Which is Better – ERISA or State Law?
Both have advantages and disadvantages. The biggest complaint against ERISA is that you cannot recover punitive damages or bad faith damages if the insurance company acts in an outrageous manner. On the other hand, it is often not cost effective for a group insurance company to litigate ERISA claims, and claims adjustors will frequently back down if you produce the proper documentation. Another point to make is that employee claimants often try to pursue claims on their own without the help of a lawyer and they do not know how to document their claim or develop a claims record. It has been our experience that with proper documentation, ERISA group benefit claims will be paid. Individual disaibility policies have the advantage of permitting you to ask for State law punitive damages for bad faith acts of the insurance company. Since most individual policies are sold to high earners and provide large monthly benefits to successful claimants, bad faith damage awards can cost the insurance
