Avoiding ERISA Under Disability
Insurance Contracts
by D. Frank Winkles and Claude H.
Tison, Jr. Florida Bar Journal
May,
2005 Volume 79, No. 5
Page 20
As its name implies, the Employee Retirement
Income Security Act of 1974 (ERISA)1
was enacted for the primary purpose of protecting ... pension plans.....
Insurance companies were quick to note
that the remedies available to an employee for wrongful denial of ERISA
plan benefits are far more restrictive and limited than are the remedies
available under state law to insureds whose insurers have wrongfully
denied their claims for policy benefits. There is no right to a jury
trial under ERISA .....
The potential savings for insurance
companies by converting state law claims into ERISA claims are enormous.
One company ... estimated that for every ... case it can convert into an
ERISA benefits case, it saves $600,000 in settlement costs. ....
For a forceful criticism of the preemption
cases from this standpoint, see
Korobkin, “The Failed Jurisprudence of Managed Care, and How to Fix It:
Reinterpreting ERISA Preemption.”11
....
ERISA is an outstanding example of the operation of the law of
unintended consequences.
[It was enacted to protect
pension plans] Coverage of employee welfare benefit plans,
i.e.,
... health insurance policies ... was added to the basic law as an
afterthought, with little or no consideration of the long-term effect of
ERISA ...,
it seemed like a good
idea at the time.
Contrary to the intent of ERISA’s sponsors,
[it] ... has resulted in a severe erosion of the rights and remedies of
insured employees against their insurance companies in connection with
the handling of their claims. In the case of insurance policies deemed
to be covered by ERISA, it has allowed insurance companies to engage in
unfair and bad faith claims denial with virtual impunity. ....
D. Frank Winkles
practices medical malpractice, negligence,
products liability, white collar criminal defense, and disability
insurance law in Tampa. He received his J.D. in 1972 from the University
of Florida. He has served on the Criminal Procedure Rules Committee,
Federal Practice Committee, and is admitted before the U.S. district
courts, Middle and Northern districts and U.S. Court of Appeals, Fifth
Circuit and 11th Circuit.
Claude H. Tison, Jr.,
practices
insurance, commercial
litigation, appellate practice, disability insurance, state and federal
constitutional litigation, contracts, and criminal defense in Tampa with
the Winkles Law Group. He graduated,
cum laude,
from Stetson University College of Law, J.D., and from the University of
Virginia, LL.M. He is admitted to the U.S. Court of Appeals, Fourth and
11th circuits as well as the U.S. district courts, Middle and Southern
districts.
Disclaimer
(that this is not legal advice) Find full text of this
excellent article
here