<nobr>Nov 4, 2009</nobr>

ERIC Strongly Opposes Proposal by Rep. Shadegg to Allow State Litigation of ERISA Plans

Washington, D.C. -- The ERISA Industry Committee (ERIC), the Washington, D.C.-based trade association representing America's major employers, strongly opposes a proposal by Representative John Shadegg (R-AZ) to subject employers' Employee Retirement Income Security Act (ERISA) plans to a patchwork quilt of state remedies and laws. Representative Shadegg earlier today held a press conference where he called on Congress to eliminate ERISA's preemption clause and allow state-based remedies.

In response to Shadegg's comments, ERIC President Mark Ugoretz warned that, "if Congress were to allow state litigation of ERISA plans, employers potentially could face thousands of lawsuits, under dozens of legal frameworks, resulting in a litigation nightmare.

Healthcare is a national not a state-by-state issue and must be dealt with in a nationally uniform system -- anything less results in healthcare chaos. Employer-provided healthcare coverage cannot survive if it is subjected to a patchwork of enforcement, remedies, and compliance rules by 50 states and a kind of product liability litigation. For the vast majority of employers, health care coverage is not a product, it is a benefit offered to employees. Employers, many of whom are struggling to offer health coverage to their employees, cannot provide health care coverage if they are subject to a patchwork of rules and multiple lawsuits in state courts."

For multi-state employers, ERISA preemption is an essential protection that allows employers to offer nationally uniform benefit packages to their employees regardless of where they are geographically located.

Ugoretz further warned that, "any change in the law relating to ERISA-governed plans would result in a retreat from offering healthcare coverage for millions of Americans who rely on ERISA-governed plans for their health care needs. Such a proposal would drive up already escalating health care costs that ultimately will be passed on to employees. That new burden would amount to a 'litigation tax' on all of an employer's employees to pay for lawsuits initiated by a few."

"The result would be added compliance and litigation costs, and extraordinary complexity and confusion for multi-state employers. Such a scenario would be disastrous for employer-provided health care and ultimately would dismantle the health care system as we know it. This is precisely what Congress knowingly intended to preclude when ERISA was enacted in 1974," Ugoretz added.

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For more information:
Ted Godbout
Manager, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: 202-789-1400
Fax: 202-789-1120
tgodbout@eric.org
www.eric.org

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The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

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