The arbitration system is harmful to employees. ERISA is often harmful to employees. So, what happens when a case involves both arbitration and ERISA? Mucho harm to employees. That is the subject of a NPR report that address the ERISA law and worker’s compensation. See NPR report. As the report explains, Kevin Schiller was a building engineer for Macy’s in Texas. After 21 years with Macy’s, he suffered a bad fall at work. He suffered a Traumatic Brain Injury. For some time, the injury remained undiagnosed. He experienced bad headaches, memory loss, disorientation and extreme sensitivity to bright light. Macy’s thought he was faking it. One doctor said he was psychosomatic. Other doctors told him they were there to observe him, not treat him.

Like many employers in Texas, Macy’s opted out of the state worker’s compensation system. It relied on private, employer provided medical insurance. Mr. Schiller, however, could not get treatment. No one believed he had an actual illness. He lost his job, his house and his pickup. He spent $90,000 of his own money seeking treatment and eventually was diagnosed with TBI.

Because Macy’s employees were required to sign a mandatory arbitration agreement, his appeals for ERISA benefits were heard by arbitrators who were paid by Macy’s. Not surprisingly, he lost his early appeals. Eventually, in a separate proceeding, he was awarded Social Security Disability benefits.

[All I can say is big deal. Social Security disability benefits generally amount to less than $15,000 per year. So, he went from $80,000 to about $12,000 per year.]

Eventually in his appeals, he succeeded, sort of. An arbitrator did eventually award him $713,000. But, that was only because he had the resources to obtain fair and impartial medical opinions. Too, he would have received at least twice that in a lawsuit against his employer, said Ted Lyon, a Dallas attorney. Since, he was injured at the age of 52 and he would have worked until he was 65, Mr. Lyon thinks $5 million would have been possible with the right jury. He means that because of how Mr. Schiller was treated by his employer and the long delay, a jury might have awarded millions of dollars.

Much of the $713,000 award went to legal and medical bills. The rest remains in a trust. But, as Mr. Schiller adds, most of the award will be gone before he is gone.

20 years ago, Kevin Schiller would have filed a worker’s compensation claim. He would have received very little benefits, but he would;d have receive medical coverage and a very reduced income for a few years. The policy since 1901 or so has been that if an employer does not have worker’s compensation, that it can be sued for negligence. Personal injury lawsuits or worker’s compensation was always the choice for employers in the state. Now, they have a third choice: medical insurance plans that can be corrupted to avoid paying anything.

And, medical insurance, unlike worker’s compensation, pays nothing to replace lost income. Worker’s compensation would pay some small amount as lost income.

Now, with the opt-out provisions we have in Texas, the Kevin Schillers gets little to nothing. Jeff Dahl, a San Antonio lawyer, explains. The ERISA statute was originally passed on 1974 to protect fringe benefits. But, it has now become a “shield” for the employer.