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Does ERISA apply when a fiduciary makes a misleading statement prior t


Guest Trammer
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Guest Trammer

Employee (and co-owner)has severe multiple sclerosis. He had medical coverage under a policy paid for by the corporation of which he was part owner. The union sent a letter indicating he could now be covered under the union policy, with cheaper rates. He called the plan administrator(union trustee)and told him he had MS. The plan administrator assured him there would be full coverage for his MS. Based on this representation the employee cancelled his existing policy and joined the union policy. He found out later that there is a $5,000/year limit on pre-existing conditions, which he was never informed about. He now owes over $40,000 in medical benefits. Does ERISA cover an misrepresentation such as this which induced him to get inferior coverage, or is this a straight state law misrepresentation claim?

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There's no clear up or down answer on this one. It depends on the circuit you are in and the judge you draw. Given current trends in the case law, I'd vote for state law.

The best answer for the plaintiff would be that it's solely a state law claim, because then he can get more than just benefits and attorneys fees.

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Why wouldn't HIPAA apply to a)limit length of pre-existing wait period and b) allow use of prior covered period to satisfy the wait period? I'm not a welfare (health) benefits expert, but I think your stronger claim is HIPAA, not ERISA.

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