Aug 212017
 

ERISA appeals involving disability benefits are, with limited exception, supposed to be decided within forty-five (45) days.  29 C.F.R. § 2560.503-1(i)(3)(i).  Additionally, however, the regulations allow for an extension of up to forty-five (45) additional days when “special circumstances” exist.  29 C.F.R. § 2560.503-1(i)(1)(i).  Over the years extension-taking has become routine, with insurers and plan administrators not infrequently paying no more than lip service to the requirements set forth in the regulations.  A pair of recent decisions out of the Southern District of New York may serve to remedy that.

In the first, Salisbury v. Prudential Ins. Co. of Am., 238 F.Supp.3d 444 (S.D.N.Y. 2017), the disability insurer (Prudential) was flagged for taking an extension without stating “special circumstances.”  The sole rationale for the extension, that additional time was needed so that the information in the file could be reviewed, was deemed entirely unexceptional.  As a remedy for what transpired, the court deprived Prudential of the benefit of deferential (or “arbitrary and capricious”) review — a rather consequential sanction.

In the second, McFarlane v. First Unum Life Ins. Co., 2017 WL 3495394 (S.D.N.Y. Aug. 15, 2017), the claimant filed suit while her ERISA appeal was still pending.  In response to the disability insurer’s motion to dismiss for failure to exhaust administrative remedies, the claimant argued that the disability insurer’s extension notice was defective because it did not set forth the date by which the insurer expected to render a decision (a requirement under the regulations).  The court agreed, holding that while the notice provided a “rough timetable” of what was expected to come, that was plainly insufficient under the regulations.  See 29 C.F.R. 2560.503-1(i)(1)(i).

Salisbury v. Prudential Ins. Co. of Am., 238 F.Supp.3d 444 (S.D.N.Y. 2017)

McFarlane v. First Unum Life Ins. Co., 2017 WL 3495394 (S.D.N.Y. Aug. 15, 2017)

May 012017
 

The “standard of review” to be applied by a federal district court presiding over an ERISA “wrongful denial of benefits” case is a critical threshold consideration.  Will the court review the determination anew without granting any leeway to the administrator (de novo review), or will it defer to the administrator by agreeing not to interfere absent proof that its claims handling was arbitrary or capricious (deferential review)?  In most circuits, the issue (at least initially) boils down to one straight-forward consideration: does the plan contain language granting discretionary authority to the administrator.  If it does, review deferentially.  If it does not, review de novo.

Since 1991, however, the Fifth Circuit has approached things a bit differently.  There, as result of Pierre v. Connecticut General Life Ins. Co./Life Ins. Co. of N. America, 932 F.2d 1552 (5th Cir. 1991), the rule is that factual determinations (as opposed to plan interpretations) are reviewed deferentially even when the plan in question does not grant discretionary authority.

The Fifth Circuit’s outlier status on this issue has put claimants in Louisiana, Mississippi and Texas at a severe disadvantage, and a recent decision from that court does little to downplay its frustration with that situation.  Whether a remedy in the form of en banc reconsideration or Supreme Court review is in the offing is anyone’s guess, but we will be maintaining a watchful eye.

UPDATE: On July 10, 2017, the Fifth Circuit granted reconsideration en banc, meaning that the case will now go before all of the judges of the Fifth Circuit.  Stay tuned for the outcome of that event.

Ariana M. v. Humana Health Plan of Texas, 854 F.3d 753 (5th Cir. Apr. 21, 2017)

Mar 232016
 

In 2014, the Sixth Circuit held that a disability insurer intent on asserting a statute of limitations defense (that is, a defense founded upon the position that the claim asserted against it is time-barred) had better be able to prove that it mentioned the time limitation in the letter through which it advised the claimant that benefits were being denied or terminated.  Moyer v. Metropolitan Life Ins. Co., 762 F.3d 503 (6th Cir. 2014).  A year later, the Third Circuit followed suit in Mirza v. Insurance Adm’r of Am., Inc., 800 F.3d 129 (3d Cir. 2015).

On March 14, 2016, the First Circuit weighed-in, holding (consistent with Moyer and Mirza) that in order not to run afoul of 29 C.F.R. § 2560.503-1(g)(1)(iv), a disability insurer must apprise its insured of the applicable time limit in its denial letter.  If it fails to do so, held the court, the defense is lost.

Santana-Diaz v. Metropolitan Life Ins. Co., 816 F.3d 172 (1st Cir. 2016)

Jan 202016
 

ERISA-controlled health insurance plans often contain a provision that states, in sum and substance, that if the insured recovers money from a third-party (like the person responsible for causing the event that gave rise to the insured’s injuries), then he or she must reimburse the insurer for the funds that it expended toward the insured’s medical care.  In Thurber v. Aetna Life Ins. Co., 712 F.3d 654 (2d Cir. 2013), the Second Circuit held that a health insurer’s suit to enforce its rights under such a provision, filed under ERISA, can proceed notwithstanding the fact that by the time suit was filed, the funds had “dissipated” (that is, they neither remained in the insured’s possession nor were used to purchase traceable items).

On January 20, 2016, the United States Supreme Court abrogated Thurber, holding (by an 8-1 margin) that when funds otherwise subject to a lien of this nature are used to purchase nontraceable items (like food and travel), then suit under ERISA is impermissible.  That is so, reasoned the Court, because the relevant ERISA provision only authorizes suit for “equitable relief,” and when funds have been used to acquire nontraceable items, a suit to recover on the lien is one against the insured’s general assets (which makes it a claim for legal, not equitable, relief).

Montanile v. Board of Trustees of the Nat’l Elevator Indus. Health Benefit Plan, 136 S. Ct. 651 (2016)

Sep 182015
 

Our blogpost of September 16, 2014 featured the decision in Mead v. Reliastar Life Ins. Co., 768 F.3d 102 (2d Cir. 2014), wherein the Second Circuit held that a remand order is generally not appealable (for lack of finality).  On August 24, 2015, the Third Circuit reached the same conclusion for substantially the same reasons.

Stevens v. Santander Holdings USA Inc., 799 F.3d 290 (3d Cir. 2015)

Sep 022015
 

In our blogpost of August 13, 2014, we featured the decision in Moyer v. Metropolitan Life Ins. Co., 762 F.3d 503 (6th Cir. 2014), wherein it was held that an insurer cannot invoke a statute of limitations defense that is grounded on plan language unless mention of the language was made in the insurer’s denial letter.  One year later, the Third Circuit expressed the exact same view.

Plan-based time limitations are commonplace, and they often serve to drastically shorten the period during which suit may be brought.  Accordingly, the Third Circuit’s decision, in tandem with that of the Sixth Circuit, is a significant victory for ERISA disability claimants.

Mirza v. Insurance Adm’r of Am., Inc., 800 F.3d 129 (3d Cir. 2015)

Jun 102015
 

A long-term disability claimant to whom an adverse benefit determination has been handed must mail his or her administrative appeal within 180 days of receiving the letter advising of the determination (for some other types of benefits, it is permissible for an insurer to impose a 60-day deadline).  But what happens when the appeal deadline falls on a Saturday, Sunday or holiday?

Andre LeGras received his denial letter on April 18, 2011, which meant that his appeal needed to be mailed by October 15, 2011 (a Saturday).  He waited until the following Monday (October 17) to mail his appeal, and in the district court’s view, that meant that the appeal was untimely, and that his suit should be dismissed for failure to exhaust his administrative remedies.

The Ninth Circuit, by a vote of 2-1, reversed.  Applying what it characterized as a “general understanding,” the majority held that when an appeal deadline lands on a Saturday, Sunday or holiday, claimants should have until the first business day following to file.  In the dissent’s view, the plan should be enforced as written, meaning that the 180th day is the deadline, regardless of whether it falls on a weekend or not.

LeGras v. AETNA Life Ins. Co., 786 F.3d 1233 (9th Cir. 2015)

Apr 082015
 

The primary weapon wielded by ERISA claimants derives from ERISA § 502(a)(1)(B), codified at 29 U.S.C. 1132(a)(1)(B), which authorizes a civil action “to recover benefits due.”  Still, a bit further down the list appears what many courts and commentators have dubbed the “catchall” provision: ERISA § 502(a)(3).  That provision authorizes suit to obtain, among other things, “other appropriate equitable relief.”  The question facing the Sixth Circuit, not to mention countless courts before it, was under what circumstances, if any, a claimant should be permitted to pursue both types of claims in tandem.

The claimant in the case, Daniel Rochow, was able to demonstrate that his long-term disability insurer’s decision to deny benefits was arbitrary and capricious, and he thus succeeded with his (a)(1)(B) claim.  While benefits were being withheld, however, his insurer garnered huge investment returns on the withheld amounts.  Pointing to those profits, Mr. Rochow leveled a claim under the equitable remedy of disgorgement, which he maintained was authorized under § 502(a)(3).

Over protests by the insurer, the district court allowed the disgorgement claim to go forward, and by a vote of 2-1, a panel of Sixth Circuit judges subsequently affirmed, 737 F.3d 415.  Thereafter, the Sixth Circuit agreed to rehear the case en banc, and on March 5, 2015, by an extremely tight margin, the panel decision was vacated.  According to the majority, which pointed to the Supreme Court’s decision in Varity Corp. v. Howe, 516 U.S. 489, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), to allow Mr. Rochow to recover disgorged profits under § 502(a)(3) in addition to his “benefit recovery” under § 502(a)(1)(B) would “result in an impermissible duplicative recovery, contrary to clear Supreme Court and Sixth Circuit precedent.”  The dissent, in contrast, argued that Mr. Rochow had been harmed in two (2) distinct ways, and that neither of the claims that he sought to advance, standing alone, was adequate to bring him the “make whole” relief that anyone in his position deserves.

The narrowness with which the en banc rehearing was decided portends potential Supreme Court review, but the case’s procedural irregularities (discussed at length in one of the concurrences) may prove to be a potent obstacle.

Rochow v. Life Ins. Co. of N. Am., 780 F.3d 364 (6th Cir. 2015)

Dec 172014
 

ERISA practitioners are very familiar with what some have dubbed the “administrative record” rule, the dictates of which provide, in essence, that a reviewing district court may only consider the evidence that was presented to the claim administrator; “new” evidence will be disregarded. Still, there are recognized exceptions to the rule, as explored in Melech v. Life Ins. Co. of N. Am., 739 F.3d 663 (11th Cir. 2014), discussed in our blogpost of January 28, 2014.

More recently, the Fourth Circuit took up the subject in the context of a benefit denial issued to a claimant who had maintained that she suffered from post-traumatic stress disorder, and had provided contact information for her treating psychiatrist, but had not submitted medical records bearing out the diagnosis. Disagreeing with the district court decision in favor of the plan, the Fourth Circuit held that “[w]hile the primary responsibility for providing medical proof of disability undoubtedly rests with the claimant, a plan administrator cannot be willfully blind to medical information that may confirm the beneficiary’s theory of disability where there is no evidence in the record to refute that theory.”

Harrison v. Wells Fargo Bank, N.A., 773 F.3d 15 (4th Cir. 2014)

Sep 162014
 

Under 28 U.S.C. § 1291, the jurisdiction of the federal Circuit Courts of Appeal is generally limited to “final decisions,” which means, in essence, that only when a district court has resolved all that there is to resolve is an aggrieved litigant then permitted to appeal. That feature distinguishes federal appellate practice from state appellate practice, where interim (or “interlocutory”) appeals are commonplace.

In the ERISA context, it is not uncommon for a “successful” claimant (that is, a claimant who has proven to the district court’s satisfaction that some aspect of the disability insurance company’s claims handling was violative of his or her ERISA rights) to be awarded a “remand” to the claim administrator, rather than an outright award of benefits. So the question becomes: is a remand order considered a “final decision,” such that the disability insurance company may immediately appeal it?

In a decision handed down today, the Second Circuit held that remand orders “generally are not ‘final’ because, in an ordinary case, they contemplate further proceedings by the plan administrator.” This is so, said the Second Circuit, even when the district court instructs the clerk to “close the case” and “enter judgment.” As to the fate of a remand order that, in contrast to the order before the court, cannot be construed as having retained jurisdiction over the case, the Second Circuit indicated that it would be addressed on “another day.”

Mead v. Reliastar Life Ins. Co., 768 F.3d 102 (2d Cir. 2014)