Does ERISA do a good job of protecting consumers?
No. You have the right to sue if you feel the insurer's denial was wrong. But often the court will reverse the denial from the insurer or payor of benefits only if that denial was "arbitrary and capricious." Basically this requires you to show that the insurer was completely unreasonable, a difficult burden of proof for claimants to carry. Insurers know this and they are likely to be more aggressive about denying ERISA claims than they are when they receive claims that are not governed by ERISA. In addition, while ERISA gives participants the right to sue to recover benefits that have been wrongfully denied and for recovery of losses to a group of employees if a fiduciary's breach of duty causes loss to the group, it doesn't allow for recovery of any "consequential" damages that result from the wrongful denial. For example, if a disability insurer improperly denies your benefits for several months and your car is repossessed or you lose your home, you can't recover anything to compensate you for the loss you suffer as a direct consequence of the insurer's wrongful denial. The best you can do is to recover your disability benefits. In addition, you can't recover punitive damages under the statute. There is very little in ERISA to deter an insurer from taking a hard line in dealing with employees and their family members. From the insurance company perspective, the worst thing that is likely to happen is that they will be ordered to pay the benefits they should have paid in the beginning. In the meantime, the insurer has been able to earn interest and investment income on the money you should have received months or years before. There is little question that, as a practical matter, consumers of health, disability and life insurance have fewer rights under ERISA than they had before that statute was passed in 1974.