Does ERISA Cover Your Health Insurance Complaint?

Washington, DCEmployees might know that their employee stock plan is covered under ERISA regulations, but they might not know that those same ERISA laws cover their health insurance, if that health insurance is provided through their employment. In fact, the Employee Retirement Income Security Act (ERISA) covers not only employee stock plans and pension plans, it also covers employer-offered insurance plans.

In other words, employees who have obtained their insurance through their employer must follow ERISA-guidelines when it comes to filing appeals and lawsuits of insurance claim denials. Under ERISA, policyholders who have had their insurance claim denied must first exhaust the appeals process before they can file a lawsuit against the insurance company. This is important, because it means that a lawsuit cannot simply be filed upon the claim being denied, as can be done in cases that involve privately purchased insurance.

But, as the Supreme Court has heard (Heimeshoff Vs. Hartford Life and Wal-Mart Stores, Inc, Case Number 12-729), filing that appeal creates an issue for the complainant. That’s because in the state the lawsuit was initially filed, the employee has three years from the day the claimant is supposed to provide proof of loss to the insurance company in which to file the lawsuit. But the lawsuit cannot be filed until after the employee has also appealed the claim denial, meaning that the statute of limitations is technically running even though a lawsuit cannot be filed.

The plaintiff argues that the statute of limitations should not begin running until a lawsuit can actually be filed, in this case once the appeals process has been exhausted.

Even with a lawsuit filed, ERISA limits what plaintiffs can recover. Under ERISA regulations, plaintiffs can only claim the money that was lost as a result of the claim being denied. This means that punitive damages cannot be sought, nor can damages for pain and suffering. Attorney’s fees can be awarded, but doing so is at the court’s discretion.

Of course, ERISA also covers employee stock and retirement plans. Lawsuits have been filed alleging that various companies and their plan fiduciaries have violated ERISA in their handling of such plans.