Articles Posted in ERISA

The administrative record is simply all of the documents provided to the LTD insurance company during the claims process, the claims file, the documents provided during the administrative appeal and the contract documents.

One of the little known but critical rules in ERISA Long Term Disability cases is that the Court will only consider the documents contained in the administrative record. Accordingly, it is extremely important that the insurer be provided all favorable information during the administrative appeal process. Otherwise, the claimants chances of winning in court can be very slim.

SMDA has had a couple of recent examples of the importance of this fact. We recently represented a client who filed her own administrative appeal by simply writing a letter explaining to the LTD insurer why she believed the claims denial decision was erroneous. Also contained in the record was a form completed by her primary care physician that indicated she needed a functional capacity examination in order to determine if she was disabled. The client was not aware of her doctor’s opinion and took no steps to provide the information suggested necessary by her own doctor.

We recently received notice that another administrative appeal of the denial of a client’s LTD claim has been successful.

When a claim for LTD benefits is denied, pursuant to the ERISA regulations the claimant must file an administrative appeal of the denial decision with the entity that denied the claim, usually an insurer. This is part of the requirement that the claimant exhaust their administrative remedies before suit can be filed.

In this claim, despite ongoing treatment our client continued to experience disabling Migraine headaches on a regular basis multiple times per week. When she experiences these headaches she is disabled from any activity. As a result of the ongoing headaches she experiences severe difficulty with focus and concentration. Her headaches are aggravated by routine physical activity. She also experience phonophobia and photophobia and nausea. As a result of her medical condition, the client has functional limitations related to any activity including sitting, standing, and routine computer usage.

SMDA had the opportunity to represent a registered nurse who stopped working in the Emergency Department after two level cervical disc fusion surgery. Several months after the surgery the LTD insurer terminated her benefits when it determined “that the medical on file does not appear to support any significant functional impairment other than that contributed by your cervical fusion.” The insurer ignored the fact that after the surgery she developed significant fatigue and was referred to a rheumatologist. She has been diagnosed with Lupus, Sjorgen’s Syndrome, Mitral Valve Prolapse, Migraine Headaches and Raynaud’s Syndrome. As a result of her illness she experienced marked fatigue, joint pain and shortness of breath. She also had significant sit/stand restriction.

SMDA succesfully argued that her occupation as a registered nurse working in the emergency department required a high level of cognitive functioning. She must be able to effectively assess and immediately determine the appropriate response to emergent life-threatening medical developments. Given her cognitive limitations related to her fatigue and multiple medications, her ability to satisfactorily perform is impaired.

Upon considering the Administrative Appeal, the insurer reversed its denial decision and reinstated the client’s LTD benefits retroactive to the termination date.

The Eastern District of Michigan federal court recently granted my motion for discovery in a long term disability insurance ERISA case without requiring a predicate showing.

In Back v Hartford I had submitted a limited number of questions to Hartford Insurance Company to try and investigate any potential bias on the part of Hartford and the doctors it hired to review the records. Hartford objected and refused to answer a single question. We filed a motion to compel which the Court granted with one small exception.
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From the Insurance Companies perspective, the answer is simple- there is no reason for them to pay.

My clients are universally surprised to learn that under ERISA the only thing you can sue for are the unpaid LTD benefits. There is no claim for emotional distress, or pain and suffering. There is no claim for bad faith or anything else. The vast majority of Long Term Disability claims are governed by a federal law (ERISA) because they are part of an employer provided benefits package.

I regularly hear tragic tales of financial devastation. Clients are unable to pay their bills, are losing their cars and their homes. Clients are forced to rely on their friends and families and the charity of strangers.

Guess what? The insurance companies could care less. You see, the LTD insurer gets to review your claim and decide if they want to pay or not. If they decide they don’t want pay your claim, they simply deny your application and hope you give up. If they approve your claim, then they have to pay and in turn make less money. Every dollar they pay on your claim is a dollar less of profit to line their pockets.
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Most Long Term Disability cases in our office are governed by ERISA as they are non-governmental employer provided benefits. The fact that they are ERISA claims is usually all bad for our clients as the law in this area has a number of inherent anti-claimant aspects. Primary among those aspects is that discovery was typically extremely limited or, more often simply not allowed.

What is discovery and why is it important?
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In a tremendously important decision, the 6th Ciruit court of appeals affirmed today a decision limiting the language that disability insurance carriers can include in their policies to protect themselves from making payments. In American Council Of Life Insurers v. Ross, No. 08-1406 , the panel agreed that the Michigan Insurance Commissioner could restrict an ERISA plan from including language giving itself discretion to interpret the plan language and determine the participant’s eligibility for those benefits.

This is critically important because up to this point in time Court’s were forced to review these cases using the very deferential “arbitrary and capricious” standard of review. In non lawyer speak, the court did not review the evidence to determine if the insurance company made the correct decision. Instead, the court was forced to determine whether there was any reasonable basis for the decision. The practical effect of this limited standard of review was to make it exceedingly difficult for a claimant to win. After all, if the insurance company hires a qualified doctor to review the claim and that doctor says the claimant is not disabled then there is a reasonable basis for the claims decision. (And oh by the way, never mind that we use that same doctor over and over and over and pay him and the reviewing company that he works for hundreds of thousands of dollars a year. they can be fair an impartial. yeah right.)

Now, the courts will review these claims de novo. In other words, the Court will be empowered to determine whether or not the correct decision was made-Whether or not the claimant meets the policies definition of disability. This is really huge.

The Second Circuit Court of Appeals cited First Unum’s deception as one of the grounds for granting an attorney’s claim for long term disability insurance benefits. In McCauley v First Unum the Court the Court cited several isntances of biased and deceptive claims review in granting McCauley’s claim for disability benefits.

In an important decision the Court analyzed the claim under the new standard set forth by the Supreme Court in Metlife v Glenn. The Court cited in detail First Unum’s history of deceptive claims handling and abusive tactics in reversing the denial decision.

Dr. Ghandi Gutta filed a claim for Long Term Disability Insurance when he was no longer able to continue his practice as a laparoscopic surgeon due to multiple medical conditions. When his definition of disability changed to “any occupation” at the end of two years his insurer, Standard Select, terminated his benefits contending that, even with his multiple medical conditions, he was able to work in the medical field.

Utilizing the the arbitrary and capricious standard of review, the court accepeted the insurer’s argument that Dr. Gutti failed to provide persuasive evidence that he was unable to perform other work in the medical field and that he had the skills necessary to work as a medical director or assistant medical director. To make matters worse, the court also ordered Dr. Gutti to repay $74,000 in overpayments as a result of payments he recieved under a different disability policy.

This case illustrates how difficult it can be for claimaints to obtain benefits that are governed by ERISA.

A Louisiana court recently rejected a long term disability insurer’s attempts to hide behind the protections afforded insurance companies by ERISA. In Gulf Coast Plastic Surgery v Standard Insurance Co. the Court determined that a claim that the insurance agent failed to increase the policy limits despite the doctors request and the agent’s promise was not preempted by ERISA. Rather, it was a simple negligence claim, even though it involved an ERISA policy.

The Court found that the claims against Hillyer(the insurance agent) were not subject to preemption under ERISA, because they did not implicate a relationship governed by ERISA and because the resolution of the claims does not require interpreting an ERISA plan. THe insurance agent was not an ERISA fiduciary, and the resolution of such allegations did not require the interpretation of an ERISA plan.