According to Bloomberg (11/27/13), Ernst & Young LLP will pay investors, including retirement systems, $99 million to settle allegations that it improperly audited Lehman Brothers Holdings. The plaintiffs, investors who bought certain securities from Lehman Brothers between June 12, 2007 to September 15, 2008, alleged Lehman Brothers misrepresented its financial position.
In agreeing to settle the lawsuit, Ernst & Young denied any liability.
The lawsuit is In Re Lehman Brothers Securities and ERISA Litigation, 09-MD-2017, US District Court, Southern District of New York.
The Employee Retirement Income Security Act (ERISA) covers a wide range of employee benefits, including health plans, retirement plans and stock options plans. It also covers employer-sponsored disability and life insurance plans. In the case of employer-sponsored insurance plans, ERISA’s rules for filing a lawsuit are different from those governing private insurance plans. ERISA-covered insurance complaints must first involve an appeal of the insurance company’s decision. If an appeal is not filed, the complainant may not ever have the right to sue the insurance company. Only after the appeals process has been exhausted can a lawsuit be filed, and even then only money lost as a result of the denial can be recovered; the plaintiff cannot file for pain and suffering or punitive damages.
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Not all ERISA claims are settled in a lawsuit. In some cases, ERISA disputes are settled in an arbitration forum. Some employers include mandatory arbitration clauses when disputes arise over employee benefits, meaning the employee is required to settle the dispute through arbitration.
Despite some of these limitations, there are still avenues for people to file ERISA complaints. Depending on the circumstances, an appeal, arbitration or lawsuit can be filed if an employer or organization has violated ERISA laws.