Washington D.C. Benefits Law Blog

A major purpose of ERISA is to help employees in Washington, D.C., and around the country secure appropriate retirement and health benefits. However, benefit payments may not be dished out correctly if old data is used to determine annuity payment amounts. This, in a nutshell, is what's at the heart of a lawsuit involving a large military shipbuilding company's non-single-life-annuity plans.

In a complaint filed in the U.S. District Court for the Eastern District of Virginia, the company is accused of using outdated mortality data that was first published in 1971. This data assumes 90 percent of the company's employees are male and 90 of the contingent beneficiaries are female. A 6% interest rate is also used. If company retirement plan participants opt for a single life annuity (SLA), they'll receive benefits at a flat monthly rate for each year of service from their retirement date until they pass.

To protect the pensions of employees in Washington D.C. and all across the United States, The Employee Retirement Income Security Act (ERISA) was signed into law in 1974. Over the years, ERISA has been modified to cover many other types of workplace benefits, including medical insurance, dental insurance, vision plans, disability insurance, and severance agreements. These protections also apply to employees at non-profit organizations and small businesses. Unfortunately, it can be complicated for employees to exercise their rights under ERISA.

When a benefit claim is denied under ERISA regulation, a complex process where the insurance company has a lot of power takes place. This involves an administrative appeal where the insurance company decides whether or not its own decision was correct. This may seem unfair, but there are ways an employee can improve their chances of success. In addition, if an appeal is not filed in time the employee can permanently lose their ability to get the compensation they deserve.

Pension plans in the District of Columbia and around the country have to be funded in order to fulfill their purpose. However, the Archdiocese of Newark, New Jersey, failed to do so, according to a lawsuit filed by more than 100 former employees of Saint James Hospital. As a result of the Archdiocese's action, the plan ran out of funds in 2017, and no benefits have been paid out since.

The pension plan operated under the Employee Retirement Income Security Act (ERISA) until the Archdiocese stopped funding it in 1988. Around 1997, the Archdiocese had more than $20 million in excess funds that it could have used to plug a $2.7 million hole in the plan. However, the Archdiocese chose instead to transfer those funds to a non-guaranteed Transamerica account. Transamerica later notified the employees that the Archdiocese had stopped contributing to the plan and that funds were no longer sufficient to meet future obligations.

Lawmakers in Washington D.C. created the Employee Retirement Income Security Act of 1974 to direct the design and operation of retirement plans for private-sector employees. ERISA does not apply to retirement plans operated for employees of government agencies, and workers at Indian tribal governments largely fall into the non-ERISA category. An amendment to the act in 2006 altered this landscape for plan sponsors at Indian tribal governments and granted ERISA protections to workers employed within tribal commercial enterprises.

A retirement plan for tribal workers would only be exempt from ERISA if the employees performed essential governmental functions, such as teachers. Tribal governments running retirement plans for employees at commercial venues, like hotels or casinos, would have to observe ERISA rules. The act requires plan sponsors to file annual reports, provide participants with a summary plan description, adhere to specific procedures for claims and appeals and meet fiduciary standards.