Sixth Circuit issues ERISA Preemption Decision involving Maternity Rights.
On September 30, 2014, the Sixth Circuit published Sherful v. Newson, wherein it found that a Wisconsin law that allowed women who had given birth six weeks unpaid leave, interfered with the provisions of an ERISA plan set up by Nationwide to cover its employees in 49 states and was therefore preempted under federal law. After taking six weeks paid leave pursuant to Nationwide’s Short term Disability (“STD”) Plan, the employee requested an additional six weeks unpaid leave pursuant to the Wisconsin law. The Plan Administrator denied the request finding that the employee was no longer disabled pursuant to the Plan’s provisions. The Sixth Circuit affirmed the district court’s finding that the Plan Administrator had to follow the Plan’s provisions pursuant to federal law and therefore the state law was preempted. ERISA preemption of state laws, including those for punitive damages, allow insurance companies to deny claims with the assurance that the ultimate downside for denying a valid claim is limited.