The Bad of ERISA Part I: No Extra-Contractual Damages

Over the last few weeks, we’ve discussed “the good of ERISA.” However, now it’s time to tackle all of the unfairness of ERISA, and there exists a lot of unfairness with ERISA. The first “bad of ERISA” is that claimants cannot sue for extra-contractual damages.

ERISA is an acronym that stands for the Employee Retirement Income Security Act of 1910. I am often asked what is wrong with ERISA. Why is ERISA so bad?

There are so many attorneys who would rather not deal with ERISA because of the complexities involved. Our practice focuses solely on ERISA, and we love helping the underdog. We think there’s a lot of unfairness with ERISA. And, we’d like to discuss a few of those unfair areas of ERISA.

The first unfair aspect of ERISA to plaintiffs is that claimants cannot sue for extra-contractual damages. Those damages are punitive damages including mental anguish, pain, and suffering. ERISA does not permit claimants to recover those types of damages.

The reason why this is unfair is because those kind of damages give incentive for a plan administrator or an insurance company to do the right thing. If all that can result from an ERISA disability claim or appeal is that they can be sued for the benefits they should have paid anyway, there’s not much incentive for them to do the right thing. It also makes it difficult on claimants to have to pay their attorney’s fees out of their own benefits.

If you need assistance after your ERISA long term disability, short term disability, pension, retirement, or life insurance claim has been denied, contact an experienced ERISA disability attorney today at 800-284-9309.

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