ERISA Fails to Provide Safety Net

ERISA Law Fails to Provide Benefits
Saturday July 5, 11:31 pm ET

By Michael Hathoway

Washington (AP) Thomas Amschwand made every effort to make sure his wife would be taken care of as he was dying of a rare form of heart cancer at 30 years old in 2001. Spherion Corp., the temporary staffing company where Amschwand worked

Spherion's denied benefits to Amschwand and his wife Mellissa Bellinger after a bizarre set of circumstances. Spherion, switched insurers after Thomas Amschwand was diagnosed with a rare form of heart cancer.

Spherion announced that Amschwand's wife would not receive any of the $426,000 in benefits she believed she was due. Mellissa Bellinger took the case all the way to the Supreme Court and was denied a hearing on June 27, 2008.

The new policy did not take effect until an employee worked one full day. His wife said if he has known, he would have suffered through one day of work. Spherion never informed Amschwand of the requirement leaving him to think that his wife was covered by Life Insurance. Amschwand's wife was refunded a few thousand dollars in insurance of which she and her husband had paid, which was not even enough to cover the costs of the funeral.

The Federal Appeals Court stated that companies that offer health, life and retirement benefits under ERISA, the Retirement Income Security Act, cannot be sued for large amounts of damages.

"The facts ... scream out for a remedy beyond the simple return of premiums," Judge Fortunato Benavides of the New Orleans-based 5th U.S. Circuit Court of Appeals said in the Amschwand case. "Regrettably, under existing law it is not available."

There is great controversy in the interpretation of ERISA between Congress, the Bush Administration and the courts. Many people personally feel the disgrace to plaintiff Mellissa Bellinger leaving multiple ERISA experts in concert as to why a beneficiary under a policy did not get the promised benefits.

Sen. Patrick Leahy, Chairman of the Senate Judiciary Committee, said at a recent hearing that before ERISA became law, employees clearly could sue for benefits in state courts. The court rulings, said Leahy, D-Vt., have left people "more vulnerable than they were before the law was passed."

Spherion spokesman Kip Havel issued a brief statement when contacted by The Associated Press after the high court declined to review the case. "We are pleased the court has made its decision and the matter has finally been resolved," Havel said.

The court also recently turned down an appeal from Louis Gerard "Gerry" Goeres, who sued Charles M. Schwab & Co. over hundreds of thousands of dollars in retirement plan benefits.

For 16 months, Schwab mistakenly refused to acknowledge Goeres as the beneficiary in the retirement plan of his domestic partner, Stephen Ward, a Schwab employee who died in 1999. By the time Schwab acknowledged its error, the value of the account had declined by more than $500,000. Goeres sued for the rest. Federal courts dismissed the suit. "Unfortunately, legal relief is not available," U.S. District Judge Charles Breyer said in ruling against Goeres.

"You know the Schwab commercial, "Talk to Chuck" Goeres said. "I thought if Chuck knew this, he'd say, 'Oh my God, this is so wrong.' I live on naive dreams."

Schwab said in court papers that Goeres could have taken legal action soon after Ward's death, when he first was told he was not the beneficiary.