Washington D.C. Benefits Law Blog

Businesses and plan administrators overseeing employee benefits in Washington, D.C., have legal responsibilities to uphold to the workers enrolled in a health, retirement or disability plan. Under the Employee Retirement Income Security Act of 1974, plan administrators must respond to participants' and beneficiaries' requests for certain documents, including basic plan descriptions and summaries of coverage. They have 30 days to respond without penalty, but they could be fined up to $110 each day afterwards.

One federal court case illustrates that these fines are not simply an attempt at deterrence that are rarely assessed in reality. In this case, an employer set up a group health insurance plan for its employees but later failed to pay the premiums. As a result, the coverage was cancelled due to the employer's failure to pay, but several plan participants were left with unpaid medical claims. In an attempt to deal with the claims, these participants requested certain plan documents from the administrator in accordance with ERISA. However, the administrator never replied to their requests for the documents, and the participants sued over a wrongful denial of benefits. They later added a claim specifically for the ERISA violations in the case.

The pension plans and benefits packages of private sector employees in the District of Columbia and around the country are protected by the Employee Retirement Income Security Act. ERISA claims are often filed over alleged breaches of fiduciary duties connected to complex stock transactions, but they may also arise when plan documents contain language that could be subject to more than one interpretation. Such a dispute was recently argued in a federal court in Connecticut over how the word 'maximum" in a life insurance policy should be interpreted.

The claim was filed by an employee's widow who was seeking an additional $4 million in life insurance benefits. The policy documents stated that beneficiaries were entitled to a sum equal to five times the salary of the deceased worker with a minimum and maximum payout of $100,000 and $1 million respectively. The employer felt that the word 'maximum" applied to the payout while the widow believed the language placed a cap on the deceased worker's salary. The widow received $1 million in benefits according to the employer's interpretation.

Employers in the Washington, D.C., area operate in one of the nation's most competitive job markets. Attracting qualified candidates will usually require offering a comprehensive benefits package as well as an attractive salary. Many of the benefits offered by employers must comply with standards outlined in the Employee Retirement Income Security Act, but companies also consider industry standards and their current and future financial obligations when deciding what to offer their employees. This means that employment contracts are often complex documents that can be difficult to understand.

Employee benefit plans sponsored by employers should, ideally, reward and motivate employees while complying with ERISA.  As an employee you will be entitled to receive certain plan documents upon becoming eligible to participate in the sponsored plans. When negotiating your employment contract, make sure you have your employer add those eligibility dates in your agreement so that you know when to expect your plan documents.  Also ask that you employment contract detail who is the appropriate contact regarding your employee benefits and reflect any intranet sites where documents and forms are located.  Employers sponsoring ERISA benefit plans have a responsibility to tell you the truth about your benefits, so make sure you document your requests and the responses. The employer typically is not the fiduciary, so you may be directed to the appropriate fiduciary respopnsible for the benefit plans. The fiduciary also must be truthful and provide you a complete response to your questions. 

Your employment contract should be drafted with great care to ensure that it reflects all that you need to know about your employee benefits.  Both executives and non-executives should take care to understand the types of benefits offered and when you will become eligible for them. If you are choosing between several job offers or deciding whether or not to sign a new employment contract, legal insight from an attorney experienced in this area could be very helpful.

If you're a public sector or federal employee in the Washington, DC, area, you likely enjoy greater benefits than employees in the private sector. Your benefits package may include generous retirement, disability and medical benefits.

Along with the differences between the benefits packages, the processes for filing benefits claims are also different for public sector and federal employees. When you suffer an injury, become disabled or decide to retire, it can be devastating if your claim for benefits is denied.