Is My Plan Governed by ERISA?

You have made a claim for–say–disability benefits, and it was denied. Now, you want to know whether that claim is governed by ERISA.

ERISA governs all claims for benefits (whether procured through insurance or otherwise) from an "employee welfare benefit plan." An employee welfare benefit plan is defined as " any plan, fund, or program . . . established or maintained by an employer or by an employee organization" which provides employee benefits such as life, health or disability. 29 U.S.C. § 1002(1). As such, if your right to benefits was through a plan established by an employer or an employee organization (like a labor union), then it is preempted by ERISA.

But what does this mean, practically speaking? In most cases, employee benefits are provided through an HMO or an insurance company. The employer goes out and purchases–say–group disability coverage for its employees. Would this be a "plan" governed by ERISA?

Probably. ERISA coverage exists where (1) there is a plan, and (2) the plan was "established or maintained" by the employer (or employee organization). At bottom a "plan" is just a scheme for providing benefits, which probably exists (or you wouldn’t be reading this).

And it doesn’t take much for the employer to have established a plan. Under "safe harbor" regulations promulgated by the Department of Labor 29 C.F.R. § 2510.3-1(j), which have been adopted by the case law [Stuart v. UNUM Life Ins. Co. of America, 217 F.3d 1145, 1153 (9th Cir. 1999)], the employer will "establish" a plan by arranging for group insurance for its employees, unless the employer does nothing more than (1) allow the insurer to publicize the program, and (2) allow for payroll deductions to pay for the insurance.

However, if the employer does almost anything else, there will be sufficient involvement to show the employer "established or maintained" the plan.  Any of these types of employer activities will probably lead to ERISA preemption:

-Paying all or even part of the policy premiums;
-Urging employees to join the plan;
-Retaining some of the deducted premium to administer the plan;
-Keeping track of who is in the plan;

Answering questions for the plan members about their coverage.

Anything like this, and a Court will likely find that the employer "established or maintained" the Plan, mandating ERISA coverage.

There are two important exceptions to ERISA coverage. One if the employer who establishes the plan is a church or religion. So, if you are Father O’Sullivan and your coverage is provided through the Roman Catholic church, your right to benefits is probably not governed by ERISA.

The other exception is with respect to governmental entities and agencies. A government plan is defined under statute as "a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality any of the foregoing." 29 U.S.C. § 1002(32).  So, if the employer who signed you up for benefits is the State of California, your claim is probably not preempted. If your employer is a quasi-governmental organization, for example the local community college, you had better call a good attorney.

 

© 2015 The Law Offices of Russell G. Petti