Health Administration Responsibility Project
ERISA Outline
(For more information, follow the blue underlined links in the text)

If the Managed Care Organization is "related to" an Employee Benefit Plan (EBP), the requirements of ERISA, the Employee Retirement Income Security Act of 1974, and its regulations are of overriding importance, and severely restrict patient rights.

No employer is obligated to establish an EBP. In order to encourage them to do so, Congress has given them, their plans, their HMOs and Insurers, and their administrators substantial immunities from liability.

State Regulation of HMOs administered by self-insured EBPs is Preempted by ERISA, so employees cannot be protected by those state laws which limit the excesses of other HMOs, not subject to ERISA.

Any case 'relating to' an EBP falls under Federal Jurisdiction and may be removed from state to federal court.

There the patient will find that the usual state law Tort Claims are also preempted by ERISA, so any claims against the HMO or EBP for medical malpractice, wrongful death, fraud, etc. will be summarily dismissed.

True, he may sue for a benefit denied him, but the decision of the plan administrator may often be reversed only if it was found to have been Arbitrary and Capricious, a very difficult standard to meet.

Even if that is proven, ERISA limits damages to delivery of the benefit, but it may then be too late. If the patient has died or experienced further injury because of the wrongful denial of care, neither he nor his survivors may be compensated, nor will the HMO be punished in any way. If the plaintiff wins the case, the court has discretion to award him his Attorneys Fees.

ERISA plans are construed according to federal common law, but federal common law in the 9th Circuit borrows many California rules of interpretation, including contra-insurer. See Padfield v. AIG Life Ins. Co., 290 F.3d 1121 (9th Cir. 2002), and Kunin v. Benefit Trust and Life Ins. Co., 910 F.2d 534 (9th Cir. 1990).

In setting up or continuing the plan, the employer has no Fiduciary responsibility to its employees at all. If an employee develops AIDS, for example, it is perfectly legal, under ERISA, for the employer to subsequently amend the plan so as to eliminate coverage for AIDS. See McGann v. H & H Music. Fiduciary responsibility applies only to the Administration of the plan, not to determination of which benefits will be offered.

HMOs even produce training films to teach their claims managers that they don't have to do a reasonable investigation for ERISA claims - just deny them. See a discussion of such a tape which came to light in the case of Fisher v. Aetna

For a time, it seemed that one way ERISA might work to the member's advantage, at least in the 9th Circuit, was to prevent plans from forcing "reimbursement" of its payments from damages paid by third party tortfeasors. See Reynolds v. Ellis
However, the 9th Circuit has now (10/4/2004) clarified that position. A subrogation claim under an ERISA plan may not be brought under federal law, but the plan's STATE court claims for breach of contract against the enrollee are NOT preempted by ERISA, and may proceed. See Providence Health Plan v. McDowell. As usual under ERISA, it is the enrollee who is the loser, and the insurer who is the winner.

However, One way ERISA may be helpful is: An administrator must provide a member with a copy of the SPD, annual report, bargaining agreement, or instrument establishing the plan, within 30 days of the request for it. If he dosn't, he may, at the discretion of the court, be personally liable for up to $100/day to the plaintiff till he complies. (29 USC 1132(c)(1)(B) or (c)(3)). This is not a penalty, but "statutory damages". Just be sure that the request is addressed to "Plan Administrator".
P.S.: The maximum daily penalty was increased in 1997 to $110, per 29 CFR 2575.502c-3. It may be due for another increase, so check.

If the member wins his case against the plan, the court may also award him his legal fees.

It is part of the Agenda of HARP to encourage Congress to amend this unjust and one-sided law.


There are New Regs as of 1/1/2002, (or maybe 1/1/2003 for group plans) which make disclosure and claims procedures much more enrollee-friendly!

Flash! - 6/20/2002

The Supreme Court has approved state "independent medical review" of ERISA plan denials based on medical criteria in Rush v. Moran.

The court did not accept the invitation in our amicus brief to overturn Pilot Life. Indeed, their decision relies on Pilot Life as though it were the 11th Commandment.

You will probably not, in the next several decades, be able to obtain damages from your ERISA plan for its malpractice.

Flash! - 6/21/2004

The above prediction has come horribly true! The Supreme Court has rendered the death blow to state law attempts to hold HMOs contracting with ERISA plans liable for their torts. The case is Aetna v. Davila (02-1845, 6/21/04). All efforts must now be devoted to attempting to get Congress to amend ERISA to remove preemption of state law, at least as it applied to HMOs providing insurance to ERISA plans.

All the more reason to try to get non-ERISA insurance. But if you're stuck with ERISA, and the plan has denied important care, get the money somehow to get the treatment, and sue the plan for reimbursement.

If you're in a state that mandates Independent Medical Review for medical necessity denials, TREAT THAT REVIEW AS IF IT WERE A FEDERAL CASE! Because it may become one!

That's where you'll win or lose your entire case. If the reviewer's decision goes against you, the chances of a Federal Judge overturning that decision in a subsequent sec. 1132 action is close to nil.

Flash! - 10/22/2004

- OK! They threw us a bone, actually a fairly meaty one. A portion of the latest tax cut bill - the "American Jobs Creation Act of 2004" called the "Civil Rights Tax Relief Act" gets rid of the double taxation of lawyers fees in certain civil rights cases, including ERISA Benefits.
Until now the IRS has made plaintiffs pay taxes on the FULL amount of any reward, before deducting legal fees and costs, and then made the lawyer pay again when he got his fee. Sometimes the taxes wiped out the plaintiff's entire award, or even left him in the hole.
It's still that way for most cases, but now the plaintiff doesn't have to pay taxes on what he has to pay to his lawyer in cases involving age, sex, housing, or race discrimination, wage and hour issues, ERISA benefits, and whistleblower laws.


If you've been injured by a third party (say in an auto accident) and your ERISA plan takes care of your medical expenses, and you sue the third party and win, your ERISA plan may come after you to pay them back for what they spent. Here is an article on how to handle that problem.

For further discussion of ERISA issues, see:
The Problem Is Erisa Blog by Richard Johnston
Health Plan Law by Roy F. Harmon III
ERISA Primer by Russell Petti
What ERISA Means by "Equitable": The Supreme Court's Trail of Error by John H. Langbein
Erisa Litigation Fundamentals by Robert A. Perez. Sr.
Challenging coverage denials under ERISA Summary of an article by Edward G. Connette

For the views of the pre-Bush Department of Labor, opposing much preemption and removal, see its
Amicus Briefs

The Bush administration has cut off DOL website access to these briefs. Too consumer-friendly!
(It says "This site is experiencing technical difficulties and this page is currently unavailable". The rest of the site has no "technical difficulties.)
They can now be found at (What a great resource!)

If you want to argue the deference due them, see:
Chevron, 467 US 837, 843-44
Anweiler, 3 F3d 986, 993 (7th Cir. 1993).
U.S. Mosaic, 935 F2d 1249, 1255(note 6)
Carr v. First National, 816 F.Supp. 1476, 1491-92 (ND CA 1993)

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