Introduction: A Little-Known Law with Big Implications
If you’ve ever battled an insurance company over a denied claim, you know the frustration: endless forms, vague explanations, and the sinking feeling that the system is designed to make you give up.
But there’s a powerful legal tool most providers and patients never think to use—ERISA.
The Employee Retirement Income Security Act of 1974 wasn’t written for healthcare. It was designed to regulate employer-sponsored benefit plans, including health insurance.
But here’s the key: ERISA requires insurers who administer these plans to act as fiduciaries—meaning they must put the beneficiary’s interests first.
When applied to healthcare, that fiduciary duty could be a game-changer.
What ERISA Covers
ERISA applies to most employer-sponsored health insurance plans, with some exceptions (like government and church plans).
It sets standards for:
- Plan transparency
- Appeal rights
- Timely benefit determinations
- Fiduciary responsibilities
If an insurer or plan administrator violates these standards, they can be challenged in federal court.
The Fiduciary Duty Angle
Under ERISA, a plan fiduciary must:
- Act solely in the interest of plan participants and beneficiaries.
- Provide benefits according to the plan’s terms.
- Avoid conflicts of interest.
When an insurer denies a medically necessary claim without valid reasoning—or drags out the process to the point of harm—they may be violating that fiduciary duty.
How This Applies to Prior Authorizations and Denials
Imagine this scenario:
- A patient’s specialist orders an MRI for a suspected neurological condition.
- The insurer denies it, citing “lack of medical necessity,” even though it’s supported by medical guidelines.
- The delay results in a missed diagnosis and worsened prognosis.
If the patient is covered by an ERISA plan, that denial might not just be “bad policy”—it could be illegal under fiduciary duty provisions.
Steps for Providers and Patients
1. Identify ERISA Plans
Ask patients if their coverage is through an employer-sponsored plan. If so, request the Summary Plan Description (SPD).
2. Document Everything
Keep detailed records of requests, denials, appeal letters, and medical justification.
3. Reference Fiduciary Duty in Appeals
Explicitly state that denying medically necessary care may violate the insurer’s fiduciary obligations under ERISA.
4. Escalate When Needed
ERISA allows for internal appeals followed by a federal lawsuit—often with the possibility of recovering attorney’s fees.
Why This Matters
Most denials never get challenged under ERISA simply because people don’t know it applies.
But when it’s used, it forces insurers to defend their decisions not just as “reasonable,” but as loyal to the patient’s interests.
That’s a much higher bar.
Limitations
- ERISA doesn’t apply to all plans (notably, it excludes government, church, and some small business plans).
- The law is complex—legal consultation is often needed.
- Remedies are generally equitable (ordering coverage), not punitive damages.
Final Thoughts: A Tool Worth Using
ERISA isn’t a magic bullet, but it’s a potent weapon in the right hands.
If insurers know that every questionable denial could trigger a fiduciary duty claim, they may think twice before rubber-stamping “no.”
Providers and patients alike should learn to recognize when ERISA applies—and not be afraid to use it.
Because in a system stacked against the patient, every tool matters.
About the Author
Douglas J. Jorgensen, DO, CPC, FAAO, FACOFP
Dr. Doug is a physician, consultant, and national educator on healthcare policy and regulatory compliance. He teaches providers how to leverage existing laws—like ERISA—to protect patient access to care.
