Avoiding an ERISA lawsuit: 4 must-check areas
An airtight administrative process is the best defense against an ERISA lawsuit.
If you can show you have a fair process and make sound, consistent decisions based on that process, courts are more likely to rule in your favor.
Plus, a fair administrative process can go a long way toward preventing a lawsuit in the first place. To ensure your ERISA administrative process is solid and fair, employment attorney Tim O’Toole recommends employers focus on the following areas:
1. Participant requests
There are a number of provisions in ERISA (and also the ACA) regarding the info plan administrators must provide participants and beneficiaries.
Some of these provisions require plans to get documents to participants in an extremely short time frame.
Without a clear process for these information requests in place, it’s easy for things to fall through the cracks – and for deadlines to be missed.
Best bet: Designate a person or person to handle information requests and make sure all the time frames are accounted for.
2. Participant assignments
If your health plan allows plan participants to assign the right to payment of claims to your healthcare provider, you need to take some steps to ensure everything runs smoothly.
This process should include designating an assignee and creating a list of requirements for the assignee regarding the information he or she must provide you.
Another option: Not allowing assignments, and including an anti-assignment clause in your plan documents.
3. Statute of Limitations
In Heimeshoff v. Hartford Life & Accident Insurance Co., the Supreme Court ruled that a statute of limitations written directly into a plan document was enforceable.
As a result of that ruling, an increasing number of plan administrators have added a statute of limitations – i.e., the time limit employees have to sue – right into their plan documents.
4. Process reviews
There have been a number of reg changes and court rulings that make reviewing your plan’s administrative process regularly a must.
During these reviews, employers should look at changes that to the law that have occurred and those that are likely to occur soon and revise their plan accordingly.
Adapted from “5 ways to a better ERISA administrative process,” by Andrea Davis.
