Employers use federal law to deny benefits

By MARK SHERMAN, Associated Press Writer

Dying of cancer, Thomas Amschwand did everything he was told to make sure his wife would collect on the life insurance policy he had through his employer.

"He was obsessed with dotting every `i' and crossing every `t'," Melissa Amschwand-Bellinger recalled about her husband, who died in 2001 at age 30.

But Spherion Corp., the temporary staffing company where Amschwand worked, told Amschwand-Bellinger she would not receive any of the $426,000 in benefits she believed she was due. When she went to court, Spherion succeeded in getting her lawsuit thrown out. The Supreme Court on June 27 refused to review the case.

Amschwand-Bellinger received a refund of the few thousand dollars in insurance premiums she and her husband dutifully had paid. The total, she said, would not cover the costs of his funeral.

The story has played out often under the federal Employee Retirement Income Security Act. Designed to protect employee benefits, the law has been used by employers as a shield against suits.

Federal appeals courts, interpreting Supreme Court decisions dating to 1993, consistently have said companies that offer health, life and retirement benefits under ERISA cannot be sued for large amounts of money, or damages. Instead, they can be sued only for typically smaller sums such as Amschwand's insurance premiums.

Several federal judges have bemoaned the unfairness even as they have felt constrained to rule in favor of employers.

"The facts ... scream out for a remedy beyond the simple return of premiums," Judge Fortunato Benavides of the New Orleans-based 5th U.S. Circuit Court of Appeals said in the Amschwand case. "Regrettably, under existing law it is not available."

The Bush administration has argued that the appeals courts are misreading the precedents and has asked the high court at least twice to clarify the earlier rulings. So far it has refused.

Congress, which could amend ERISA to make clear such suits are allowed, also has taken no action.

The result, in the view of ERISA experts, the administration and some lawmakers, is perverse.

"The beneficiary under the policy didn't get the promised benefit," said Colleen Medill, an expert on ERISA at the University of Nebraska-Lincoln. "To say we're just going to return your premiums, that's a total farce. That's not what they paid the premiums for. They paid them for the benefits."

Sen. Patrick Leahy, chairman of the Senate Judiciary Committee, said at a recent hearing that before ERISA became law, employees clearly could sue for benefits in state courts.

The court rulings, said Leahy, D-Vt., have left people "more vulnerable than they were before the law was passed."

Spherion's decision to deny benefits to Amschwand-Bellinger turned on an odd set of facts. Spherion, which employs about 300,000 people, switched insurers after Thomas Amschwand was diagnosed with a rare form of heart cancer. The new policy did not take effect until an employee worked one full day. Spherion never informed Amschwand of the requirement.

Amschwand asked repeatedly whether there was anything else he needed to do and was told no. He asked that the new policy be sent to him. Spherion never did so.

He died without returning to work. His widow said he easily could have worked a day if that was what it took to activate the new policy. Spherion could have waived the one-day-of-work provision, as it did for other employees but not for Amschwand.
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LINK TO THE FULL ARTICLE

I am missing something here...why isn't the claim against the insurance underwriter rather than the employer?

Fair enough question, but in the one case I gather it's because it was the employer's requirement of at least one day's work under the new policy that was ultimately used to deny the benefit. It was the employer's rule that was the basis for denial, not something from the insurance company.

I'm thinking the company's incentive is to keep claims low or nonexistent is to keep its share of the benefit expenses to a minimum.

Are you famaliar with the term 'dead peasant insurance'.

My company tried that with me (and my fellow workers) and I told as many of them as I could not to sign the free death benefits forms because I knew they weren't reading them thoroughly. They were mailed to everyones home where in their privacy they would proably just fill them in and ail them off instead of being handed out with their paychecks at at work where someone like me might read it and discuss what this really was.

I got to most of them and they did not submit it.

How much are you worth dead to your company?

Wall Street Journal: "The practice is as widespread as it is little-known. Millions of current and former workers at hundreds of large companies are thus worth a great deal to their employers dead, as well as alive, yielding billions of dollars in tax breaks over the years, as well as a steady stream of tax-free death benefits."


Dead Peasant Policy: Washington Post Primer

• Industry slang for insurance policies taken out by corporations on the lives of thousands of their rank-and-file employees, usually without workers' knowledge or consent.
• An insurance product that allows corporations to earn tax-free investment income on money put aside for retiree health and pension benefits
• According to articles in the Houston Chronicle and Wall Street Journal last week, a questionable gambit used by at least 100 large corporations to boost profits by taking advantage of the tax-shelter features of life insurance.
• The source of an estimated $6 billion in lost tax revenue to the Treasury each year and the subject of several pending tax court cases.
• A product actively marketed by the insurance industry as an "attractive, off-balance-sheet asset."


Enron Subsidiary took out Dead Peasant Insurance

Workers lost their retirement; benefits are paid to executive's retirement fund

read it all------

http://www.hereinreality.com/deadpeasant.html

and

http://www.texassportfishing.com/editorial2.htm

This loophole is so bad, even George Bush is against it.

The Bush administration has argued that the appeals courts are misreading the precedents and has asked the high court at least twice to clarify the earlier rulings. So far it has refused.

Congress, which could amend ERISA to make clear such suits are allowed, also has taken no action.

So between this and FISA, why is Congress so intent on taking away people's rights to sue corporations? And, by the way, under what authority are they claiming that right? I know the right to sue isn't spelled out in the Constitution, but neither is Congress' right to deny citizens access to the court system.

Anybody who thinks we don't live in a corporocracy, raise your hand.

Publication 525, Taxable and Nontaxable Income states on page 20:



It is no wonder that employers might want employees to sign off on these contracts without knowing what they were signing.

I wonder if signing off on a contract like this is a pre-condition for employment with Blackwater?

Never mind Blackwater (it most likely is) but as seen in the links above most companies try to do it from Wal-Mart to whoever......

Staying with the insurance topic.............

California regulators admitted Thursday that for more than a year they didn't even try to enforce a million-dollar fine against health insurer Anthem Blue Cross because it feared they would be outgunned in court.

In early 2007, the Department of Managed Health Care pledged to fine the state's largest insurer for "routinely rescinding health insurance policies in violation of state law."

But they never did.

The department's director, Cindy Ehnes, told The Associated Press on Thursday that, when it comes to rescissions, the agency has had success in forcing smaller insurers to reinstate illegally canceled policies and pay fines, but Blue Cross is too powerful to take on.

"In each and every one of those rescissions, (Blue Cross has) the right to contest each, and that could tie us up in court forever," Ehnes said of the approximately 1,770 Blue Cross rescissions between Jan. 1, 2004, and now.

http://www.cbsnews.com/stories/2008/07/04/...tr=HOME_4234198

Interesting Site........

http://www.badfaithinsurance.org/

I posted this before I'd seen that Bushwa had already done so.

This is an outrage and whats worse is it's supported by congress and the courts. Demand that your Congressman and Senators address this and before you buy or spend another dime on insurance you should address this with the company who is promising that your loved ones will be taken care of after you pass away.

Here's something else to consider. These companies have used the premium paid to make more money for themselves, along with the refund she should have gotten back all the money her husbands money made for them.

Actually - Load your cannon properly, folks. Start looking at who started the ball rolling with the ERISA and COBRA re-writes - follow the money and the who ponied up the expertise to load the legal Tetris to it's present position. That Spherion is the present Corp-RAT that got caught in the spotlight on this one serves them right. Spherion is right up there with StarFucks and Wal-Fart as Champion Abusers Par Excellance of employee welfare. Oh YEAH - Did I mention that they provide up to 70% of DELL'S workfarce? And that every 7 fiscal quarters or so they lay off about 3000 to 7500 employees down here? Texas is a "right to work" state that unions can't make headway in because of the "bubba-tocracy" that plays so nicely into the hands of the "I've got mine" crowd.

Screwing over employees is going to continue to be the National pastime of large employers until the US adopts a Worker's Bill of Rights. (oh - there was a backlash that Dell got caught in and it cost them dearly - for awhile, no one familiar with the tech industry in Austin would work for Spherion OR Dell...Served them fucking right....and YES, I speak from experience - mandatory overtime and 70 hour weeks. Your money ain't that good, Mickey D - neither are you.)


Kyoti