Why Government Plans Are Exempt From ERISA

Government Plans Exempt from ERISA

If you have been denied benefits provided through an employer-sponsored plan, your claim will generally fall under the Employee Retirement Income Security Act (ERISA). ERISA is a federal law that governs most employee benefit plans. While ERISA was originally enacted to safeguard employees’ retirement and pension benefits, its reach and scope has been expanded over the years.

But not all employee benefit plans fall under ERISA. When Congress crafted ERISA, it wanted to reduce abuses in the system for private employee pensions. However, it decided that state and local governments should be free to decide the best way to protect their employees. This became an established part of the law. Under ERISA, a government plan means any plan “established or maintained” by the federal government, a state government or political subdivision, or by any agency or instrumentality of any of the foregoing. 29 U.S.C. §1002(32). Courts have defined “established” to include plans created under a collective bargaining agreement between a government unit and a union.

This means that employees who fall under the government plan exemption are not subject to ERISA. There are many reasons why it is beneficial to get out from ERISA’s reach. Like other states, Texas has laws governing life, accidental death, disability, and health insurance that are more fair to insurance claimants and allow them to sue an insurance company for breach of contract, insurance bad faith, and punitive damages. Emotional distress damages and other damages caused by insurance company’s bad faith may be recoverable under Texas law but are not recoverable in ERISA cases.

Determining whether a matter is governed by ERISA can be a complex process, but this is one factor to keep in mind when a plan may be established or maintained by the government. If you have been denied ERISA benefits, a Houston ERISA attorney at Berg Plummer Johnson & Raval, LLP can help you file a case and recover the compensation you deserve. For more information on filing an ERISA claim, call our firm today at (713) 526-0200 or contact us online to schedule a consultation. Our lawyers offer unique, cost-effective fee arrangements and will fight for your rights throughout the entire duration of your case.