Articles Posted in ERISA

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.

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.

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?

Unum is one of the biggest disability and life insurers in the United States, owning subsidiaries including Provident Life and Accident Insurance Company and The Paul Revere Life Insurance Company. Unum generates billions of dollars in revenue and has boasted high rates of growth over the past few decades. Unum has also built a bad reputation for unfair handling of disability benefits claims over the years. Their aggressive and unfair tactics to avoid paying benefits to insured individuals resulted in numerous lawsuits and class actions for insurance bad faith practices, with trial losses totaling well over $100 million.

On top of individual lawsuits and class actions, in the early 2000’s, insurance regulators undertook a multistate market conduct examination to investigate reports of wrongful practices related to delaying and denying legitimate disability insurance claims.  As a result, Unum entered into a multi-state settlement agreement in 2004 in which Unum agreed to review denied claims, implement new claims handling procedures, and pay a $15 million civil penalty. On top of the multi-state settlement agreement, California regulators undertook their own investigation and Unum’s California settlement agreement entailed an additional $8 million penalty as well as changes to policy provisions and claims handling procedures.

Some of the most striking problems with Unum’s handling of disability claims that insurance regulators identified included the following:

Renaker Hasselman Scott and Kantor & Kantor. LLP represent a former employee of Helena du Pont Wright in litigation concerning a pension trust established in 1947 by Mary Chichester du Pont Clark. The trust provides pensions to employees of Mary Chichester du Pont Clark’s children and grandchildren, including A. Felix du Pont, Allaire Crozier du Pont, Alice du Pont Mills, Mary Mills Abel Smith, Katharine Gahagan, James Mills, Phyllis Wyeth, Christopher T. du Pont, and Michael du Pont. Positions that may be covered include household employees, secretaries, personal assistants, chauffeurs, stable hands, and grooms, among others.

The litigation seeks to ensure that the pension trust is operated in accordance with the Employee Retirement Security Act of 1974 (ERISA), the federal law that establishes standards for pension plans sponsored by private employers. In June 2019, the United States District Court for the District of Delaware ruled that the pension trust is governed by ERISA.

Generally, ERISA requires that a pension plan provide pensions to employees who work in employment covered by the pension plan for at least five years. ERISA also generally requires that a pension plan provide benefits to the surviving spouses of such employees.

Our firm is involved in litigating a proton beam cancer treatment denial case in Georgia, Ghattas v. Blue Cross Blue Shield Health Care Plan of Georgia, Inc., Case No. 1:20-CV-03157-ELR, 2020 WL 6867155 (N.D. Ga. Nov. 18, 2020). Defendants Blue Cross Blue Shield Health Care Plan of Georgia (BCBSGA) answered Plaintiff Christopher Ghattas’ Complaint alleging the wrongful denial of his life-saving proton beam radiation therapy at Emory University Proton Therapy Center for a diagnosis of brain cancer. Following Defendant’s answering of the Complaint, counsel began preparing to conduct a Rule 26(f) Conference per the Court’s Order. Prior to the setting of this conference call, counsel for BCBSGA articulated to Plaintiff’s counsel two positions: (1) that ERISA matters were exempt from the initial disclosures requirements of FRCP Rule 26 and (2) that Plaintiff—although never having received a page of the administrative record in this case nor counsel ever discussing the standard of review to be applied to this benefits denial—was not entitled to any discovery in an ERISA matter. The Court resolved these two issues as addressed in the parties’ Joint Preliminary Report to the Court.

First, the Court agreed with Plaintiff’s position that Defendant would be required to produce initial disclosures in this matter pursuant to Rule 26. Citing Golden v. Sun Life Fin., Inc., 2:08-CV-070-WKW, 2008 WL 2782736 (M.D. Ala. July 15, 2008), the Court held that “[b]ecause this [ERISA] case involves more than just the administrative  record and because the parties will be engaging in discovery, [defendant is] required to provide initial disclosures in accordance with Rule 26(a).”

Second, Plaintiff had taken the position that he was not foreclosed on any grounds from conducting targeted and limited discovery depending upon the standard of review that would apply to BCBSGA’s benefits denial. Without having produced a single page of the administrative record, BCBSGA took the position that Plaintiff was entitled to no discovery in an ERISA matter. Here, the Court agreed with Plaintiff. Citing Adams v. Hartford Life and Acc. Ins. Co., 589 F. Supp. 2d 1366 (N.D. Ga. 2008), the Court stated that it did “not agree that discovery is inappropriate here.” “In matters such as the one at hand, ‘the body of case law developed under ERISA’ requires ‘the [C]ourt, at the very least, [to] examine the facts as known to the administrator at the time the decision to deny benefits was made to determine whether the administrator’s decision was reasonable.’” Adams, 589 F. Supp. 2d at 1367. The Court held that Plaintiff was entitled to narrowly tailored discovery regarding what evidence the Plan (who claimed it was vested with discretionary authority) was aware of at the time of its decision to deny Plaintiff’s claim for proton therapy.

As many healthcare providers have experienced, anti-assignment provisions in ERISA health plans can be a full-stop to recovering unpaid claims. In good news, the Ninth Circuit Court of Appeals recently decided Martin Luther King, Jr. Community Hospital v. Community Insurance Company dba Anthem Blue Cross Blue Shield, et al., No. 19-55053, __F.App’x__, 2020 WL 5870513 (9th Cir. Oct. 2, 2020), which is a decided win for providers.

In this case, the Ninth Court considered a trial court’s award of damages in favor of Martin Luther King, Jr. Community Hospital (“MLK”), for services rendered to employees of Budco— the sponsor of the ERISA plan (the “Plan”). Budco’s employees made covered visits to MLK. Although the employees had assigned their benefit payments to MLK, Anthem—the Plan administrator—ignored the assignments, and made payments directly to the employees, who were beneficiaries under the Plan. The employees retained these payments. When MLK sought payment, Anthem ignored the request. Anthem, in refusing to pay MLK, asserted that an “anti-assignment” provision was part of the Plan and justified its payments directly to the employees.

To recover the assigned payments, MLK asserted two grounds in support of its claims. First, MLK asserted that the language of the anti-assignment provision did not prohibit the assignments. The district court did not rule on this contention. Second, MLK asserted that the district court should ignore the anti-assignment provision because it was not part of the Plan.

Kantor & Kantor, LLP recently achieved a victory in Olis-v.-Unum-Life-Insurance-Company-of-America No. 8:19-cv-01347-JVS-DFM, __ WL __ (C.D. Cal. July 27, 2020), a lawsuit seeking payment of an ERISA-governed disability claim based on debilitating migraines. Disability cases involving subjective reports of pain may be the most difficult benefit cases courts have to consider. This case provides a good example of what makes for a convincing claim, and what courts are looking for in deciding whether to award benefits. Our client was represented by Kantor & Kantor attorneys, Brent Dorian Brehm, Sarah Demers, and myself, Peter Sessions.

The plaintiff in this case was a 36-year-old woman who was employed by Enterprise, the rental car company, as an account specialist, which involved significant computer use. She had suffered from headaches for much of her life, but in 2016 those headaches intensified into recurrent migraines, which were accompanied by vertigo and visual disturbances. She took a medical leave of absence to address her problems and then tried to return to work, but she only lasted another month before she had to stop working entirely. During this time, Plaintiff visited numerous doctors in a number of specialties, tried several medications, and attended countless physical therapy sessions.

Plaintiff submitted a claim for LTD benefits to Unum Life Insurance Company of America, which Unum denied on the ground that she had not presented sufficient evidence to prove that she could not return to work. Plaintiff unsuccessfully appealed, and then filed suit against Unum under ERISA. The parties filed cross-motions for judgment under Fed.R.Civ.P. 52.

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