erisa for dummies and the rest of us who represent nonsubscribers james mccoy the mccoy law firm...

ERISA For DummiesAnd The Rest Of Us Who

Represent Nonsubscribers

James McCoyThe McCoy Law Firm

12400 Coit Rd., Ste. 560

Dallas, Texas 75251

(214) 292-2603

[email protected]© The McCoy Law Firm 2012

Nonsubscription in One Minute

• Unique to Texas

• Employers reject worker’s compensation

• No obligation to pay benefits to employees

• 40% of all employers are nonsubscribers

• Not just for marginal companies any more

• Responsible nonsubscribers provide for injured employees

© The McCoy Law Firm 2012

Nonsubscription Pros and Cons

• Advantages• Cost Savings• Employer manages medical costs and can

encourage a quicker return to work• Employer has greater flexibility and control

• Disadvantages• Subject to negligence liability• Time spent on claims


ERISA – What is it?

• Employee Retirement Security Act of 1974

• Enacted to protect the interests of participants by requiring disclosure and establishing standards of conduct, responsibility and obligations for fiduciaries and granting access to courts


ERISA – What it really is:

• ERISA is detailed and complex with many exceptions and special rules; sometimes the rules are vague, even contradictory

• Lawyers, accountants, consultants and insurance specialists can make a career out of it

• ERISA for the nonsubscriber is very manageable


The Hassle Factor

• Why do I need an ERISA Plan?

– Saves money– Gets workers back to work; keeps employer

competitive– Take care of injured employees– Minimizes lawsuit potential


The Plan Reduces Lawsuit Risk

• Nonsubscriber carriers require ERISA Plans

• The Plan pays benefits while an employee is off work

• Paying wages and benefits takes the fear and anxiety out of being hurt and keeps employee away from lawyers


Inviting a Lawsuit

• Keep employees guessing

• Don’t pay medical bills or lost wages; deny benefits

• Fire the employee

The ERISA Plan helps avoid these Nonsubscriber pitfalls.


What is an ERISA Plan?

• It’s a contract• Between the company and the employee• It spells out what the employee will get, when he

will get it and how long he will get it

• It’s an assurance• If employee is injured on the job, he will be

provided for• It gives peace of mind to the employee and to his

family


ERISA and the Insurance Product

• The Plan is the contract between the employee and company

• The insurance product funds the benefits promised in the Plan

• This allows the company discretion and freedom in handling its claims

• Allows the company to receive a credit or offset against any award should a lawsuit be brought


The Plan Binder

• Benefit Schedule

• Official Plan Document

• Summary Plan Description (SPD)

• Arbitration Agreement

• Meeting Sign-In Sheet

• New Hire Receipt

• Payroll Stuffer


Benefit Schedule

• “Dec” Page for the Plan

• One page summary of the benefits available and their duration


Official Plan Document

• Main Plan document; contains specific information for covered claims and exclusions

• Think of it as a contract between company and employee


Summary Plan Description

• SPD

• Distributed to all employees

• Summarizes Plan in understandable language

• Should be distributed with Benefits Schedule


Agreement to Arbitrate

• Reduces likelihood of lawsuits

• Disputes will not be heard by jury

• Allows company to participate in selection of arbitrator

• Critical cost savings measure

• Covers nonsubscriber negligence claims as well other employer liability claims


Meeting Sign-in Sheet

• Proof that employees received SPD and arbitration agreement

• Will be used to compel any lawsuit to arbitration

• Copy should be returned to TPA to show proof that materials were distributed to employees


New Hire Receipt

• For use with new hires and employees not present at roll-out meeting

• Install this document in company’s new hire packet

• Maintain record for proof that employee received SPD and Arbitration Agreement


Payroll Stuffer

• Used to remind employees of Arbitration Agreement

• Should be distributed in paychecks quarterly

• Keep record of when distributed


The Rollout

• Can be as simple or as complex as you would like

• Purpose is to ensure employees get the materials and employer gets employees’ signatures acknowledging receipt of same

• Signatures, Signatures, Signatures


The Roll of the Agent• Talk to insured about importance of getting

SPD and Arbitration Agreement into employees’ hands

• Stress getting signatures from all existing and future hires

• Participate in rollout

• Handle getting copies of sign-in sheets back to TPA

• Explain the basics of the Plan© The McCoy Law Firm 2012

Common Questions

• Does everybody really need to get a copy of the SPD?

• Can’t we just pass out the Benefits Schedule?

• Do we have to pass out the Benefits Schedule?

• Multiple Locations?

• Who gets the sign-in sheet?


Common Questions

• Why are the ERISA limits lower than the policy limits?– Don’t want to make it an goal– Need to save insurance for litigated claims– Allows extra insurance to settle large loss– Limits are adequate for 99.5% of claims


Claims Procedures

• Utilize TPA’s expertise

• TPA will assist in setting up a claims administrator and review committee

• Claims administrator makes initial determination

• Review committee handles appeals


ERISA Lawsuits

• Very rare• Recovery limited to benefits and possibly

attorney’s fees• Exhaustion of administrative remedies

(i.e., appeal under Plan’s terms) required• Net result – lawyers try to roll wrongful

denial claims into negligence lawsuit• Emphasizes importance of distributing arbitration

agreement and getting employee signatures.

Regulatory Requirements

• DWC (State) Forms– DWC-5

• Annual requirement

– DWC Notice 5– DWC-7

• DOL Form 5500 Annual Report– 100 or more employees at beginning of plan year


ERISA. Simple.

• It’s a contract

• It has to be distributed

• Get signatures

• If you have a claim, avoid re-inventing the wheel -- rely on TPA’s expertise


erisa for dummies and the rest of us who represent nonsubscribers james mccoy the mccoy law firm...

Documents

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benefits schedule

care of injured employees

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