What Is ERISA Litigation?
ERISA litigation refers to a lawsuit that involves an employee seeking damages against an employer for the failure to pay job related benefits, including short-term disability, long-term disability and medical care. It also includes litigation related to violation of regulations related to employee retirement plans.
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History
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Employees receive protection for their employment benefits under the Employee Retirement Income Security Act of 1974 (ERISA). This act regulates the management of the majority of employee benefits plans. The beneficiaries of the employees also have rights under ERISA. The regulation applies to medical insurance, short-term disability, long-term disability and life insurance. In addition, ERISA covers benefits for loss of life or accidental death and retirement benefits
Function
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The intended purpose of most ERISA litigation entails suing employer or their third-party administrators for a wide variety of violations of the employee rights as related ERISA. Two of the most common infractions consist of the denial of employees' rights to short-term or long-term disability benefits. Short-term benefits pays 60 to 100 percent of a worker's salary for up to six months due to sickness, pregnancy or injury. ERISA does not cover job-related conditions.
Long-term disability (LTD) takes over at the end of the period from the end of short-term benefits if the employee becomes permanently disabled. Typically, LTD pays 60 to 80 percent of the salary for a predetermined period or up to age 65. In both cases, a physician must certify the employee's sickness or injury. LTD claims tend to require a more stringent medical certification process that results in more denials.
Some other items often litigated include excessive fee claims related to 401 (k) retirement plans and stock drop cases. Stock drop cases consist of security fraud associated with the investment of 401 (k) funds in an employer's stock that experiences a significant drop in value.
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Plaintiffs
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Generally, employees or beneficiaries hire lawyers who specialize in ERISA law to file civil actions to protect their rights after exhausting the internal appeal for receiving an employment benefit. For example, an insurer who refuses to approve an LTD claims for an employee. The other side of ERISA litigation involves defending the employers and third party administrators for breach of their "fiduciary duties" or responsibilities to pay a "justifiable" claim. The Security and Exchange Commission, State Attorney Generals and private parties may initiate litigation for violations related to retirement benefits.
Defendants
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ERISA law allows any person who has a fiduciary responsibility to become a defendant or personally liable for breaching the plan. Each fiduciary of the plan, including an employer, administrator or sponsor, may have a personal liability to pay restitution or "make good" on the plan.
Time Frame
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If a plaintiff has actual knowledge of a fiduciary breach of responsibilities, the statute of limitation for an ERISA claim runs three years. In some cases, action may take place as long as six years after the last incident of a fiduciary breach of responsibilities.
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References
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