Articles Posted in ERISA

Missing a deadline in your ERISA claim is deadly to your claim.

Accordingly, it is extremely important that any and all deadlines are met. One deadline of particular importance is the 180-day deadline by which to submit an appeal of a denial of benefits covered by ERISA. The federal regulations that govern ERISA require insurance companies to allow claimants 180 days to submit an appeal of a denial of benefits. While the regulations state that the claimant is to be allowed 180 days from the date of receipt of the denial, the safest course of action is to calculate the deadline from the date of the letter denying the benefits. This is one of many good reasons to come to Kantor & Kantor with your claim.

Six Months Will Fly By

In recent years, UnitedHealth Group has ramped up its practice of recovering supposed overpayments to medical providers on claims of plan participants in one healthcare plan by offsetting these “overpayments” against (and therefore often totally disallowing) payments on the claims of participants in an unrelated plan.  Keep in mind that the participants in the plans normally are still on the hook for any medical bills that the United refuses to pay.  I like to refer to this practice of cross-plan offsetting as robbing Peter to pay Paul’s plan.  Or perhaps given the petition for certiorari filed last week by United in a case brought as a class action by Dr. Louis Peterson seeking to end this practice, I should say robbing Peterson (and his patients) to pay Paul.

In the Peterson case, the Eighth Circuit Court of Appeals issued a decision earlier this year agreeing with a trial court that this practice was not allowed under the terms of the governing plans, which expressly allowed such offsetting for provider claims based on patients within the same plan, but said nothing about cross-plan offsets.  Without deciding whether the practice necessarily violates ERISA, as the Department of Labor argued it does in a brief it filed as amicus curiae in the case, the Eighth Circuit noted that, at a minimum, the practice was “in some tension with the requirements of ERISA,” and “pushed the boundaries of what ERISA permits.”  Accordingly, the court concluded that, despite the broad grant of interpretive authority granted to United in the plans, its interpretation of the plan as allowing cross-plan offsets was unreasonable.

United has asked the Supreme Court to review (and reverse) the decision.  In its cert. petition, United asks the Court to resolve two issues (1) whether the Eighth Circuit incorrectly held that its interpretation was “necessarily unreasonable merely because the plan is silent on the matter”; and (2) whether a court is required by established ERISA case law to defer to “an otherwise reasonable plan construction that is lawful under ERISA but, in the court’s view, pushes ERISA’s boundaries.”

We represent a number of clients who suffer from Rheumatoid Arthritis.  This often misunderstood and “invisible” disease causes extreme pain for its sufferers.  On top of the pain, many also deal with the disbelief of friends, family and employers as to the disabling nature of their illness.

Rheumatoid Arthritis (“RA”) is a chronic disorder in which the body’s immune system attacks joint tissue and causes inflammation that can spread throughout the body.  It can also cause excruciating pain.  Because there are very few visible symptoms during most stages of this disease, its sufferers appear to be fine when in reality, they are in extreme pain.

Another difficult aspect of RA, from a disability standpoint, is that there is no single test for diagnosing the condition. Rather, it is diagnosed by clinical evaluation, lab tests and imaging. This makes meeting your long term disability plan’s definition of disabled more difficult as insurers are often looking for “objective evidence” of disability.

Undeterred by a federal court’s recent ruling striking down most of a Department of Labor regulation that allowed small employers and sole proprietors to band together to form association healthcare plans (AHP), DOL is giving top priority to finalizing a rule that will do much the same thing on the pension side.  The proposed pension rule, which was published last October, is aimed at increasing the abysmally low retirement savings by employees of small businesses, whose employers more often than not do not offer pension plans, a laudable goal.  As proposed, the rule expands the definition of “employer” in ERISA to allow unrelated employers and sole proprietors that are in the same general line of business, or in the same State or geographic area, to participate in a pension plan sponsored by an employer group, association or professional employer organization.  DOL has said that it is aiming to release the final rule in June.

If the final rule looks mostly like the proposal, it is hard to say whether it would be a good thing or a bad thing for employees overall.  Unlike the AHP regulation, which was seen by many as a fairly blatant attempt to undermine key consumer protections of the ACA, the pension proposal seems genuinely aimed at increasing the availability of such plans for more small businesses and not at undermining any of the protections of federal law.  In fact, in its proposed form, the rule does not go as far as some industry professionals had wanted in expanding who may sponsor such plans, and it expressly prohibits financial services professionals – banks, insurance companies, broker-dealers, third-party administrators and the like – from sponsoring these plans.  And it remains to be seen if, in issuing the final rule, DOL tightens the requirements for the sponsoring organizations by, for instance, mandating a minimum number of years of experience, staffing qualifications and capital reserves, as some commenters have urged.  But, however well-intentioned the approach, by allowing unrelated employers and business owners with no employees to join association retirement plans, the rule cannot be easily squared with the employment-based context of ERISA.  It takes precisely the approach that DOL took in its AHP regulation, and it is likely to be challenged in the same court and to suffer the same fate.  Stay tuned for updates.

The attorneys at Kantor & Kantor keep up to date on issues such as these so we can better protect our clients.  For more information, please contact an attorney at at 800-446-7529 or use our online contact form.

In an intensely litigated ESOP case involving 14 counts of ERISA violations, on April 22, 2019, Judge Staton, District Judge, Central District of California, certified a class of ESOP participants. The certification came after the court denied Defendants’ motions to dismiss all 14 counts. The case, as a whole, has many interesting legal issues, however, most interesting is the continued litigation of whether indemnification agreements for breaches of fiduciary duty are void.

As background, ERISA § 410 categorically voids indemnification agreements and states, in part “any provision in an agreement…which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty…shall be void as against public policy.” However, Department of Labor regulations have interpreted this to permit employer indemnification but not plan indemnification. (29 CFR 2509.75-4). The regulations also permit indemnification agreements so long as it does not relieve a fiduciary of responsibility or liability.

In 2009, we heard the first case in the 9th circuit that interpreted ERISA § 410 and its regulations, giving some clarity on the validity of indemnification agreements. In Johnson v. Couturier, 52 F.3d 1067 (9th Cir. July 27, 2009) the ESOP participants alleged defendants breached their fiduciary duties by allowing the company to pay excessive compensation to an officer who was a fiduciary to the plan. The company in Johnson was 100% ESOP owned and was in the process of liquidation. The indemnity agreement between officer-fiduciary and plan sponsor (company) provided indemnity unless due to gross negligence or deliberate wrongful acts. Despite the indemnity being paid from corporate assets, which would typically be permitted under DOL regulations, here, because the company was liquidating, the Court held that payment of indemnification by the company would reduce, dollar-for-dollar, the liquidating distribution from the plan – essentially paid by ESOP.

Many of our clients suffer from chronic pain. For some chronic pain is a symptom of an underlying condition and for others it is the main condition; in either case, chronic pain can be and often is disabling. Because so many of our clients are affected by chronic pain, we thought a discussion of the organization that provides information, support and education for those who suffer from chronic pain conditions might be helpful.

The American Chronic Pain Association’s mission:

  • to facilitate peer support and education for individuals with chronic pain and their families so that these individuals may live more fully in spite of their pain; and

Long term disability policies frequently have two different definitions for disability. The first provides benefits if one is unable to perform their “own occupation.” To determine benefits under these criteria, the carrier often looks at the “material and substantial duties” of the insured’s occupation and whether the insured can perform those duties with his or her restrictions and limitations.

After 24 months, the criteria often change to whether the insured can perform “any occupation” for which he or she is suited by education, training and experience.  Most, but not all policies, also expressly include “station in life” criteria.  This means the carrier must also consider the insured’s prior earnings and any alternate occupation identified by the carrier must pay earnings commensurate to the insured’s prior occupation.

We frequently see carriers terminate benefits at the “any occupation” phase of the Plan based on mythical occupations. For example, Hartford has terminated benefits for our clients, stating that the insured can be a “Lens Inserter” or a “Jacket Preparer.”  The carriers take the position that it does not matter if the job actually exists in the national economy. Since the occupations are identified by the outdated Dictionary of Occupational Titles, the carriers believe that they are suitable alternative occupations.

It seems we are handling an increasing number of Lupus cases, so we thought we would write about the illness and the organization that provides information, support and education for those who suffer from Lupus.

The Lupus Foundation works to find a cure, to advance research, to increase knowledge, to empower the community and to ensure that those living with the disease enjoy the best quality of life possible. http://www.lupus.org/about

This organization can provide valuable information for our clients with Lupus and their families on topics that include: understanding the illness, coping with a recent diagnosis, managing Lupus and support for care partners and family. These are just a few examples of the many resources available on the Lupus Foundations’ website.

First reported in 2011, Breast Implant-Associated Anaplastic Large Cell Lymphoma, referred to as BIA-ALCL, is a rare and highly treatable type of lymphoma that can develop around breast implants. This is a cancer of the immune system, not a type of breast cancer. However, when caught early, BIA-ALCL is usually curable.

BIA-ALCL occurs most frequently in patients who have breast implants with textured surfaces. BIA-ALCL has been found with both silicone and saline implants and both breast cancer reconstruction and cosmetic patients. To date, there are no confirmed BIA-ALCL cases that involve only a smooth implant.

Common symptoms of BIA-ALCL include breast enlargement, pain, asymmetry, lump in the breast or armpit, overlying skin rash, hardening of the breast, or a large fluid collection typically developing at least more than one year after receiving an implant, and on average 8 to 10 years after receiving an implant.

What happens if the people in control of an employee benefit plan’s assets make decisions that benefit themselves at the expense of the plan participants? What if they are lazy and don’t make decisions based on a reasoned, researched, thoughtful process? How are they held accountable?

Under ERISA, an employee benefit plan’s assets are meant to be held in trust for the use of the plan participants and their beneficiaries. The people who manage those assets, have the authority to determine who is eligible for benefits under the plan, and make determinations on claims submitted to the plan are plan fiduciaries and they owe fiduciary duties to the plan’s participants and beneficiaries.

An ERISA plan fiduciary must “discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan, with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use…” 29 U.S.C. §1104.

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