When a plan participant is denied a retirement plan benefit, he is required under ERISA to ask the plan, usually through a plan administrator or other fiduciary, to review the denial before he can file a complaint in court. This is referred to as exhausting the plan’s administrative remedies. These administrative remedies and procedures that a plan participant must follow are laid out in the governing plan document and in the summary plan description. This process allows the plan administrator to reconsider its position with perhaps additional information, explanation or evidence. Once the participant gets to a “final” denial, he can then file a complaint in court. Typically, a claim is filed when a participant believes he is entitled to a benefit, or more of a benefit, and the plan tells him he is not. However, when a plan participant believes a fiduciary to the retirement plan has breached a fiduciary duty under ERISA, the question of whether a participant must exhaust the plan’s administrative remedies is unresolved and depends on the jurisdiction where the case is filed.

While the majority of courts of appeals and district courts have found no requirement to exhaust administrative remedies for breaches of fiduciary duty claims, there are two circuits that have ruled the opposite. In a fairly recent case, Fleming v. Rollins, Inc., No. 19-cv-5732 (N.D. Ga. Nov. 23, 2020), the Eleventh Circuit confirmed again its minority stance that exhaustion is required for breach of fiduciary duty claims. Citing Bickley v. Caremark RX, Inc., 461 F.3d 1325, 1328 (11th Cir. 2006). The Second Circuit, on the other hand, has not yet directly addressed the question; however, numerous circuit courts within the Second Circuit have routinely found no exhaustion requirement for breach of fiduciary duty claims.

To be sure, this is not deterring defense attorneys from bringing motions to dismiss on the basis of failure to exhaust. In the decision, Savage v. Sutherland Global Services, Inc., 2021 WL 726788 (W.D.N.Y., 2021) defendants argued exhaustion was required for statutory ERISA claims because the exhaustion requirement is specifically written into the plan document. The court was not impressed with the argument explaining “while plan fiduciaries may have expertise in interpreting the terms of the plan itself, statutory interpretation is the province of the judiciary.” Savage at 4, quoting De Pace v. Matsushita Elec. Corp. of America, 257 F.Supp.2d 543, 557 (E.D.N.Y. 2003).

One of the most crucial pieces of evidence in supporting a long term disability (LTD) claim is the opinion of the claimant’s treating physician that he or she is disabled.

Many physicians are more than happy to assist their patients with forms required by the LTD provider and in some cases, narrative accounts of their patient’s disabling condition. Sometimes, though, the doctor is unable or unwilling to assist. There are a variety of reasons for this: lack of time, lack of compensation, misunderstanding of the level of involvement required by the doctor, employer/hospital rules preventing them, and in some cases, a disbelief that their patient is actually disabled.

If you have a disabling condition and you are making an LTD claim, or you are receiving benefits, your doctor’s participation in the process is essential. Without a doctor’s support, in most cases, your claim is finished. If your doctor has notified you that he or she will not be able to assist you with your claim, it is important to ask him or her to tell you the reason for their decision. If it is anything other than lack of belief that you are disabled, often, further information can change their minds. The offer of additional compensation for their time is a big help. Explaining that they will not have to do anything more than the forms or a letter – that they will not have to testify in court – goes a long way in changing minds.

If you have a disability insurance policy, you probably assume that if you’re unable to perform the duties of your job because of your medical condition, you’re entitled to benefits under your policy.

Not so fast! You may be surprised to learn that most disability policies don’t insure you from being unable to perform the duties of your job – instead, they insure you from being unable to perform the duties of your occupation.

What’s the difference? Well, as insurers will tell you, they are concerned about insuring people when they don’t know what those people are doing. There are too many jobs with individual specific duties performed in a variety of idiosyncratic ways for insurers to keep track of. As a result, they only insure the “type” of job you have, i.e., the job as it is typically performed in the national economy.

An alternative to health insurance marketplaces available through healthcare.gov are “short term” health insurance plans purchased through insurance brokers.

These short term plans have surprisingly low premiums and even slimmer coverage. The problems with these short term plans have caused four states – California, Massachusetts, New Jersey, and New York – to ban them.

Insurance brokers are incentivized with higher commissions to sell short term plans compared to Affordable Care Act (“ACA”) plans.  See more from Consumer Reports HERE

Health insurance plans provide coverage only for health-related serves that they define or determine to be “medically necessary.” Medical necessity refers to a decision by your health plan that your treatment, test, or procedure is necessary for your health or to treat a diagnosed medical problem.

Most health plans will not pay for healthcare services that they deem to be not medically necessary. The most common example is a cosmetic procedure, such as the injection of medications to decrease facial wrinkles or tummy-tuck surgery. Many health insurance companies also will not cover procedures that they determine to be experimental or not proven to work.

Hereditary Leiomyomatosis and Renal Cell Cancer (“HLRCC”) is a very rare genetic condition that was named in 2002. It is also known as Reed’s Syndrome. HLRCC is a disorder in which affected individuals tend to develop benign tumors containing smooth muscle tissue (leiomyomas) in the skin and, in females, the uterus. This condition also increases the risk of kidney cancer. Surveillance and monitoring for HLRCC is recommended starting at around age 5-8 years.

If an ERISA appeal for long term disability benefits is denied and the claimant pursues litigation, the appeal is likely to be mediated before going to trial with a judge. Indeed, most ERISA cases settle in mediation.

Here are some fundamental points to understand about mediation of long-term disability cases:

  • Mediation discussions are confidential. What you say in mediation cannot be used against you in court.

Pension “de-risking” sounds like a fancy term for protecting participants’ interests in their benefits. In other words, take the risk out of pension benefits. Well, not quite. Not even close. Pension de-risking is a scheme to benefit the employers who sponsor pension plans. It refers to ways in which the employer can reduce its own risk that it may not have enough assets to pay the benefits that have been promised or just reduce the expense associated with such promises. While pension de-risking is not new to the pension world, the amount of de-risking and the type of de-risking in recent years should be concerning.

There are a few ways that pension plans can reduce their risk. Older and more common methods are to amend the plan to freeze benefits, terminate the plan altogether or make a lump sum offer to eligible participants. Another de-risking strategy that has become very popular in recent years is for an employer to purchase annuities from an insurance company which then provides the monthly payments to the pensioners. This is more commonly referred to as a “buy-out.” One need only do a simple google search of the term “pension de-risking” to find a plethora of insurance companies chomping at the bit to buy-out pension liabilities.

That begs the question, “why?” Why do insurance companies want to take on these liabilities and why do employers find them attractive? Employers find annuity buy-outs attractive for a few reasons.

If you are a union employee, you probably have a pension plan that has promised to pay a monthly annuity for your life once you reach retirement age. What happens if the plan cannot pay your benefit when the time comes? Well, there’s insurance for that. Pension plan sponsors are required to pay premiums for insurance through a government run program called the Pension Benefit Guaranty Corporation (PBGC). Simply stated, this insurance kicks in if the employer cannot fulfill the promises made to the employees. When that happens, the PBGC pays the pension benefits, up to certain limits. However, the PBGC predicts that its multi-employer program, the program that covers most union-sponsored pension plans, will become insolvent before the end of 2026 and almost certainly by 2027.

To determine its potential obligations, the PBGC looks at the funding status of all multi-employer plans. Each year, pension plan are required to report their funding status to the Department of Labor if the funding levels fall below certain thresholds. For 2020, the Department of Labor website shows there were 55 plans reported to be in engaged status (less than 80% funded), 112 plans reported to be in critical status (less than 65% funded), and 61 plans reported to be in critical and declining status (reported as going insolvent within 20 years). Many of these plans are multi-employer plans and some are very large plans. Continued failure of these multi-employer pension plans is putting an enormous strain on the PBGC’s resources. In 2020, the multi-employer portion of the PBGC had a deficit of -$63.7B. Despite being able to turn around its deficit for the single employer program, the multi-employer program has had a deficit fluctuating between -$42.4B to -$65.2B since 2014.

The PBGC was designed to be self-supporting by requiring pension plans to pay premiums for the plan participants and by taking over the assets of failed pension plans. It does not receive any funding assistance from the Federal government which means that if the PBGC fails there is no other government funding for these failed pension plans and no current mechanism to support the PBGC.

If a claim for ERISA disability benefits is denied or terminated, the claimant’s next recourse is to submit an administrative appeal to the insurance company. An ERISA long-term disability claim cannot be taken to court until the administrative appeals process is first exhausted. If the appeal is denied and the case proceeds to litigation, ERISA constrains the scope of evidence that is heard at trial and also limits the available remedies. (For this reason, ERISA is favorable to the insurance companies since it does not contain strong disincentives for denying meritorious claims).

It is important to understand that, with rare exceptions, the evidence submitted on appeal is the only evidence that will be considered in litigation—in other words, once the insurance company makes a final decision on an appeal, the file for litigation becomes closed. New supporting evidence does not get added during litigation and no witnesses are called to the stand to testify. The judge makes a determination based on the legal briefs submitted by the attorneys on both sides and a hearing at which the attorneys present arguments and answer any questions the judge may have. This makes ERISA litigation is a very particular type of litigation  governed by certain rules and limitations which make the process quite different from many other types of litigation such as personal injury.

For this reason, thoughtful preparation and submission of all relevant evidence for the administrative appeal is absolutely imperative. Appealing the denial of a disability claim is not just a matter of refuting the insurance companies’ reasoning for the decision or pointing out overlooked facts. Rather, it is the one opportunity to assemble the strongest possible body of evidence that can be presented in court if the appeal is denied.

When you start a new job that provides disability insurance, or accidental death and dismemberment insurance, most policies include language that states you will not have coverage for claims you make in the first 12 months if the claim is for an injury or illness that is a “pre-existing condition.” But what is a pre-existing condition, and how will insurance companies determine if you have one?

A pre-existing condition is generally defined as any medical condition for which you received treatment, care, advice, or a prescription from a medical professional in the 90 days before you started your new job. The precise language will differ from policy to policy, but that is the general idea. For some medical conditions, the application will be obvious. If you were in treatment for breast cancer in the three months before you started your new job, started a new job believing you were in remission, and then 8 months later found out that your cancer had returned, that would be a pre-existing condition and you would not have coverage. If you were in a car accident before you started a new job and treated with a chiropractor or in physical therapy for injuries, and eventually could not work because of those injuries and so went on leave within the first year of work, that would be a pre-existing condition. It’s also reasonably clear that if you treated with a doctor for a broken leg, or with a psychiatrist for anxiety before starting your new job and six months later you were hit by a car and went out on disability for internal injuries, your prior medical care would not be a pre-existing condition that would bar coverage for the accident.

There are other situations that are not so clear cut. If you were treating for back problems due to a slipped disc prior to starting work, and then were in a car accident six months into your new job and further injured your back, will coverage for that injury be barred by the pre-existing condition limitation? Your insurance company will almost surely argue that there is no coverage because the injury was a pre-existing condition. What if you had diabetes, and after a car accident lost a leg, in part because of complications related to your diabetes? Or what if you had been fully released to work after a prior injury and were not treating for it, but were titrating down on your pain medication during the 90-day period before you started work, and then your injury flared and you needed to go on disability?

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