The Employee Retirement Income Security Act of 1975 (“ERISA”) is a federal statute that was passed to ensure the fair treatment of employees who are covered by an employer-funded health and disability insurance plan.
The federal law does not directly provide any insurance benefits to covered employees; instead, it prescribes various procedures that must be followed by the plan administrator to ensure fair treatment of covered employees. The statute applies most forcefully in cases where the plan administrator denies a claim for benefits under the plan.
Basic ERISA requirements
ERISA requires that the plan administrator follow the provisions of the plan in acting on claims for benefits. The plan administrator is responsible for ensuring that all covered employees receive copies of the plan and the summary plan description (SPD0.
Both documents must accurately describe the provisions of the plan and must contain current and accurate information about the coverages available under the plan.
ERISA also imposes fiduciary responsibilities on plan administrators. The statute also requires every covered plan to provide a grievance and appeals procedure and to give employees the right to seek judicial review of an adverse decision on an application for benefits.
Appealing the denial of a claim in federal court
A denial of benefits must comply with the provisions of the plan governing such actions. If the employee disagrees with the denial or the reasons given to support the administrator’s actions, the employee may bring an action in United States District Court to have the administrator’s action invalidated.
Grounds for reversal of the administrator’s decision include failure to accept the medical judgment of the health care givers who treated the employee, failure to follow plan procedures in processing the claim, and failure to abide by the fiduciary duties imposed on the administrator.
The plan administrator must also abide by the provisions of the Summary Plan Description. Many retirement plans drafted in the early days of ERISA often include provisions in the SPD that conflict with provisions in the plan itself.
Understanding the fiduciary duties imposed on the plan administrator
The plan administrator must administer the plan for the benefit of all covered employees. The administrator must manage the plan assets solely to preserve and increase the members’ interest in plan assets. The plan administrator must also avoid conflicts of interest in the management of plan assets.
Because an appeal from the decision of the plan administrator necessarily involves filing an action in federal court, appealing an administrator’s decision necessarily involves hiring an attorney.