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Due to their depth and breadth of knowledge, the attorneys at Kantor & Kantor are frequently asked to speak at seminars, conferences, or give presentations. In June of 2019, partner Brent Dorian Brehm was asked by a national continuing legal education (CLE) provider to speak about long term disability benefits.  The seminar was titled “Mastering Social Security, Long-term Disability & Government Benefits.” Mr. Brehm took the attendees on a journey from the start to the end of a long term disability claim – and everything in between. He also covered relevant differences between disability claims governed by state law and those governed by ERISA.

While we cannot provide you with the actual presentation or the question and answer segment that followed, we can provide Mr. Brehm’s outline. This information is valuable to anyone at any stage in the long term disability claim process. It starts from the beginning – explaining what LTD benefits are. It then goes through tips on making a successful LTD claim. It addresses what needs to be done during the claim stage to avoid litigation – but be ready for it if that must happen. And finally reviews the nuts and bolts of litigating both an ERISA and bad faith disability claim.

What are long term disability benefits?

Yahoo Finance published an article about how insurers try to prevent individuals from obtaining disability benefits. While the article discusses Canadian insurers, our experience is that the tactics described in that article also happen in the United States.

This blog elaborates on some of the points raised in the article, especially as they relate to ERISA insureds. The Yahoo article observed:

Surveillance is a common tactic. Insurers will hire private investigators to try to catch you in the act of doing something a disabled or injured person couldn’t, like moving a ladder or other heavy objects.

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.

Disability is not measured only by one’s ability to lift, walk, stand, sit, etc.  Rather, the California definition of total disability in a policy insuring one’s ability to perform their own occupation is:

“A disability that renders one unable to perform with reasonable continuity the substantial and material acts necessary to pursue his usual occupation in the usual or customary way.”

In policies insuring one’s ability to perform “any occupation” or “any reasonable occupation,” the definition has been stated as:

In January of 2018, Judge Lawrence O’Neil issued a scathing ruling against Sun Life Financial, finding that it acted arbitrarily and capriciously when denying Ms. Vicki Young’s claim for ongoing disability benefits, and awarding said benefits to the Plaintiff, Ms.Young.

Ms. Young is a 62-year-old former mortgage broker who suffers from a severe form of fibromyalgia, and several other co-morbid conditions. After paying her LTD benefit for several years, Sun Life decided to terminate her benefit, arguing that the independent physician to whom Sun Life sent Ms. Young concluded that Ms. Young was able to return to a sedentary job, and that Ms. Young’s own physician agreed with that conclusion.

Judge O’Neil agreed with Kantor & Kantor’s argument – on Plaintiff’s Ms. Young’s behalf – that not only did Ms. Young’s treating physician support her disability claim (and was merely confused by an intentionally misleading form), Sun Life’s own independent physician actually gave restrictions and limitations which precluded Ms. Young from returning to applicable work under the terms of the policy.

When you think of what lawyers do for a living, the first thing you probably think of is arguing over a case in front of a judge.

You may be surprised to learn, then, that in the federal courts this staple of practicing law seems to be on the way out. The federal district courts – the trial courts of the federal system – are increasingly holding fewer and fewer oral arguments. Some district courts even have a standing default rule that they won’t hear oral argument on a motion unless the presiding judge explicitly asks for it.

This trend is even more accentuated in the federal circuit courts – the appellate courts of the federal system. While the Supreme Court of the United States holds oral argument in almost all of its cases, the circuit courts of appeal do not.

The classic “he said, she said” scenario shouldn’t apply to healthcare claims. A denial based on medical necessity arises when there are two opposing opinions: (1) the treating physician who recommends that a patient receive treatment necessary for the patient’s condition; and (2) the insurance company’s physician reviewer who has never seen the patient. In deciding medical necessity, the insurance company must consider clinical judgment. But whose clinical judgment applies?

Clinical judgment is defined as “the application of information based on actual observation of a patient combined with subjective and objective data that lead to a conclusion.” http://medical-dictionary.thefreedictionary.com/clinical+judgment.  In most cases, the only physician who has “actual observation of a patient” is the treating physician.

Yet insurance companies give little to no credence to the clinical judgment of treating physicians. For example, major health insurer, Anthem, states that its physician reviewers will apply guidelines, “Anthem corporate medical policy, and other decision-support material.” And when criteria is not available, “physician reviewers make a determination based on the available information and their independent clinical judgment.” https://www.anthem.com/wps/portal/ahpfooter?content_path=provider/nv/f4/s4/t0/pw_002053.htm&label=Medical%20Management

“There used to be considerable skepticism that Fibromyalgia was a real disease. No more.”

Kennedy v. The Lilly Extended Disability Plan, –F.3d–, 2017 WL 2178091 (7th Cir., 2017)

It has been said that disability insurance carriers view a Fibromyalgia diagnosis with skepticism. The disease is an “invisible disease” which cannot be measured on x-ray and its diagnosis is often dependent on an insured’s report of pain, fatigue and cognitive dysfunction. For this reason, insurance carriers often try to discount the disabling nature of the disease.   We see carriers do this by: (1) hiring physicians who do not believe in the disabling nature of the disease or (2) demanding the insured submit “objective proof” of the disability, which cannot exist. There are no x-ray’s or MRI’s used for diagnosing Fibromyalgia.

For over 25 years, I have been representing individuals who have had life, health, and disability claims denied by their insurance companies.   I have represented over 3,000 people.   What is so disheartening to me is that I hear from clients again and again that they “almost gave up before calling” me. They tell me they were beaten down by the process, convinced their insurance company must be right, or that they didn’t know there were lawyers who specialized in handling their kind of case on a contingent basis.   While sometimes the client HAS waited too long for us to help them, usually my law firm, Kantor & Kantor, is able to step in and successfully resolve their claim.

However, I wonder just how many DO give up unnecessarily.   While my view of the insurance industry may appear very cynical, I am 100% convinced that the industry employs a strategy of denying as many claims as possible in the hope that claimants will just give up and go away.   I could write pages upon pages of stories about clients who had almost given up, but for whom we were able to obtain benefits with nothing more than a well written letter.   It sometimes seems like the insurance company is daring their insured to challenge the denial, or to get a lawyer.   If they do, the insurance company will reconsider its denial. If not, the denial will stand and the insurance company will keep the benefits which are rightfully yours.

In the last month, I have obtained over a $1,000,000 in total benefits for several clients who separately told me that they had seriously considered giving up before calling my firm.   This led to me to come back to a familiar thought, which was to wonder about all the people who did simply give up.   I decided to write this blog in the hope that maybe ONE insured might read it, and decide not to give up.   I am not writing this to get business. I have more than I need.   I practice in California, but this blog might be read by someone in Florida, or Illinois, or New Jersey, for example. If it is, and you were considering giving up trying to get your benefits, I am not suggesting you call me.   Go on the internet, or call your State Bar, and find an experienced attorney in your State.   The worst thing that happens, is that no one will take your case  —  but what if they will?

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