ERISA & Contract Benefit Disputes

ERISA benefits  are  administered by third-party administrators who are paid a fee for  services.  Requirement imposed by ERISA are vast and are very expensive  to properly administer. As third-party administrator fees are  competitive and employers are reluctant to pay the true cost of  services, shortcuts  are employed and many mistakes are made.  The errors committed by third  party administrators are compounded by mistakes employers make  in reporting wages and service credits, the buying and selling of  plants and divisions and changes in ownership of those plants and  divisions. The terms of the plan frequently change either by design  or as a result of changes in law.  Third-party administrators often  change as well.  All of this makes for an environment where tracking  historical data is very expensive.  Sometimes a refusal  to follow the law adds to this problem.  As a result retirement benefit  errors are quite common.  

The Department of Labor reported this problem  back in the mid-90s and that report made the front pages of newspapers  all over the US.  The general deregulation environment that followed  Wall Street doesn't make it any less likely that these particular   problems were lessened or solved.   As employers  generally lowered future benefits in the period that followed by  replacing traditional retirement plans with cash balance benefits plans  or 401(k) plans, retirement benefit computation errors likely increased since the mid 90s.

What can you do to protect yourself?

The first thing  that you should do is go to an outside actuary and pay for an  independent benefit computation before you retire or soon thereafter.   As your employer is the custodian of the records, an independent  actuary will be unable to spot many data errors unless you retained some  of that information yourself.   Employers were required to furnish you accrued benefit statements and  summary annual reports annually, a summary plan description when you  were hired and a summary of changes made to the plan when the plan  changed materially.   Once the mistake is discovered you should bring  this to the attention of your HR department.  That usually will get  things corrected.

What can you do if your employer refuses to correct it?

There is an administrative procedure that you must follow first.   Without doing that you may not be able to sue.  Besides, the litigation  remedy is a last resort because the cost to take your employer to court  likely exceeds $100,000 if the employer really fights back.  It will be  almost impossible to find an attorney who will work on contingency fee basis  because ERISA  restricts the lawsuit to benefits lost and does not  guarantee that your attorney will even be awarded attorney's fees if you are successful. ERISA attorneys are few in number because of the complex nature of the law and most who work in this area are not litigant attorneys.  

As the implication to winning the lawsuit means the employer may have liability from many other employees, it  can be expected to fight you very hard.   Thus, from a practical point  of view, you will not be successful finding an attorney unless the issue  that affects you affects other employees where the lawyer could file  the action on behalf of a class of employees, referred to as class  action lawsuit.  But because litigation is seldom practical does not  mean that you have no remedy.  So many governmental agencies have broad  oversight on ERISA matters and depending on the specific issue or issues that affect you determines which oversight agency could work best for you.  

In  addition, ERISA provides the employee with broad rights to  disclosure and the employer severe penalties for noncompliance.  Your rights to  information may have been breached giving you other remedies that may be pursued in court or with the Department of Labor affording you other ways to correct the error.  Retaining an attorney to pursue these alternatives may offer the best of  both worlds while offering a less expensive alternative.  But the longer you wait the less chances you have to  correct the problem.

What you can do to protect yourself with Welfare benefit disputes?

Welfare benefits include life, health and disability benefits, often involving insurance products.  Even though Welfare benefits offer fewer guarantees and less oversight,  you still have many of the same remedies as with retirement benefit disputes.  As a vast  number of these were triggered by inducing retirement this means there  will be a large pool of affected employees which creates the climate for  a class action lawsuit.  That increases your chances to find an attorney who  will sue. You will need the  outside help of someone with third party administration experience and/or  the services of an attorney, and if you sue you will need an  expert who can help with this class action lawsuit.  You almost always need an  actuary to establish a loss on complicated welfare benefits related to  health.

We  can Help with both.  Jerry Reiss has 30 years of experience providing  employers with Third-party administrative services.  He also is an  actuary and he provided many of those same employers with actuarial services under ERISA.  He has extensive experience in court as an expert witness and legal consultant over the past 25 years.