Aug 222014
 

Although ERISA generally comes into play any time a dispute surfaces in the context of a benefit made available to the claimant through his or her employment, certain exceptions exist. One such exception covers governmental employees. Another concerns individuals covered under a “church plan,” which is a benefit plan covering employees of a church or comparable religious institution.

But what happens when an aggrieved claimant whose benefit plan unmistakably qualifies as a church plan nevertheless brings and prosecutes an ERISA case, only to claim, at the tail-end of the litigation (and after losing on the merits), that in fact ERISA is inapplicable? According to the Sixth Circuit, which deemed the issue non-jurisdictional and therefore subject to forfeiture, the claimant is out of luck.

Russell v. Catholic Healthcare Partners Employee Long Term Disability Plan, 2014 WL 3953722 (6th Cir. Aug. 14, 2014)

Aug 132014
 

In a decision handed down last week, the Sixth Circuit deemed invalid an otherwise solid “statute of limitations” defense on the ground that the insurer had failed to mention the limitations period in the letter through which the subject adverse benefit determination was communicated to the claimant. Relying on a series of cases, including Novick v. Metropolitan Life Ins. Co., 764 F. Supp. 2d 653 (S.D.N.Y. 2011), the court held that the omission violated the applicable regulation (i.e., 29 C.F.R. 2560.503-1(g)(1)(iv)), thus allowing the claimant’s otherwise late claim to proceed to the merits.

Moyer v. Metropolitan Life Ins. Co., 762 F.3d 503 (6th Cir. 2014)

Mar 112014
 

Concluding a nine-year court battle, John J. Donachie was awarded summary judgment against Liberty Life Assurance Company of Boston, the administrator of his employer’s LTD plan. As respects his request for attorneys’ fees, however, Mr. Donachie was not as fortunate. The District Court denied his application on the ground that he had failed to show that Liberty Life had demonstrated “bad faith” in its handling of the claim.

In a decision handed down March 11, the Second Circuit reversed the District Court’s denial of fees, and, in the process, made several important holdings. First, the court held that a reviewing court must consider whether a claimant has achieved “some degree of success on the merits.” It further held that while a District Court may award fees upon a showing of some degree of success, it may also drill further down by considering the five (5) so-called Chambless factors. And as respects the Chambless factors, the Second Circuit emphasized that a District Court “cannot selectively consider some factors while ignoring others,” that “bad faith” and “culpability” (both elements of the first Chambless factor) are distinct, and that a finding of culpability alone will satisfy the first factor.

Lastly, and perhaps most significantly, citing to Birmingham v. SoGen-Swiss Int’l Corp. Ret. Plan, 718 F.2d 515, 523 (2d Cir. 1983), the Second Circuit held that where (as here) a claimant not only achieved “some degree of success on the merits,” but also acquired “prevailing party” status, granting a fee request “is appropriate absent some particular justification for not doing so.” And finding no particular justification present, the Second Circuit awarded Mr. Donachie fees (and a remand to the District Court for the purpose of determining the amount).

Donachie v. Liberty Life Assurance Co. of Boston, 745 F.3d 41 (2d Cir. 2014)

Feb 132014
 

Since the dawn of ERISA disability litigation, claimants have been advancing the position that the opinions of their treating physicians should be credited over those of a file reviewing physician/consultant. The opinions of a treating physician, it has been argued, are ipso facto more reliable than those of a “consultative reviewer” who has never examined the claimant, and whose only “knowledge” as to the claimant’s condition is derivative of a cold file review. But in 2003, the United States Supreme Court dealt a blow to the position’s adherents, declaring in Black & Decker Disability Plan v. Nord, 538 U.S. 822 (2003), that the so-called “treating physician rule” — a rule developed in the context of Social Security Disability — is inapplicable to ERISA claims.

The Nord decision did not, however, put an end to the debate, and the issue continues to receive attention to this day, particularly in the area of “mental illness” disability.  A notable example is found within a pair of decisions from the Western District of New York: Westphal v. Eastman Kodak Co., 2006 WL 1720380 (W.D.N.Y. June 21, 2006) and Morse v. Corning Inc. Pension Plan for Hourly Employees, 2007 WL 610628 (W.D.N.Y. Feb. 23, 2007). Another is Kinser v. Plans Admin. Committee of Citigroup, Inc., 488 F.Supp.2d 1369, 1383 (M.D.Ga. 2007) (“There can be no serious doubt that a psychiatric opinion of a treating psychiatrist is more reliable than an opinion based on a one-time file review”). Still another is a very recent Sixth Circuit decision, wherein it was held that while there is “nothing inherently objectionable about a file review by a qualified physician,” such a review is “questionable as a basis for identifying whether an individual is disabled by mental illness,” and is likewise “inappropriate where a claims administrator disputes the credibility of a claimant’s complaints.”

Javery v. Lucent Technologies, Inc. Long Term Disability Plan for Management or LBA Employees, 741 F.3d 686 (6th Cir. 2014)

Jan 282014
 

As most ERISA claimants know (or will shortly into their lawsuit find out), a District Court’s review of an adverse benefit determination is normally limited to the materials in the administrative record, that is, the materials that were presented to and/or considered by the insurance company while the claim was still under consideration. Indeed, that facet of ERISA litigation is the main reason why ERISA appeals need to be handled with extreme care, for an appeal often serves as a claimant’s final opportunity to present evidence helpful to the cause.

There is precedent for a District Court to consider evidence that is dehors (or outside) the administrative record where “good cause” to do so is shown, but a recent decision from the Eleventh Circuit takes it a step further. In the case, the disability insurer, Life Insurance Company of North America (“LINA”), had required Diane Melech (the claimant) to pursue a Social Security Disability Income (“SSDI”) claim — a practice universally pursued by disability insurers, because when a claimant succeeds with an SSDI claim, the insurer gets to offset the amount received. But before the SSDI claim was decided, LINA denied Ms. Melech’s disability claim, and while she was in the process of appealing LINA’s denial, the Social Security Administration (“SSA”) had her submit to two (2) medical examinations (which, in turn, generated two (2) reports). Although Ms. Melech’s SSDI claim was thereafter approved, and LINA was apprised of that fact, the reports were never presented to LINA, and LINA never sought to obtain them. Instead, LINA denied Ms. Melech’s appeals, after which she brought suit.

The District Court found in LINA’s favor, deciding that the decision to deny benefits was correct based on the record before it — a record that did not include the reports generated by the two (2) SSA physicians. The Eleventh Circuit, by 2-1 vote, viewed the matter differently, holding that once LINA took the self-serving step of requiring Ms. Melech to pursue an SSDI claim, it became obligated to consider the evidence presented to the SSA in conjunction therewith (regardless of whether or not that evidence had found its way into the administrative record). In other words, having sent Ms. Melech to the SSA in pursuit of SSDI benefits, LINA had an affirmative obligation to seek out and obtain the evidence presented to the SSA.

Melech v. Life Ins. Co. of N. Am., 739 F.3d 663 (11th Cir. 2014)

Jan 272014
 

Karen McClain’s pain management physician certified her as capable of performing only part-time sedentary work. Nevertheless, in reliance upon that opinion, her long-term disability claim was terminated. During the course of a pair of unsuccessful administrative appeals, physicians retained by the claim administrator concluded that full-time work was possible, and those conclusions played a prominent role in the Sixth Circuit Court of Appeals’ decision affirming a District Court’s determination to uphold the benefit termination.

In dicta, however, the Sixth Circuit indicated that even if the conclusions reached by those other physicians were not entertained (that is to say, even if the opinion of Ms. McClain’s pain management physician were the sole consideration), the same result would obtain because a claimant who is capable of engaging in part-time work is ipso facto unable to demonstrate that he or she is incapable of performing “any work for compensation or profit.” In other words, the ability to work part-time is, in the Sixth Circuit’s view, incompatible with the notion of disability, at least insofar was that term was defined in Ms. McClain’s plan.

The Sixth Circuit’s position marks a dangerous (and, in our view, erroneous) incursion on the rights of disability claimants, and we will monitor the issue for further developments.

McClain v. Eaton Corp. Disability Plan, 740 F.3d 1059 (6th Cir. 2014)

Dec 192013
 

On December 16, the Supreme Court of the United States resolved a split among the Circuit Courts of Appeals on an issue of critical importance to disability claimants and administrators alike: the statute of limitations. By way of background, we begin by noting that ERISA does not contain a statute of limitations for “benefit recovery” claims — that is, claims brought under 29 U.S.C. 1132(a)(1)(B). When forced to analyze a claim’s timeliness in the face of a statute that does not specify a limitations period, courts generally apply the most analogous state law limitations period, which in New York State would be 6 years (the statute of limitations applicable to claims for breach of contract). Notably, however, most states (New York included) allow contracting parties to make adjustments to the limitations period, and indeed many long-term disability plans contain clauses that purport to do just that. In that regard, the clause at issue in the case required claimants to bring suit within 3 years after “proof of loss” is due.

Notice that the clause actually functions to shorten the limitations period in two (2) distinct ways. The first (and more obvious) way is that it reduces the number of years that a claimant has to sue from 6 (in New York) to 3. The other (more subtle) change is that it sets as the event that serves to “start the clock” the date when proof of loss is due, as opposed to the date that the claim accrues. Couple that with ERISA’s administrative remedy exhaustion requirement, and what this all means is that where there is present a clause like the one in question, a claimant’s time to sue will begin to expire before (sometimes well before) he or she is empowered to commence suit.

And as illogical and potentially inequitable as this arrangement may seem to some, it has now received the blessing of all 9 justices of the Supreme Court, who indicated that in the “rare case” where an administrative review is so drawn out that the claimant is prevented from bringing suit in a timely manner, courts are “well equipped to apply traditional doctrines” that would serve to allow the claimant to proceed nevertheless.

Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604 (2013)

Nov 262013
 

Although the goal, or at least the primary goal, of most ERISA cases is the recovery of some sort of employment “benefit,” as to which suit is authorized under 29 U.S.C. 1132(a)(1)(B), occasionally an ERISA litigant will pursue a claim under 29 U.S.C. 1132(a)(1)(A). That subsection authorizes suit “for the relief provided for in” 29 U.S.C. 1132(c), which, in turn, requires that certain information be made available to a beneficiary within thirty (30) days of a request, and sets out a penalty — currently $110.00 per day — for noncompliance.

The number of reported decisions that have addressed (a)(1)(A) claims is minuscule in comparison to those that have addressed (a)(1)(B) claims, but from those that exist, a common theme has emerged to the effect that there are two (2) primary obstacles to an (a)(1)(A) claim. The first is that not every information “possessor” is a proper target for an (a)(1)(A) claim; only an “administrator” is. The second is that the subsection only covers certain “information,” to wit, “information which [the] administrator is required by [subchapter I of ERISA] to furnish.” The consensus is that this boils down to 29 U.S.C. 1024(b)(4), which lists, among other things, the “latest updated summary plan description” and “other instruments under which the plan is established or operated.” No where on the list does “claim material” or the like appear, and since it is that brand of “information” that forms the basis for most (a)(1)(A) claims that have resulted in reported decisions, most have come up short.

A recent decision out of the Southern District of New York, Curran v. Aetna Life Ins. Co., 2013 WL 6049121, highlights these issues quite effectively.

Curran v. Aetna Life Ins. Co., 2013 WL 6049121 (S.D.N.Y. Nov. 15, 2013)

Nov 072013
 

In the “prototypical” ERISA benefits case, a claimant sues a provider to obtain benefits asserted to have been wrongfully withheld. Occasionally, however, the dynamic is reversed, with the benefit provider going on the offensive and the claimant being the target. This happens, generally speaking, in one of three scenarios: (i) when a disability benefit provider is looking to recover or “recoup” benefits paid, because the recipient of the benefits subsequently received benefits from a different source (e.g., Social Security) that the provider is permitted (under the terms of the plan) to offset; (ii) when a claimant obtains a third-party recovery that covers (in whole or in part) medical expenses for which a benefit provider made payment; and (iii) when a benefit provider is trying to recover benefits that it claims to have paid in error.

In March 2013, the Second Circuit held in Thurber v. Aetna Life Ins. Co. that a disability insurer should be permitted to recoup benefits that are subject to an offset (category (i) above) notwithstanding the fact that when recoupment was first sought, the funds were no longer in the claimant’s possession (because they had, in the vernacular used by the court, “dissipated”). The decision contains an excellent synopsis of the Supreme Court’s treatment of recoupment cases over the years, and there is, at present, an application pending to have the Supreme Court review the “dissipation” issue on which the case is centered. More on that if the application is granted. Stay tuned.

Thurber v. Aetna Life Ins. Co., 712 F.3d 654 (2d Cir. 2013)

Oct 162013
 

As was set forth in our post of October 15, resolution of the critical “standard of review” issue is linked to the presence (or absence) of “magic” language in the plan — that is, language conferring upon the decision-maker discretion to determine benefit eligibility. If the “magic” language is present, then “arbitrary and capricious” review results; if not, then the review standard is “de novo.”

But even under circumstances where it is conceded that the plan contains language conferring discretionary authority, there are a handful of potential arguments for the court to pursue “de novo” review nonetheless.  One such argument, explored by the Second Circuit in Nichols v. Prudential Ins. Co. of Am., 406 F.3d 98 (2d Cir. 2005), comes into play when the benefit determination in focus did not come about as a result of an exercise of the decision-maker’s discretion (as where, for example, an ERISA appeal was denied by operation of law because the decision-maker never actually rendered a decision or because the decision came too late).  Another focuses on the fact that some jurisdictions have, by statute, rendered discretionary clauses unenforceable.  See, e.g., California Insurance Code 10110.6 (effective January 1, 2012).  Still another, highlighted in a recent District Court decision, is predicated on the common sense requirement that the entity responsible for the benefit determination and the entity vested with discretion must be one and the same.

In the case, discretionary authority was vested in First Unum Life Insurance Company (“First Unum”), but the individuals who actually made (and subsequently upheld) the adverse benefit determination were employees of Unum Group (a holding company of various subsidiaries, including First Unum). Deciding that the decision-makers were not agents of First Unum (because the “general service agreement” between First Unum and Unum Group defined Unum Group as an “independent contractor”), and that First Unum had not validly delegated its discretionary authority to Unum Group (because the power to delegate is not inherent, and no authority or procedure for doing so existed in the plan), the District Court held that “de novo” review was appropriate.

McDonnell v. First Unum Life Ins. Co., 2013 WL 3975941 (S.D.N.Y. Aug. 5, 2013)