ERISA does a terrible job of protecting the individuals it was designed to protect. Today's Wall Street Journal has an article written by Ellen E. Schultz about the efforts of former NFL player Victor Washington to get disability benefits from the league's disability plan. The story is behind a subscriber wall. But it states that ERISA has ended up "tilting the playing field in favor of employers and serving as a legal shield for them." Too true. It references the Supreme Court's 1987 ruling in Pilot Life v. Dedeaux that no punitive damages may be awarded in ERISA cases and states that, as a consequence, " . . . there's little downside to delaying or resisting approval of a claim, since the worst that can happen is that the employer will later be ordered to pay. For employees, however, the lack of punitive damages means it is often difficult to afford--or even find--legal representation."
It's actually worse than the article describes. Not only is an ERISA claimant prohibited from getting punitive damages (damages to punish the insurer), he has no right to "consequential" damages. These are damages routinely awarded by courts to compensate a person for loss arising out of another person's wrongful act. For example, under ERISA if you lose your home or car because an insurer has wrongfully denied your health or disability claim, you get no compensation for that loss if a court later decides the insurer was wrong.
Back in 1989, two years after Pilot Life, Justice O'Connor wrote in Firestone Tire and Rubber v. Bruch, another ERISA case, that courts should not interpret the statute in a way that would "afford less protection to employees and their benefitciaries than they enjoyed before ERISA was enacted." But that is exactly where we are. And, ironically, it is in large part because of Pilot Life, a decision written by . . . Justice O'Connor.