Thomas Amschwand knew he was dying and did everything in his power to make sure his wife would be able to collect his $426,000 life insurance policy. Yet when the 30-year-old succumbed to heart cancer, his employer, Spherion, a temporary staffing company, told his widow Melissa that she would receive nothing.
Spherion had switched life insurance providers without informing Thomas. Under the new policy, employees had to work for one full day to activate their coverage. Spherion never mentioned this to Thomas, and repeatedly assured him that he didn’t need to do anything to retain his coverage.
His widow said he easily could have worked a day if that was what it took to activate the new policy. Spherion could have waived the one-day-of-work provision, as it did for other employees but not for Amschwand.
When Thomas died, because the policy had never been formally activated, Spherion refunded his insurance premiums and told his widow she would receive nothing else.
The story has played out often under the federal Employee Retirement Income Security Act. Designed to protect employee benefits, the law has been used by employers as a shield against suits.
Federal appeals courts, interpreting Supreme Court decisions dating to 1993, consistently have said companies that offer health, life and retirement benefits under ERISA cannot be sued for large amounts of money, or damages. Instead, they can be sued only for typically smaller sums such as Amschwand’s insurance premiums.
Several federal judges have bemoaned the unfairness even as they have felt constrained to rule in favor of employers.
“The facts … scream out for a remedy beyond the simple return of premiums,” Judge Fortunato Benavides of the New Orleans-based 5th U.S. Circuit Court of Appeals said in the Amschwand case. “Regrettably, under existing law it is not available.”
The Supreme Court recently refused to hear Melissa’s case. Congress has refused to act. Insurers continue scrape up lucre, and consumers are left to suffer.
Employers use federal law to deny benefits [AP]
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Scumbags.
Temp agencies (aka “body shops” or “new slavemasters”) should just be made illegal. Loosen up rules on employers so they can pay an increased wage for a “trial” period, then be required to hire “permanently” after a certain amount of time.
And if anyone still isn’t convinced that Universal Healthcare and other basic human support isn’t necessary after reading this widow’s plight, then your soul is deader than her husband.
Scumbags.
Temp shops are unmitigated evil. Some day we will look on this period and these forms of “employment” as the slavery that they truly are. No benefits, games like this being played, creating a society with no hope for the future except winning lotto or robbing a bank. Nice.
Universal Healthcare and other basic human needs are absolutely overdue. To think not would indicate one’s soul is deader than this widow’s late husband.
@Eoghann: Please check your facts about the Supreme Court and the recount. They voted to prevent the recount, the opposite of what you said.
banks and insurance companies… they exist only to collect money and find reasons not to give any of it back to you when by any reasonable measure they should do so.
avoid them whenever possible, otherwise see to it that your elected officials regulate the crap out of them.
@dweebster: I moved to a different state and got on with Manpower after I moved. It gave me an instant paycheck (which is important after a move,) introduced me to several people in the area, and got me regular work for several months until I found a full time job.
I’m mighty happy that it’s available as an escape hatch if I suddenly need work.
I don’t use Spherion and I can certainly make sure that none of my friends in Las Vegas do. Once you get a bad reputation around here it is very difficult to overcome.
Not that it means much but I wrote an email to them from the contact us page. I hope the press that they are getting leads to a change in their attitude because this is just abhorant.
Definitely time to vote with your feet. If you need temps, don’t call Spherion; if you work for them, leave.
I’m a little bit confused. Spherion Corp. switched insurers without telling Thomas Amschwand about the switch, and Spherion has the power to waive the one-workday activation requirement? I thought only the insurance company had that power. And if the benefits coordinator of Spherion misled Amschwand about the new policy requirements, then why isn’t Spherion on the hook for negligence? Should not Spherion themselves be paying out the equivalent of the insurance money?
@JollyJumjuck – Regarding the waiving of the one day requirement, I’d imagine that Spherion (if for nothing else other than goodwill) could credit Amschwand with having worked a day in the payroll system following the switch (essentially, paying him 8 free hours so that he is eligible for insurance claims). I mean, just clock him for a day of ‘training’ or something. At most companies, this should be something any manager could do with approval from a supervisor.
michael_dell@dell.com
Maybe if they lose a large client?
“Insurers continue scrape up lucre, and consumers are left to suffer.”
I know insurers are a frequent target, most of the time deserved. but in this case, how is this the insurer’s fault? And how do they scrape lucre, when the premiums were refunded?
@angelmom1: except, that, you know, the Supreme Court was just doing what it is intended to do, there; and this situation dates back to the early Clinton years; and it is way off topic.
Hello?
@negitoro: Why would they? Right now, their move is saving them almost half a million dollars. If they can sleep at night knowing what they did to this poor man and his family, that’s a pretty good economic incentive to do the evil thing here…
llcooljabe makes a good point: should our anger be reserved for Spherion or the insurer??
I’m thinking Spherion is to blame bc 1) they knew the insurer had been changed, and 2) they were aware of that Amschwand needed to work one day to activate it.
But the question remains: did they come up with this plan on their own or did the insurer help, bc ultimately the insurer would be the one saving money, right?
This is completely loathesome. I will not forget this company’s name and have e-mailed this story to several friends who are in positions to hire temporary staffing, telling them never to have anything to do with Spherion — anybody who will cheat their employees will cheat their clients. Everyone involved in this decision — completely ripping off a dying man and his widow — should be publicly reviled.
TJX hired Spherion to clean up the mess from the Credit Card issue. I was hired by Spherion for TJX along with 300 other people. They had seating for 200 people. I left that position after 1 month because of the grief they put me through.
This is a downright scary story. Essentially, any company could do this to you and me and pull the rug out from under our feet. I imagine they do similar shenanigans when you reach retirement age…
I would love to write a letter to my congresspeople, but I admit I am at a loss for what exactly is the issue, legally. I am not familiar with insurance (as I cannot afford it), and I don’t see how I could possibly convince a congressperson to understand something I myself don’t. I guess even a link to this story is better than nothing, but I feel it really would be a waste of time. I ask that next time an encouragement to write a letter is issued, that you include exactly what “legalese” is required to help solidify the arguement.
Several clients of this company have already canceled their services with them. And with good reason. If a company will do their employees this way, they will do it to the clients.
What a tragedy for the widow. My company uses Spherion for its temp staffing – what can I do? I’m a pretty low-level employee and I don’t know where to start. I probably won’t be listened to anyway.
this is what really digs me. you are a freakin federal justice. if there should be remedy under the law, make one. stick your neck out & make a precedent already. & if SCOTUS reverses your decision, so be it.
while ERISA may protect employers, it certainly seems as though there are conflicting laws at play here, which should give a federal judge ample maneuvering room for a ruling. either melissa’s case isn’t as strong as it appears to be, her lawyer is a moron, or we just have some whimpy justices out there.
with the state of things today, i think i know the answer to that one already…
@mac-phisto: when unelected, untouchable people start making the rules, we tread on very thin ice.
Though I think Spherion’s behavior calls for “Pit and the Pendlum” treatment.
whats shameful is that alot of employers are switching their liabilites to staffing agency. Spherion knows that most of the policies that they are underwriting is supplemental insurance. belive me i know i am license agent. email me your request and i will glady anser all questions. especially fo our seniors. service@docguy.net
@JollyJumjuck: I think that is the case here. Spherion is being found liable for their mistake. However, they are arguing that, under ERISA, they can only be sued for an amount equal to the premiums paid by Melissa’s husband. Since they’ve already paid her back, there is nothing to sue for.
@TheNerd: The legal issue being discussed is the amount a company could be sued for when, they are negligent or deliberately misbehave or defraud someone. ERISA has been interpreted to mean that any company that offers health, life, and retirement benefits cannot be sued for large amounts of money.
Thus, the problem could arise that you could be giving the company you work for some of your paycheck to buy life insurance for you. But instead of buying life insurance for you, they just blow it all on drugs and hookers. Then when you up and croak, they say “oops, sorry about that” to your widow/er and give her/him what you paid in premiums, which would most likely be far less than the amount of insurance you thought you had purchased. Since they offered health/life/retirement benefits, there is no legal recourse for your widow to go after them, and since no one is changing the law (or the interpretation of it), there is no reason for the company to change their behavior. Basically, it’s a “get out of jail free” card.
Oh yeah, obligatory IANAL, but that is the way I understand it.
My husband worked for Spherion for 6 months. Total. After the first two weeks, they started “forgetting” to give him a paycheck each week. When he brought it up with them, they blamed him for not coming in to pick them up, even though he had Direct deposit from the first week. Kleberg bank luckily went after them for sending empty payments via direct deposit to his account and proved he was getting no money from them. Once the payments actually started. They wouldn’t let Ikon direct hire him from them. They refused the paperwork every time. He had a chance to move from 10$/h to 18$/h with Ikon. Spherion told them he could not switch due to “probation” because of a payment error, which was their fault.
I will NEVER doubt Spherion to be a bunch of backstabbing “employers”
Sad part is there really is nothing she’s gonna be able to do i guess. If there was a way that i knew of. I’d suggest it. If she accepted the payment from them for the premiums he paid into… I don’t think she’s gonna be able to get anything else.
@pearl_girl: Thanks for all the great info!
@drrictus: it’s not that they’re making the rules necessarily. when multiple laws conflict, it’s up to our judges to decide which law sets the framework & relate conflicting laws accordingly. i would think that evidence of other waivers of on-day-of-work provision would signify discrimination in this particular case. does ERISA supersede EOE guidelines or ADA rules (is heart cancer a “disability”? i dunno.)?
regardless, the statute seems to conflict itself. it establishes that employers have a fiduciary duty to employees, but then denies relief for a breach of duty?!? that alone should be enough for a federal judge to remedy the situation.
Spherion provides responses to frequently-asked questions concerning the Amschwand case here:
spherion.com/amschwand.jsp
“Activist judges” pull their equivalent of “jury nullification” all the time. It’s certainly odd that they choose not to when it comes to ERISA. Anyone care to follow the money?
For what it’s worth, Spherion contacted me by phone or e-mail for a local position today. While I am certainly looking for better positions, this one paid notably less than my current one, and this issue and some of the others I know of from here and elsewhere make me extremely hesistant to take employment with them at any pay level. Here’s a copy of what I wrote them:
(Recruiter’s Name),
I am afraid I must respectfully decline to pursue this opportunity with you. The pay rate is signifigantly lower than my current full time employee status with my employer, which would make this a poor choice for me.
I also find myself turned away by the way in which your company handled the situation of the late Mr. Thomas Amschwand and his widow, Melissa Amschwand. This situation, and Spherion’s behavior in it, was most unbecoming of such a large organization. The situation reflects poorly on your company for those who value having an employer who will work with them not only to meet the requirements of the law, but also in good conscience and with a display of moral character.
Respectfully,
(Me)