McKennon Law Group, Author at McKennon Law Group

The case of Mundrati v. Unum Life Insurance Company of America, __ F. Supp. 3d __, 2025 WL 896594 (W.D. Pa. Mar. 24, 2025), serves as a significant illustration of how courts will apply the abuse of discretion standard of review in disability claims under the Employee Retirement Income Security Act (ERISA). The decision rendered by the United States District Court for the Western District of Pennsylvania on March 24, 2025, reveals the dynamic of long-term disability (LTD) claims and the responsibilities of insurance companies to properly classify the claimant’s occupation and the evidence of disability a claimant provides.

Brief Factual Background

Dr. Pooja Mundrati, a Physical Medicine and Rehabilitation Physician with interventional spine and sports fellowship training, was employed by Summit Orthopedics, Ltd. (Summit), as an Interventional Spine Physician (ISP). Her duties included evaluating patients, performing examinations, administering treatments, and conducting fitness physical examinations. Unum issued a group LTD plan and administered benefits under Group Policy No. 421054001 to Summit, Dr. Mundrati’s former employer (Policy) On February 27, 2018, Dr. Mundrati was involved in a motor vehicle accident that resulted in a traumatic brain injury (TBI). Despite her initial recovery and return to work, she experienced a major setback in January 2019 due to increased workload. Her condition worsened over time, leading to her termination by Summit on January 15, 2021.

Procedural History

Dr. Mundrati filed a claim for LTD benefits with Unum Life Insurance Company of America (Unum) on March 26, 2021, citing her TBI as her disabling condition. Unum denied her claim, leading to her filing a lawsuit on October 27, 2023, under ERISA. The parties filed cross-motions for summary judgment, which were fully briefed and argued on January 22, 2025.

Key Issues in the Case

Misclassification of Occupation: Unum classified Dr. Mundrati’s regular occupation as a physician, a light-duty position, rather than recognizing her specific role as an Interventional Spine Physician, a medium-duty position. This distinction is crucial because it directly impacts the definition of disability under the policy. Dr. Mundrati argued that her actual job duties required significant physical demands that were overlooked.

Evidence of Disability: The court scrutinized Unum’s assessment of Dr. Mundrati’s ongoing health issues, particularly its reliance on the opinions of external paper reviewers, a family medicine physician and an ophthalmologist, over those of her treating physicians. Unum’s denial was based on these reviews and a review of medical records, which the court found to be selective and lacking the necessary depth to accurately reflect Dr. Mundrati’s condition.

Time Relevance of Evidence: Unum denied the relevance of certain medical evaluations conducted after the elimination period, arguing they did not pertain to Dr. Mundrati’s condition during the period in question. The court found that this rationale was unfounded, as there were no substantial changes to her condition that would justify disregarding later evaluations.

Court’s Analysis and Holding

The court concluded that Unum’s decision to deny benefits to Dr. Mundrati was arbitrary and capricious and therefore granted summary judgment in her favor. The court found Unum’s characterization of her position as a physician with light duty activities significant. Under the terms of the plan, while there was language in the Policy that Unum was required to look at Dr. Mundrati’s medical specialty as it is normally performed. It was clear to the court that Unum did not do so and that this failure was an abuse of discretion. Indeed, even if the Policy had a provision that allowed it to look at how her occupation was performed in the “national economy,” Unum was required to also consider how she performed her occupation. The court stated:

Thus, although Unum was not required to look at Dr. Mundrati’s occupation as specifically performed at Summit, and certainly not exclusively so, it was required to consider her specialty in the practice of medicine. Unum has not explained why it chose to categorize Dr. Mundrati as a “physician,” a light-duty occupation, rather than as an ISP or physiatrist which, according to the DOT, is considered a medium-duty occupation “as performed in the national economy.” Its briefs do not discuss Lasser, Weiss or any other case on the issue of “regular occupation.” Indeed, Unum does not dispute Dr. Mundrati’s supplemental statement about her job duties, nor does it contend that they are inconsistent with how the position is performed in the national economy.

Id., 2025 WL 896594, at *15 (Emphasis added).

The court also concurred with Dr. Mundrati that Unum abused its discretion by rejecting crucial pieces of evidence as “not time relevant” even though they related back to her original injury without any evidence of an intervening event1. To the court, Unum could not justify its decision to exclude the vocational report and the Functional Capacity Evaluation (FCE) as not time-relevant. Nor could the court disagree with Dr. Mundrati that it was problematic Unum’s reviewing doctor ignored critical evidence, including the opinions of her treating physicians. While Unum was not required to accept the opinions of the treating physicians, the court found Unum’s “decision to rely on [its own doctor’s] unreasonable and selective paper review over [Dr. Mundrati’s] treating physicians is another factor to take into account in determining whether its review was arbitrary and capricious.”

Finally, the court considered Unum’s decision not to order an independent medical exam (IME), and found that coupled with everything else it further supported Dr. Mundrati’s contention that Unum’s denial of her appeal could not withstand even deferential scrutiny. For these reasons, the court granted Dr. Mundrati’s motion for summary judgment and denied Unum’s motion for summary judgment.

Conclusion

The Mundrati case highlights the importance of accurately classifying an insured’s occupation and thoroughly considering all relevant evidence when evaluating disability claims under ERISA. The court’s decision underscores the need for insurance companies to adhere to the terms of their policies and to conduct fair and comprehensive reviews of disability claims. This case serves as a reminder that arbitrary and capricious denials of benefits will not be upheld by the courts.

Ninth Circuit Clarifies Standing of Medical Providers in ERISA Lawsuits

The Ninth Circuit Court of Appeals in S. Coast Specialty Surgery Ctr. v. Blue Cross of Cal., __ F. 4th __, 2024 WL 105317 (9th Cir. Jan. 10, 2024) (Before Circuit Judges Graber, Mendoza, Jr., and Desai), recently clarified a longtime standing issue in the law that a healthcare provider may sue an insurance company under ERISA to recover from the insurance company benefits that otherwise might otherwise be recoverable only by the patient. South Coast Specialty Surgery Center, Inc. (“South Coast”) brought an ERISA action against Blue Cross of California dba Anthem Blue Cross (“Blue Cross”) to recover benefits on behalf of patients who had been treated by South Coast and who had assigned their benefits to South Coast. The district court dismissed South Coast’s lawsuit on the basis that South Coast lacked authority to bring an ERISA action, as South Coast was neither a beneficiary nor a plan participant. The district court construed this assignment as giving South Coast the right to receive direct payment from Blue Cross but not the right to sue for nonpayment of benefits.

South Coast appealed the dismissal of its suit and argued to the Ninth Circuit that because each of its patients, who were beneficiaries, had signed an Assignment of Benefits agreeing to allow South Coast to receive benefits from Blue Cross, the patients had effectively assigned their right to sue under ERISA to South Coast. The Ninth Circuit had little trouble holding that South Coast’s patients had validly assigned their right to benefits to South Coast, and that such an assignment included the right to sue for nonpayment of benefits.

The Ninth Circuit’s reasoning was based partly on ERISA’s stated purpose of effectuating “a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans.” Concluding that South Coast had no authority to sue despite its patients having assigned it their rights to receive benefits would leave South Coast with no legal recourse after essentially “fronting” the costs of its patients’ care. The court noted that not allowing South Coast to sue “stymies Congress’s purpose in enacting ERISA.” The court concluded that: “[c]onstruing an assignment of benefits as including the right to sue for non-payment thus increases patient access to healthcare and transfers any responsibility of litigating unpaid claims to the provider-an entity that is much better positioned to pursue those claims in the first place.” A nice place to end the decision and begin the year. Therefore, so long as an ERISA beneficiary has validly assigned his right to receive benefits, the provider to which he assigned that right also has the right to bring an ERISA action against the insurer for nonpayment of benefits.

NEWPORT BEACH, Calif., Jan. 24, 2024 /PRNewswire/ — McKennon Law Group PC, a national law firm specializing in representing claimants and employees in bad faith insurance and ERISA benefits cases, is proud to announce a significant victory for disability benefits claimants.

The case, Kayle Flores v. Life Insurance Company of North America, No. 22-55779, 2024 WL 222265 (9th Cir. Jan. 22, 2024), involved a claimant who had short-term disability (“STD”) and long-term disability (“LTD”) coverage through her employer. She was denied STD benefits and brought suit in federal court. The claimant also sought LTD benefits, even though she had never submitted an LTD claim. The district court agreed that the insurance company incorrectly denied STD benefits but also held that the claimant was not entitled to LTD benefits because she did not file an LTD claim.

The claimant then filed an LTD claim with the insurer which was also denied. She brought a second lawsuit and the insurer moved to dismiss the case on the grounds that the question of eligibility for LTD benefits was already decided and could not be relitigated. The district court agreed and dismissed the case because of the res judicata/claim preclusion doctrine.

The claimant appealed and the Ninth Circuit reversed the dismissal. The Court concluded that the claimant’s cause of action for LTD benefits did not accrue until she submitted an LTD claim and received the denial from the insurance company. Since the LTD denial came after her first lawsuit, the question of eligibility for LTD benefits could not have been litigated in the first case.

“We are very pleased with the Ninth Circuit’s decision in this case,” said Robert McKennon, founding shareholder of McKennon Law Group PC and attorney for the plaintiff. “The decision was correct from both an equitable and legal perspective. Our client will now be able to pursue the LTD benefits that she desperately needs, and we look forward to continuing our fight against the insurance company.”

This decision is significant because the issue of res judicata/claim preclusion in this situation had never been addressed in the history of U.S. jurisprudence and substantially protects employee benefits to ensure technical legal doctrines do not deprive them of their much needed employee benefits.

Attorneys Robert McKennan and Joseph Hoff represent the plaintiff, Kayle Flores.

McKennon Law Group has over 70 years of experience specializing in long-term disability and short-term disability insurance, life insurance, health insurance, accidental death insurance, and long-term care claims, as well as all types of ERISA litigation claims involving employee benefits, including group insurance claims, pension claims and severance claims.

What Is ERISA?

ERISA is an acronym for the Employee Retirement Income Security Act of 1974. It is federal legislation that originally became law in 1974. The main goal of ERISA is to provide protection for individuals who receive employer-sponsored insurance and retirement employee benefits.

One specific goal is to help ensure that employees of private employers will have the insurance benefits when they need them and the retirement income they expect when they retire. Such benefits typically include disability insurance, life insurance, health insurance, accidental death insurance, and pension benefits. To that end, ERISA sets forth numerous fiduciary duties owed by ERISA plan fiduciaries.

What Are Fiduciary Duties and Who Is Responsible for Them?

The fiduciary responsibilities under ERISA include managing plans with the interests of beneficiaries and participants first and foremost. Trustees, plan administrators, insurance companies and other fiduciaries involved in making claim decisions or managing assets under an ERISA plan cannot make decisions that place the interests of the employer or themselves before the plan participants or their beneficiaries. Some examples of specific requirements include:

Acting prudently. Fiduciaries would breach their fiduciary duties by managing investments or asset pools recklessly and/or unreasonably.
Diversifying. It is typically considered in the best interest of participants and beneficiaries if the value of the assets is stable, and stable investments tend to be diversified in nature.
Following plan documents. Employers and other plan fiduciaries must in most cases follow the documents that detail how the plan works and what benefits should be paid out. They cannot change their mind about benefits later and simply pay at a different rate that is not defined by the plan. There are exceptions to this rule that include making sure that they act consistently with their representations made to plan participants even if later they determine the representations were false.
Avoiding conflicts of interest. Fiduciaries cannot engage in activities concerning the plan in an attempt to benefit the employer or other fiduciaries or partners.
Acting on the direction of plan participants. In cases where plan participants have a say in how their own retirement assets are invested, they have the final word on the matter. If they instruct a fiduciary to invest their assets in a certain manner, the fiduciary must typically follow through on that request.
Do not misrepresent the plan terms. Plan fiduciaries must communicate honestly and accurately about the plan and the plan benefits.

Anyone who is involved in managing the funds or who makes claims decisions with respect to the plan benefits related to employer-sponsored benefits plans will act in a fiduciary role. Under ERISA, individuals are fiduciaries if any of the following are true:

They have a certain level of control in managing the assets of the plan
They can buy or sell assets on behalf of the plan at their own discretion
They provide any type of investment advice related to the assets within the plan
They decide claims by exercising discretion in making claims decisions

Signs That Fiduciary Duties Under ERISA May Have Been Breached

Sometimes there are signs of a fiduciary breach, such as someone refusing to follow through on your requests or your benefits payments not being paid. However, that is not always the case, so it is important to review your retirement account statements regularly and look for any potential irregularities and it is important to critically review claim denials for benefits payable under a plan.

Some examples of signs that fiduciary duty might have been breached include:

Inconsistencies with pension or other retirement account reporting, or statements arriving late or not at all.
Contributions being withheld from your paycheck are not transferred to your retirement accounts promptly.
Your statements reflect investments that you did not authorize.
You notice new, excessive, or confusing fees and other withdrawals.
You receive a denial of a claim for benefits you have made under an insurance policy covered by your plan.
You receive a denial of a claim for benefits you have made under your pension or retirement plan.
You are told that the amount of benefits you are to receive from your pension plan is inconsistent with representations that plan fiduciaries have previously made to you.

Understanding Your Options if Fiduciary Duties Are Breached

The term fiduciary means to involve a high level of trust. Often, fiduciary relationships exist when there are financial matters at stake and there are parties that manage the finances on behalf of and for the benefit of others. For example, if you create a conservatorship and have a trustee manage it on behalf of a disabled individual, the trustee has a fiduciary duty to manage the assets for the benefit of that person.

ERISA creates a fiduciary relationship between pensioned employees and others with employer-sponsored benefits and the entities that operate those plans and make discretionary decisions regarding those plans. If the insurance companies or plan administrators involved act in bad faith or otherwise breach their fiduciary duties, employees and plan participants may have options for seeking compensation for any related losses. Working with an experienced ERISA lawyer can help you understand your rights and what options you have for enforcing them.

Steps to Take if You Believe Fiduciary Duties Have Been Breached

If you believe that you are the victim of a fiduciary breach of duty related to an ERISA-covered plan, there may be remedies available to you. You can pursue an ERISA appeal and/or file an ERISA lawsuit that may help you recover any losses related to the breach. Fiduciaries who breach their duties can be required to make good on any losses contemplated by the ERISA plan.

Start by reaching out to an experienced ERISA legal team. Provide them with as many details as possible so they can evaluate your case and help you understand if you have cause for a lawsuit. You may want to begin collecting documentation and information as soon as you believe a breach of duty is possible. Some information you might want to gather includes copies of investment and benefits statements related to your plan, claim denial letters, your claim forms and appeal letters, your plan documents, your claim file/administrative record, all communications between you and the insurer/ERISA fiduciary and any notes you can make about the signs you have noticed.

For help fighting for your ERISA benefits, call McKennon Law Group PC. Call us at 949-504-5381 to find out more about how we can help with your ERISA claims, including your breach of fiduciary duty claim.