I’ve posted here and here about ERISA’s limited remedies. But the situation Don and Cindy DeCastro, former clients of mine, faced several years ago really brings home the problems ERISA’s lousy remedies create for people.
Don and Cindy were a young couple with children. Don worked for a large company that had a self-funded medical benefits plan. Cindy, his wife, was diagnosed with ovarian cancer. Her doctors said her best chance to survive was to get a bone marrow transplant. The problem was that Don’s employer terminated Cindy’s coverage for no good reason shortly after she was diagnosed. Because she had no coverage, and the DeCastros couldn’t pay for the transplant out of their own resources, Cindy had to go without it.
Don came to me asking for help in getting Cindy’s coverage reinstated. We were successful in doing that but it took a few months. When I finally called Don to tell him the good news about Cindy being reinstated he said, "well that’s great but Cindy’s health has now deteriorated to the point that the doctors tell us that she is no longer a candidate for the transplant."
A few months later Cindy died. Don called and said, "I understand that even if Cindy had received the transplant, she might not have made it. But that was her best shot at living. My employer terminated Cindy’s coverage in error. I want to sue the company to recover something for the fact that they are responsible for Cindy losing her best chance to live." He had a reason to feel the way he did. He should have had the chance to hold his ERISA plan administrators accountable for the loss associated with their wrongful act. But Don had no remedy for that loss of opportunity to save Cindy’s life.
ERISA only allows you to recover lost benefits you are entitled to under an ERISA plan. You can’t recover damages you suffer as a direct consequence of an error an ERISA insurer makes in denying a claim. You can lose your car, your house, your wife, your life. But you have no ability to recover anything for those losses no matter how directly they flow from the wrongful denial of the claim and no matter how indifferent, callous or even malicious the insurer’s denial was.
It would be bad enough if the Don DeCastros of the world simply were left without compensation for their losses. But there is reason to believe that the restrictions on the ability to hold insurers accountable under ERISA makes them more likely to cut corners. Read the next blog entry, "ERISA Encourages Bad Insurer Behavior."