ERISA

What is ERISA ?

ERISA preemption strips all policyholders who get their insurance at work from their rights and the leverage they need to simply get their insurers to pay legitimate claims. Typically with ERISA-preempted disability or medical policies:

1. The claimant cannot work and has no money coming in.

2. The claim has been denied for bogus reasons, and the claimant is losing his/her life savings and home and may be suffering additional mental distress as a result.

3. If the claim were not ERISA-preempted, the insured would have the leverage to settle promptly because the insurer's liability is obvious and the claimant would have the ability to threaten to sue the insurer for fraud and bad faith under state laws. WITH ERISA preemption, all state insurance regulations are preempted (eliminated). There are NO federal protections or regulations because the federal government is barred from regulating insurance by the McCarran Ferguson Act.

By denying two or three thousand claims per year with a remaining pay-out of ten years (out of hundreds of thousands of annual claims), an insurer reaps billions of dollars in fraudulent profits. AND there's a new batch of claims coming in every year. The financial incentive to defraud claimants out of their benefits is enormous.

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The 2 biggest problems that must be solved to reduce fraudulent and bad faith conduct by insurance companies are:

1) The fact that individuals purchasing insurance at their workplace have no recourse if they are cheated by their insurance companies. This is so, even if they are bankrupted and their lives are destroyed.

2) When a policyholder's rights are not preempted by ERISA that means the insured receives the protections and remedies provided by his state's insurance laws.

Specifically, insureds illegally deprived of policy benefits should be entitled to obtain compensation for all resulting damage including:

a. of all the past and future benefits owed,

b. consequential damages if they have lost savings, homes and other assets.

In addition, as in California, insurance companies should be deterred from profitable misconduct by providing judges and juries with the authority to award punitive damages in cases involving clear and convincing evidence of malice, fraud or oppression.

Contact us if your disability insurance benefits have been denied and you are uncertain whether your policy is ERISA Preempted.