Employer Obligations Under ERISA

The Employee Retirement Income Security Act (ERISA), sets minimum standards with which private employers who offer retirement benefits, pensions, and health insurance to their employees must comply. It also grants employees who are covered by ERISA-qualifying plans certain rights to appeal denials as well as protections from discrimination or retaliation based on an entitlement to benefits.

Employer Obligations

Employers who fall under the purview of ERISA are required to:

• Provide participants with information about their benefits in up-to-date Plan Documents and Summary Plan Descriptions (SPDs);
• Fulfill certain fiduciary duties towards their employees;
• Institute procedures for employees who have grievances about benefits;
• Ensure that employees whose claims are denied are aware of their right to appeal; and
• Create a fair and impartial appeals process.

While many employers are careful to comply with these obligations and duties, others unfortunately do not and:

• Improperly deny benefits to those with valid claims;
• Breach their fiduciary duty towards participants; and
• Interfere with the rights of employees to collect benefits or appeal a denial.

What the plaintiff is required to establish depends primarily on the action alleged. For instance, plaintiffs who file a claim because they were denied benefits, must prove that they:

• Properly filed a claim for benefits;
• Exhausted the insurer’s appeals process;
• Are entitled to benefits; and
• Were denied benefits.

To demonstrate that a plan’s administrator breached a fiduciary duty, however, plaintiffs are only required to prove that:

• The defendants are plan fiduciaries;
• The defendants failed to fulfill their fiduciary duties; and
• They suffered a cognizable loss as a result of the fiduciary’s breach.

Unlike a claim for denial of benefits, a plaintiff attempting to demonstrate a breach of a fiduciary duty does not have to exhaust internal administrative appeals before filing a claim in court. Employers can also be held accountable for interfering with an employee’s rights to benefits if a plaintiff can provide evidence that an employer retaliated or discriminated against an employee who exercised a right under a plan.

Penalties

Plan administrators who fail to fulfill their obligations may be required to:

• Pay fines;
• Change certain internal procedures or practices;
• Provide a beneficiary with his or her rightful benefits;
• Provide plaintiffs with the interest accrued while benefits were denied or withheld;
• Pay a plaintiff’s attorneys’ fees; and
• Reinstate a plaintiff who was wrongfully terminated in an effort to avoid providing benefits.

Unlike other causes of action, plaintiffs who file claims under ERISA are not eligible to receive monetary damages. Instead, successful plaintiffs can expect to receive equitable relief, such as the reinstatement of benefits. However, an employer who violates ERISA may also face criminal penalties, the severity of which depends upon the type of violation. Typically, criminal penalties involve hefty fines and in some cases, jail time.

Call an Experienced Long Term Disability Attorney

When employees with ERISA-qualifying plans are wrongfully denied benefits, claimants can appeal their denied claims in court. Unfortunately, this can be a difficult process that requires compliance with a number of procedural requirements, so if you have questions or concerns about your own rights to benefits, please contact an experienced ERISA attorney at Bartolic Law today. A member of our legal team can be reached by calling (312) 635-1600 or by completing and submitting one of our standard contact forms.