In the normal world, if someone you are relying on misrepresents the truth, and you are injured as a result, you can sue the other person. Typically, that would be called "fraud" (although other legalese like "estoppel" might apply as well).

But what if your employee benefit plan lies to you? For example, your husband is listed on your health insurance card. You filled out the forms to enroll him. Your employer takes premiums for him out of your paycheck. And then, relying on your belief that your husband is, in fact, enrolled in health insurance, he receives treatment for a serious illness.

Then the insurance company (or your employer itself) says "Whoops, you never properly completed the enrollment process," or "He was ineligible for benefits from the get-go." So they deny the health insurance claims and you are left with tens of thousands or hundreds of thousands of dollars in medical bills.

Can you sue the ERISA plan to make things right? Can you force the plan to pay the claims as if your husband was covered under the health insurance plan?

You would think so, just like in any other situation. But shockingly, that is not true. Federal courts have almost always said No. Not if the actual contract governing your benefits doesn't allow it. This rule, in effect, gives insurance companies and employers the right to misrepresent crucial information about your coverage and benefits, without any repercussions at all.

Besides appearing wrong from a basic justice standpoint, it is also wrong, legally. My forthcoming article in the ABA Journal of Labor & Employment Law, called "Reviving a Dead Remedy: Equitable Estoppel in ERISA," argues that federal courts have gotten this completely backwards. People should be able to sue to make things right. That's what Congress always intended; to protect employees, not leave them high and dry.

Hopefully, federal courts will come around on the issue.

Jill S. Bollwerk
Helping St. Louis area residents with personal injury, workers' compensation & insurance appeals/disputes.
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