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ERISA
What Exactly Is ERISA?
ERISA is an acronym for the Employee Retirement Income Security Act of 1974. The body of ERISA law includes the Federal statute 29 USC. 1001, et seq.; the regulations (See: e.g. 29 CFR 2560 et seq.), and the "common law" (decisional law of the Federal Courts). ERISA was enacted by Congress to address irregularities in the administration of certain large pension plans, particularly the Teamsters Pension Fund, which had had a rather colorful history, involving questionable loans to certain Las Vegas Casinos.
The "Employee Welfare Benefit Plan":
When it was enacted in 1974, ERISA was not intended to affect group medical or disability insurance in any major way; however, almost inexplicably, a very small part of the ERISA statute made reference to a thing called an "employee welfare benefit plan". Although this term is defined in 29 USC 1002(1), it is not clear whether anybody back in 1974 had any idea as to exactly what an "employee welfare benefit plan" was or what it would become. However, because of this relatively insignificant part of ERISA (and primarily as the result of Federal judicial decisions over the succeeding two decades), today ERISA controls or impacts upon practically all employee benefits in the private sector, including employer-sponsored insurance plans.
A Potpourri of Protected Rights:
On its face, ERISA is a truly magnificent law. One of its architects, Sen. Jacob Javits, described ERISA as "the greatest development in the life of the American worker since Social Security". The language of ERISA is replete with promises of protection for plan participants and beneficiaries. Reporting and disclosure requirements are imposed upon plan administrators -- and most noble of all -- "fiduciary duties" are imposed upon anyone, who exercises final decision-making authority over plan benefits.
Pick up any ERISA plan booklet, describing medical or disability benefits, and you will find a wonderfully profound and inspiring "Statement of Rights Under ERISA". There in black and white are enumerated the various rights, guaranteed by the Federal law. A careful reading of this "Statement of Rights", may even conjure up images in your mind of the "Bill of Rights" to our Constitution. However, I wish to assure you that if those two documents were in any way similar in effect, we would all be living in gulags. The more you understand about ERISA the more you will come to the realization that things are not quite what they seem.
The Scam of the Century:
Without question, ERISA was the preeminent scam of the 20th century. While proclaiming to give employees greater rights and protections, ERISA has actually stripped employees of many of their rights, particularly as against insurance companies who underwrite and/or administer health or disability plans. Several factors coalesce to make ERISA the scam that it is:
1. The Pre-emption Clause:
ERISA provides that: "[T]he provisions of . . . this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . ." 29 USC 1144(a). Under ERISA’s pre-emption clause, any inconsistent state laws are rendered meaningless. Today, ERISA pre-empts almost all state consumer insurance laws, relating to group medical or disability insurance, while at the same time there are no Federal consumer insurance laws. Thus, by structuring practically all employer-sponsored medical and disability insurance plans as "employee welfare benefit plans" under ERISA, the insurance industry has, in a very ingenious way, carved out the single greatest immunity from civil liability ever devised.
2. No Incentive to Treat Claimants Fairly:
In the old days, before "ERISA pre-emption", once an insurance company’s liability was reasonably clear, the insurance company was required by various state laws to make a reasonable attempt to settle a claim for a reasonable amount. (See: e.g. "Unfair Claims Settlement Practices Act" California Insurance Code 790.03et seq.). Furthermore, under the case law of the various states, an insurance company had an obligation to deal in "good faith" with its policyholders. If it didn’t, it could | ||