As a result of ERISA, if you obtain your insurance at the workplace you don’t have as many remedies as you otherwise would have. All of your rights are eliminated under state law, because federal law takes over, and federal law under ERISA doesn’t exist. There are no protections under federal law. If you obtain any health any disability insurance at work you’re basically going it alone, and you don’t have any unfair claims practices act protections at all, something likely taken into account by insurance companies when considering denial of a claim.
We often see claims that are ERISA Preemption that are so outrageous, people who are obviously disabled, the insurance company simply doesn’t pay, and you can’t sue them for bad faith. If you obtain your insurance in the workplace from your employer or through your employer in any way you basically have no rights to recover damages for wrongful insurance conduct. It’s not about lawyering. It’s not about lawsuits, ’cause we settle 99 percent of our cases.
It’s about leverage. If the insurance company understands that the most they would ever have to pay you are your contract benefits under the policy, that they have no exposure to you for extra contractual damages, you don’t have a right to a jury trial, you don’t have a right to seek punitive damages, you don’t have a right to recover for your loss of your home or your life savings, if they realize that you don’t have any of those rights, the value of your claim shrinks.
If your claim is worth four million dollars the insurance company will maybe offer you a million and a half or even less if it’s an ERISA Preemption policy whereas if it’s not an ERISA Preemption policy you, you can settle a case for double or even triple what they would pay on a ERISA policy. These are some of the realities we are seeing when claims are preempted by ERISA. For more on ERISA see my article here: http://raybourhis.com/disability-insurance-articles/erisa-warning/