What is an ERISA Claim?

Book about ERISA claims with money and a calculator

The Employee Retirement Income Security Act (ERISA) protects employees' retirement and health benefits. ERISA grants various rights to employees participating in a benefit plan covered under the Act. ERISA also provides causes of action for enforcing those rights. 

There are many claims that you can bring under the ERISA statute. Congress wanted to give the law teeth, so you might be able to bring a claim for the following reasons:

  • Recover benefits due under a plan covered by ERISA;
  • Breach of fiduciary duty;
  • Violation of ERISA or the terms of a plan; and
  • Anti-retaliation.

Types of ERISA Claims

There are many types of claims you can bring. Consider the following examples, which is not exhaustive:

  • An employee who has a long-term disability plan that provides benefits if she is totally disabled. After suffering a serious fall at work, the employee struggles with a traumatic brain injury and other impairments. She submits a claim for disability benefits. However, the plan denies her claim, citing that she is not totally disabled based upon their review of the medical evidence. Because the employee wants to enforce the terms of her plan, she can bring a lawsuit.
  • An employee falls sick and goes to the doctor. The doctor performs several tests and decides that the employee needs to have surgery to address her condition. Her group health insurance plan will cover any medically necessary surgery, but to submit a claim she needs to pay a $100 filing fee with the insurance company. The employee believes this fee is hampering her ability to obtain benefits, so she sues to prevent having to pay for it.
  • An employee signs up for a life insurance policy. The plan administrator makes oral misrepresentations that the plan is worth much more than is stated on the plan document. The employee relies on these misrepresentations and signs up, only to realize later that the plan pays out far fewer benefits than he expected. In this situation, the plan administrator might have breached their fiduciary duty of honesty. The employee can often sue.
  • An employee has a 401k account. She is looking over the fees that she is charged and is surprised by how high they are. She suspects that the fees being charged are not reasonable or necessary, and she wants to challenge them. She might be able to bring a fiduciary claim against the plan.

Why ERISA Claims Are So Complicated

An assortment of statutory requirements and procedures make bringing ERISA claims complicated. 

First, ERISA must apply to the plan involved in the claim. Second, an employee must try to remedy the dispute with the employer before bringing the claim to a court. Third, ERISA claims must follow civil procedure rules to bring the claim in federal court. Finally, the standard of review adopted by the court may make a claim more difficult to prove.

Does ERISA apply to the plan involved in the claim?

ERISA governs the claim only if ERISA covers the plan involved in the claim. ERISA applies to most employee benefit plans, including employee health and retirement plans. ERISA does not cover certain plans, such as government plans and church plans. 

Has the employee sought a remedy through internal claims procedures?

ERISA provides internal claims procedures for determining whether to grant or deny benefits. Courts generally hear ERISA claims only after the employee exhausts these remedies. 

First, the plan must provide an employee with notice of a decision to deny the benefits under the plan. The notice must give specific reasons for this decision. 

Second, the plan must provide the opportunity for "a full and fair review" of this decision. 

If the benefits remain denied after a full and fair review, the next step is to bring the claim to a federal court. 

Initiating ERISA claims in court. 

Initiating ERISA claims in federal court comes with its own set of hurdles. There are several issues to keep in mind when initiating a claim under ERISA:

  • The plaintiff must determine the proper ERISA claim to file. ERISA provides a variety of claims, but certain causes of actions may not be available in every case. 
  • Federal civil procedure rules may apply to the claim. For example, ERISA claims may raise complicated issues of preemption, jurisdiction, and venue. 
  • The employee must file the claim before the applicable statute of limitations passes. Some jurisdictions apply the state's statute of limitations. Other jurisdictions will apply a statute of limitations set by the benefit plan. 

Which standard of review must the court adopt?

The standard of review a court adopts has a significant impact on the outcome of the case. The court may review the decision de novo or under the arbitrary and capricious standard. 

Federal courts usually review ERISA claims “de novo.” De novo simply means that the reviewing court will look at the issue “anew.” When the court treats the case as though it hasn’t been decided, it doesn’t give any weight to the agency’s original decision. De novo review is the default standard, and it can make ERISA claims easier to win on appeal.

If administrators have been given discretion over eligibility for benefits, the arbitrary and capricious standard governs. The court looks at whether the agency’s decision was “arbitrary and capricious,” meaning that it will generally uphold the decision unless it was clearly irrational. Any reasonable explanation for the decision is enough to defeat the ERISA claim. This standard makes the employee's claim much more difficult to win. 

Reasons You Can Bring an ERISA Claim

  • You want to enforce the terms of your plan after being unfairly denied benefits
  • You want to remedy a breach of fiduciary duties, which are duties the plan owes to plan participants and beneficiaries
  • You want to remedy any interference with the exercise of your ERISA rights

Bringing an ERISA Claim

By bringing these lawsuits, employees are enforcing their rights under the benefit plans. They are also making sure that plan administrators and others are being prudent and honest in how they administer plans. ERISA allows plan participants and beneficiaries to get into federal court to bring these claims. Otherwise, the claims would be stuck in state court with laws that do not provide the breadth of protection as ERISA does.

It is not always clear whether you have a valid ERISA claim. Rather than guess, or (even worse) simply assume that the law is too complicated to pursue, you can meet with a seasoned ERISA attorney to go over your complaints. You might find that other plan participants have similar complaints and that a lawsuit might be an effective way of changing the plan’s behavior.

If you need help with your ERISA claim, contact us today