A story from the Associated Press appearing in the Tampa Tribune this week chronicles the plight of a woman who was robbed twice: once when her husband died of cancer, and once when her husband's company and its insurer failed to pay her claim for life insurance proceeds. The story is a sad example of how well-intended federal legislation can deprive Americans of even their most basic rights through the legal principle of federal preemption.
According to the story, Thomas Amschwand knew that he was dying of a rare form of heart cancer and did everything he was told that he needed to do to make sure his wife would collect on the life insurance policy he had through his employer, Spherion Corp. He filled out the paperwork, paid his premiums, and asked repeatedly whether there was anything else he needed to do. Spherion told him no. He even asked for a copy of the policy, but Spherion never sent it to him.
When Thomas died in 2001 at the age of 30, his wife, Melissa, filed a claim for the $426,000 payable to her as the beneficiary under the policy. But Spherion told Melissa that she would not receive a dime under the policy. Why? Because Spherion switched insurers after Thomas was diagnosed with cancer, and the new policy did not take effect unless and until an employee had worked one full day. Melissa says that Thomas could have, and would have, worked that one day if only he had known that is what he needed to do to make sure that his death was covered under the policy. But the fact is Thomas didn't know, because Spherion didn't tell him, even though he asked.
Never mind the fact that Spherion never informed Thomas of the one-day-of-work requirement despite his repeated inquiries to ensure that his wife would be taken care of under the policy. Never mind the fact that Spherion could have waived the one-day-of-work provision for Thomas, as it did for other employees. And never mind the fact that Thomas had paid all of the premiums due under the policy. When Melissa filed suit to collect her money, the court told her that her claim was preempted by ERISA, and the most that she could receive was her money back for the premiums Thomas had paid.
What?! That's right. The Employee Retirement Income Security Act (ERISA) was originally intended as means of protecting employee benefits, but it has been used as shield by employers like Spherion who say that any claims against an insurance policy governed by ERISA are subject to the provisions of ERISA, which means that the most you get is your premiums back in cases like that of Thomas and Melissa Amschwand. And, courts have said, ERISA preempts or overrides state law tort claims against the employer for fraud or negligence - e.g. for telling Thomas that everything was taken care of when it allegedly knew that it was not.
Even the Bush administration thinks that this result is unfair, but has anyone done anything about it? No. One would think that Congress would have stepped in to prevent this sort of injustice but it has not. Thus claimants like Melissa, or you if you happen to be unfortunate enough to find yourself in the same position, have absolutely no recourse.
For those wondering about what federal preemption means, this is what it means: Congress, and by delegation of Congressional power, federal agencies, can and do deprive innocent victims such as Thomas and Melissa Amschwand of their day in court. God forbid that one day that victim might be you or your family. It is not right, it is not fair, and the law should be changed.
