failed to comply with ERISA’s reporting and disclosure requirements and failed to mention ERISA in policy documents, brochures and letters. (See du Mortier v. Massachusetts Gen. Life Ins. Co. (C.D. Cal. 1992) 805 F. Supp. 816, 820; Johnson v. Watts Regulator Co. (1st Cir. 1995) 63 F.3d 1129, 1132-33.) • Plans that fall under the Department of Labor’s “safe harbor” regulations are not ERISA preempted. (29 C.F.R. § 2510.3- 1(j).) The regulations generally state that ERISA is inapplicable where: (1) the employer does not “endorse” the pro- gram; (2) employee participation is com- pletely voluntary; (3) premiums are paid entirely by the employee; (4) the employ- er’s sole functions are to permit the insur- er to publicize the program, collect the premiums through payroll deductions and remit the premiums to the insurer; and (5) the employer receives no consid- eration, except reasonable compensation for collecting and remitting the premi- ums. Significantly, however, some courts have found the “safe harbor” regulations applicable despite employer activities far beyond those permitted by the regula- tions. (Johnson, 63 F.3d at 1135-38.) Claimants should confront the issue
of possible ERISA preemption as early as possible, long before the lawsuit is filed. Courts generally require plaintiffs bring- ing claims under ERISA to exhaust first the administrative remedies provided under a plan. Although the ERISA statutes do not explicitly require exhaus- tion of administrative remedies before a claimant can sue, if the insurer represents that the matter is ERISA-preempted and informs the claimant of appeal deadlines, failure to appeal the denial of what later turns out to be an ERISA claim can be fatal to an action. (See Abatie v. Alta Health & Life Ins. Co. (9th Cir. 2006) 458 F.3d 955, 961; see also Keller v. Albertsons, Inc. Employees’ Disability Benefits Plan (C.D. Cal. 2008) 589
F.Supp.2d 1205.) Therefore, it behooves every
claimant to ascertain whether ERISA is truly applicable when confronted with a denial letter that contains a purported deadline to appeal the insurance company’s decision.
JUNE 2011 The Advocate Magazine — 69
“The Big Print Giveth, The Small Print Taketh Away”
The best individual disability-insur- ance policies for professionals, which
insure against loss of earning capacity spe- cific to an insured’s own occupation, are commonly referred to as “own occ” poli- cies. If the insured was practicing in a recognized specialty within the scope of a
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