Christopher Oster for today’s edition of the Wall Street Journal reports: “The ERISA Trap: When Employees Can’t Sue.” The article makes the point that whether or not a disability insurance plan is covered by ERISA could make a big difference from a litigation standpoint if the employee is wrongfully denied a claim and wants to sue, i.e. that insurance companies prefer that ERISA apply because the likelihood of recovery by the employee is less.
The subject was also covered by Workforce Management magazine (at Workforce.com) in their July, 2003 issue in an article by Douglas P. Shuit entitled “Nasty Business.” (Subscription required.) That article provides a more in depth discussion of why recovery under ERISA is so difficult to obtain, stating correctly that ERISA limits the participant’s right to a jury trial and prevents participants from recovering punitive or compensatory damages. (Despite the difficulties with suing under ERISA, the article quotes Raymond Bourhis of San Francisco as predicting that there are going to be a huge number of class action “lawsuits filed against employers, as well as insurance companies, alleging conspiracy and collusion to deprive ERISA-preempted workers’ protections under state law.”)
Note: In contrast, another area of ERISA litigation–involving alleged ERISA fiduciary breaches–has been called an “oasis for plaintiffs’ lawyers.” (See this previous post which mentions an article by Jason Hoppin for the Recorder at Law.com–“A Matter of Trust: Stung by corporate collapses, workers look to ERISA for relief“–which discusses how ERISA has become an “oasis for plaintiffs’ lawyers, where you can make new law, the bar is friendly on both sides of the aisle, there are few competitors and, of course, huge recoveries are the norm.”)