ERISA renders any employment-based insurance coverage virtually unenforceable in court should it ever come to that. In the case of both self-funded and insured coverage, state laws regarding breach of contract, insurance bad faith, and remedies are gutted by ERISA and replaced with a scheme which very significantly stacks the deck in favor of the insurance companies and similar entities. It also limits the remedies which may be recovered – if, against the odds, the claimant is able to prevail – to a level which is utterly meaningless to the insurer. This is a major, major problem, as of course it directly impacts the behavior of insurers and plan administrators, who know full well that the coverage they issue is essentially unenforceable and that they may breach their contracts with no meaningful consequence. For one example, see this discussion at my blog about ERISA:

http://problemiserisa.blogspot.com/2009/09/rising-judicial-chorus-judge-young.html

and those interested may wish to peruse some of the rest of the blog as well.

One of the essential underpinnings of a free market is the rule of law. ERISA undermines the rule of law, and in this sense too it must be amended if any sort of real reform is to be achieved.

Allen Taylor