an appeal. An ERISA lawyer can help you through this process and make sure you protect your rights and recover the benefits and attorney fees you are owed.
Have Your Group Benefits Been Denied?
The Peace Law Firm provides experienced representation in ERISA claims cases. We can help determine the validity of your claim and advise you of what steps you can take if your benefits are denied. Contact the Peace Law Firm today for a free consultation.