Articles Posted in ERISA

Over the years, courts deciding ERISA cases involving accidental death due to autoerotic asphyxiation have issued mixed opinions as to whether benefits should be payable. In a recent decision, Wightman v. Securian Life Ins. Co., No. CV 18-11285-DJC, 2020 WL 1703772 (D. Mass. Apr. 8, 2020), a district court upheld the denial of accidental death benefits due to the insured’s death caused by autoerotic asphyxiation gone awry.

Plaintiff Anne Wightman sued Securian Life Insurance Company after it denied the accidental death benefit claim filed as a result of her husband, Dr. Colin Wightman. This policy expressly excluded death when caused directly or indirectly by, among other things, “suicide or attempted suicide, whether sane or insane . . . intentionally self-inflicted injury or attempt at self-inflected injury, while sane insane” and “bodily or mental infirmity, illness or disease.”

Dr. Wightman had been in therapy since the late 1990’s for his interest in sexual asphyxia. Dr. Wightman told his wife about his interest in “sex-related strangulation” in 2007 after he engaged in a sexual encounter that led to a complaint to the police, and Dr. Wightman losing his job. Dr. Wightman sought mental health treatment as a result from June 2007 through April 2010. He also was prescribed medication to help treat his addiction, which he took through 2015. The court noted that records from his mental health treatment highlighted Dr. Wightman as having “high risk sexual behavior [that] has led to possibility of charges for sexual assault.”

An employee who becomes disabled while covered by an employer-sponsored disability plan may qualify for short-term disability (STD) benefits and then long-term disability (LTD) benefits, based on the length of the disability and the terms of the plan. However, some LTD policies require that the employee not only apply for STD, but “exhaust” it, meaning receive the maximum amount of benefits allowed under the policy, before they may pursue LTD. If an employee received all but one day of the full STD benefit, they may still have to go through the appeals process or risk eligibility for the more valuable LTD benefit.

Kantor & Kantor was recently retained by a client, who we will refer to as John Smith for anonymity.  Mr. Smith was employed by a large corporation as a Material Handler who was responsible for all supplies and materials needed to manufacture medical devices.  Unfortunately, he became disabled by degenerative disc disease and painful spondylosis of his lumbar spine.  In addition, he suffered from sciatic nerve pain in his back.  His painful conditions necessitated medications which also caused side effects and impacted his functioning.

Mr. Smith’s company’s disability plan claim involved the situation described above, except that his STD claim was terminated just a few weeks before he received the maximum duration of benefits.  He unsuccessfully appealed his STD denial on his own before hiring the law firm.  In evaluating his STD claim and his potential LTD claim, the attorneys identified the following language in his LTD policy:

On April 8, 2020 Kantor & Kantor Partner Elizabeth Hopkins and Karen L. Handorf of Cohen Milstein, filed a friend-of-the court brief in the Supreme Court for Phyllis Borzi and Dan Maguire, two former, high-ranking Department of Labor officials.

The brief supports a number of States that successfully challenged a newly-enacted federal regulation, which runs contrary to the requirement in the Affordable Care Act (ACA) that women in healthcare plans be provided free access to preventive health services.

Under the challenged regulation, virtually any employer may simply disregard the ACA requirement that healthcare plans provide cost-free contraception for women enrolled in such plans, and thereby prevent enrolled women from receiving this congressionally-mandated preventive health service.

If you have a pending ERISA disability claim, the plan administrator or insurance company may schedule an Independent Medical Examination (“IME”) for you.  Your first question may be, “do I have to attend?”  While every person’s situation is different, and you should consult with your attorney about the specifics of your case, it is recommended that you comply with reasonable requests by the administrator to have you evaluated in person.

Why, you ask?  For starters, most disability policies contain a provision that gives the administrator the right to have you examined.  Failure to comply may result in the denial of your claim.  For example, in Burke v. Pitney Bowes Inc., 392 F. App’x 570, 572 (9th Cir. 2010), the Ninth Circuit Court of Appeals held that it was reasonable for the plan administrator to request a second IME of the plaintiff and that the plaintiff’s refusal to attend prejudiced the administrator’s ability to decide the claim.  The Court found that the termination of disability benefits based on the plaintiff’s failure to attend the IME was not an abuse of discretion.

Second, if your matter ends up in litigation, it is important that you appear reasonable and cooperative to the judge.  The focus should be on the merits of your disability claim, not on whether you should have attended an exam.

The Supreme Court handed down a victory on February 26, 2020 to employees whose pension, healthcare or other benefit plans are mismanaged.  Under ERISA, the federal law that governs such plans, those who manage or administer such plans are considered fiduciaries bound by strict standards that require them to act with great care and in the interest of plan participants and their families.  If they fail to meet these requirements or otherwise violate the statute, ERISA give employees six years to sue unless they have “actual knowledge” that the plan managers or administrators violated their duties or the statutory requirements, in which case a three-year period for filing suit applies.  In Intel Corp. v. Sulyma, a unanimous Supreme Court held that Congress meant what it said and that plan participants must actually know about the fiduciary breach or violation to trigger the shorter deadline.  In that case, a pension plan participant stated that he never read financial disclosures posted by his employer on a website.  The Supreme Court held that, in those circumstances, the employee did not automatically gain “actual knowledge” of the plan’s risky investments based on these web postings and therefore his suit was timely.  This decision will ensure that ERISA works as intended so that employees and their families are not prematurely cut off from their right to file suit simply because an employer or insurance company posts information which could have led them to discover mismanagement.  Kantor & Kantor filed a friend-of-the-court brief on behalf of the Pension Rights Center supporting the employee, Mr. Sulyma, and we are very pleased with the result.

For questions about your pension, healthcare, or long-term disability benefits, please call Kantor & Kantor for a free consultation at 800-446-7529 or use our online contact form.

Our law firm receives many inquiries from long-term disability claimants whose insurance companies claim that they overpaid them benefits and insist that the claimants pay them back.  Often, these claimants do not have the money to pay the companies back and want to know their legal rights.

First, it’s important to know the common situations in which these overpayment issues arise.  Group disability insurance companies that fund employer-provided disability benefits draft their policies to include “offsets.”  An offset is a type of other income you might receive (or are eligible to receive) which reduces what the insurance carrier is obligated to pay you.  If you receive other income which applies retroactively, the insurance company will require you to pay back the benefits it paid you during the relevant time period.  As an example, below is language from a Lincoln National Life Insurance Company group disability policy.

RIGHT OF RECOVERY.  If benefits have been overpaid on any claim; then full reimbursement to the Company is required within 60 days.  If reimbursement is not made; then the Company has the right to:

Over the past 15 years, I have represented hundreds of claimants in their claims for disability benefits governed by the Employee Retirement Income Security Act of 1974, also known as ERISA.  If an ERISA disability claim is denied, a claimant must appeal that denial to the plan administrator or insurance company before he or she is able to file a lawsuit.  The appeals process is referred to as exhausting administrative remedies (though there is no administrative agency involved). The ERISA Regulations provide rules that an administrator must follow in order to give a claimant a “full and fair review.”  See ERISA § 503; 29 CFR § 2560.503-1 (Claims procedure).

Effective April 1, 2018, the ERISA Regulations were changed to require that an insurance company or administrator provide to the claimant copies of new evidence it obtains after a claimant submits an appeal so that the claimant has an opportunity to respond to the new evidence before the insurance company issues a final claim decision.  Some insurance companies, however, refuse to provide this evidence to claimants who filed their disability claims before April 1, 2018.

What if you fall into this pre-April 1, 2018 category?  Do you have any rights to know what the insurance company is relying on before it issues a final decision on your appeal?

There comes a time in your life when you will need to consult with a lawyer – whether it be good news or bad news. A good lawyer works with you, helps you understand the situation, and guides you to the best possible result. At Kantor & Kantor we routinely speak with individuals who have had life, health, and disability claims denied by their insurance companies.

As lawyers we are well-versed in the practice of law, but we rely on the information from our clients to steer us in the right direction and guide each case. It takes TEAMWORK to get the best possible result for our clients.

Here are a few tips for talking to your lawyer and telling them what they need to know.

We represent many clients who have been denied long-term disability benefits in lawsuits against the insurance companies who have denied their claims. Many of our clients ask, “What is the value of my disability claim?”

This question usually presents itself in the context of mediation, which is a form of voluntary alternative dispute resolution, because our clients must decide whether to take the insurance company’s lump sum settlement offer. There are many factors to consider. To aid our clients’ decision-making process, we will prepare a “present value calculation” designed to capture the total value of all benefits in dispute.  In most circumstances, the value of your benefit can be broken up into two parts:  the past-due benefits and the future benefits.  Benefits, both past and future, are calculated by taking your net monthly benefit (total gross monthly benefit minus offsets” for other income you receive) and multiplying by the number of months benefits are due. However, past and future benefits have to be calculated differently in order to account for inflation.

Past-due benefits are calculated by multiplying the net monthly benefit by the number of months of past-due benefits you are owed. Then, we add interest to compensate you for the fact that, had you been properly paid your past-due benefits, those benefits would have been worth more in the past than they are in the present, because inflation has made the value of each dollar decrease over time.  Notably, the insurance carriers seldom factor in interest on the past-due benefits in the context of mediation. However, if your case does not settle and the court makes a decision in your favor, it has the discretion to award prejudgment interest on the past-due benefit. The percentages that courts award vary and range from the nominal interest amount rate dictated by 28 U.S.C. § 1961 (1-year constant maturity Treasury yield) to 10% interest. See, e.g., Blankenship v. Liberty Life Assur. Co. of Bos., 486 F.3d 620, 628 (9th Cir. 2007) (affirming award of prejudgment interest at a rate of 10.01 percent, compounded monthly); Oster v. Standard Ins. Co., 768 F. Supp. 2d 1026 (N.D. Cal. 2011) (finding current U.S. Treasury Rate at .3% too low and awarding prejudgment interest at the rate of 5% ).

The Supreme Court heard arguments yesterday in Retirement Plans Committee of IBM v. Jander, an ERISA case challenging the prudence of fiduciary decisions with respect to an employee stock ownership plan (ESOP).  The Court granted certiorari to review whether the Second Circuit correctly applied the Court’s “more harm than good” standard set forth in Fifth Third Bancorp. v. Dudenhoeffer to a claim that fiduciaries, who were corporate insiders with information that the company stock was overvalued, should have made a corrective disclosure before allowing the plan to make continuing investments in that stock.

Of the three ERISA cases that Court is looking at this term, Jander is the most confounding and the argument yesterday did little to clear things up.  This is mostly because the case concerns the meaning and application of Dudenhoeffer, a decision that attempted to describe pleading standards in the hazy terrain where corporate securities obligations end and ERISA fiduciary duties begin.  But the fact that the Petitioners (IBM plan fiduciaries), the government and the plan participant all proposed different standards, only one of which was based on Dudenhoeffer, added to the confusion.

Several Justices expressed some concern that the petitioner’s broadest argument – that corporate insiders who are fiduciaries have no ERISA duties when they learn of problems with the company stock – and the government’s argument that almost any disclosure not required under securities law would be inconsistent with that regime, would require them to scrap Dudenhoeffer.  Perhaps most interestingly, Justice Gorsuch noted that corporate insiders don’t have to serve as fiduciaries and thus the problem presented in the case was, to some extent, self-created.  But he also questioned whether the securities laws might not be the most logical place to look when considering what actions a fiduciary with insider information should take to protect ESOPs.

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