McKennon Law Group, Author at McKennon Law Group

Insurance companies often base denials of disability claims on the mere review of the available documentation in the existing claims files. It is cheaper for them to do so and by using their own paper reviewer, they reduce the risk of an unfavorable report after completion of a significantly more expensive independent medical examination. By carefully selecting the paper reviewers, the insurance companies can obtain some “evidence” of a basis for denial of claim benefits. But how much value do such reports have, particularly if they conveniently fail to address substantial evidence of disability in the reports of the claimant’s treating physicians in the claims file?

In a recent disability benefits decision involving Unum Life Insurance Company (“Unum”), Rios v. Unum Life Ins. Co., 2020 WL 7311343 (C.D. Cal. Dec. 10, 2020), the court reviewed the denial of a disability claim under a de novo standard of review and determined that the claimant was entitled to disability benefits.

Claimant Yolanda Rios worked as a User Support Specialist for large national law firm, Arnold & Porter Kaye Scholer, L.L.P., until she made a claim for disability benefits with Unum. Claimant’s specific job at Arnold & Porter required constant sitting as well as intense concentration and logical thinking. Her Regular or Usual Occupation in the national economy required “constantly sitting” for more than 5.5 hours in an 8-hour day, and it required “focus and concentration.” Rio’s primary disabling condition was “back and leg pain (sciatica) related to multi-level degenerative lumbar disc disease, stenosis, radiculopathy, and ‘severe disc narrowing at L4/5.’” Unum initially approved and paid long-term disability benefits based only on her anxiety and depression and not on any physical impairment, but Unum agreed to further evaluate her physical complaints.

Unum based its denial on a “paper review” of the records which arbitrarily failed to adequately address the claimant’s own testimony regarding pain. The medical reviewer ignored substantial evidence of “excess pain” throughout the claimant’s medical records. Unum had the opportunity to medically examine the claimant and chose not to do so while knowing of the evidence of Rio’s significant pain in the medical records. The court’s disability finding was further supported by the Social Security Administration’s determination that the claimant was “less than sedentary” and, therefore, disabled from “any gainful occupation.” Although the favorable SSA ruling was not dispositive, the court, following applicable Ninth Circuit precedent, found it to be relevant.

The Rios court criticized Unum’s paper review because it conflicted with substantially all the medical evidence, and it faulted Unum for failing to conduct a medical examination of the claimant. The court held that Rios was disabled under both the “own” and “any” occupation standards and faulted Unum’s reviewer for numerous misstatements and inaccuracies. It noted that at least five treating doctors or health care providers had documented that she was taking drugs that affected her concentration, that she had memory problems and that her muscle relaxant did not allow her to work. Because her current job required the ability to focus on a task for some length of time and the ability to use reasoning consistently in her regular and usual occupation as required in the national economy, Rios was disabled under both standards.

The court found that Unum arbitrarily discredited Rios’ testimony of her pain, and her testimony was supported extensively in the medical records. And, Unum did not bother to conduct its own medical examination of the claimant. Unum’s failure to do so “‘raise[s] questions about the thoroughness and accuracy’ of its benefits determination.” Rios, 2020 WL 7311343, at *3, citing Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 630, 634 (9th Cir. 2009). The court was skeptical of the opinions of Unum’s non-examining experts because it found that the opinions of the examining physicians were “entirely one sided in favor of [Plaintiff’s] claim.” Rios, 2020 WL 7311343, at *3, citing Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 676-679 (9th Cir. 2011).

Rios is instructive in demonstrating the relative lack of evidentiary value a court should attribute to such one-sided paper reviews. The ruling recognizes that the insurer had the opportunity to obtain better evidence of the actual current condition of the claimant through a medical examination, and that the insurer should not benefit from its failure to engage in such examination. And, of course, one-sided paper reviews that completely fail to consider abundant evidence of disability are entitled to little, if any, consideration. In addition, Rios underscores the need for claimants to supplement the evidence in the claim file with additional favorable evidence. In particular, Ms. Rios benefited from the supplementation of the record to include the approval of her SSA benefits, which approval occurred after her claim was submitted and was, therefore, not available for consideration at the time of the insurance company’s denial of benefits.

The involvement of skilled ERISA attorneys can make an important difference in the likelihood of a favorable outcome in these matters. McKennon Law Group PC focuses its practice on assuring the most favorable presentation of such reasonably available evidence to the court and the opposing party. Its expertise in handling these matters can be seen in the numerous rulings in favor of claimants. If you believe that an insurance company or benefits administrator has unfairly handled your claim for disability benefits, we urge you to contact us for a free, no-obligation, case evaluation. Let us see what we may be able to do to help you get the benefits you deserve.

McKennon Law Group PC is proud to announce that its founding partner, Robert J. McKennon, has been recognized as one of Southern California’s “Super Lawyers” for Insurance Coverage and appeared in the 2021 edition of Southern California Super Lawyers magazine. Mr. McKennon has been recognized as a “Super Lawyer” for 11 years in a row, and in 2020 received a special designation as a 10-Year “Super Lawyer,” a rare designation achieved by less than 1% of attorneys.

Each year, Super Lawyers magazine, which is published in all 50 states and reaches more than 14 million readers, names attorneys in each state who attain a high degree of peer recognition and professional achievement. The Super Lawyer designation is given to less than 5% of lawyers nationally after being nominated and voted on by their peers. Mr. McKennon has received this Southern California Super Lawyer designation every year from 2011 through 2021.

Mr. McKennon and his firm have also received numerous other awards and recognitions (click here).

A California Federal District Court has granted a motion for summary judgment under F.R.C.P. Rule 52 in favor of a disability claimant, holding that an insurer must consider a long-term disability (“LTD”) claim in accordance with the correct classification of the claimant’s “occupation” as determined by the claimant’s “actual duties.”

In McCulloch v. Hartford Life and Accident, 2020 WL 7711257 (N.D. Cal. 2020), the plaintiff suffered from “involuntary tremors and body jerking, fatigue, and cognitive impairment” that, inter alia, affected her ability to drive. Id., *1. The insurer denied the disability claim and ensuing appeal, whereupon the “plaintiff filed a complaint against [the insurer], alleging a cause of action under 29 U.S.C. § 1132(a)(1)(B) to recover LTD benefits under the terms of [the insurer’s] Plan.” Id.

The Court found that, after having been bitten by a tick, the plaintiff developed various symptoms, including an impairment of “cognitive capacity”, whereupon one of her physicians wrote to the insurer, “I believe that [claimant’s] health issues are serious and limiting. She cannot work because of cognitive impairment as corroborated by her decidingly [sic] abnormal SPECT scan.” Id., *4. The insurer, however, determined that plaintiff’s occupation involved “light work” in the workplace, and denied the claim on the ostensible basis that “plaintiff’s medical records ‘did not provide any objective exam findings or other assessments to support the severity of … symptoms’ and did not state specific work restrictions.” Id., *5. Although the plaintiff appealed on the basis of the reports of several health care practitioners, the insurer denied the appeal on November 20, 2019. Id., *7. Notably, on August 30, 2020, the Social Security Administration (“SSA”) awarded the plaintiff monthly benefits because “under SSA’s rules, [the claimant] became disabled on March 12, 2018.” Id., *8.

The Court observed, “the issue before this Court is whether plaintiff qualifies as disabled under the Plan’s ‘Your Occupation’ definition” and whether the plaintiff was disabled thereunder. Id., *7. The Court first addressed the plaintiff’s “occupation.” The term, “Your Occupation,” was defined in the LTD Plan as “the [e]ssential [d]uties of the job [claimant] is performing for [her] [e]mployer.” Id. Observing that a determination of disability must be based on the plaintiff’s “actual duties”, the Court held that the insurer applied the incorrect definition of “occupation;” rather than “light work” as proffered by the insurer, the plaintiff’s “occupation involved concentration, frequent driving, traveling by airplane, and keyboarding.” Id. *7-8.

The Court then concluded that the plaintiff was, in fact, disabled under the foregoing definition of “occupation.” The Court rejected the insurer’s assertion that the plaintiff’s “real problem seems to be that she found her job and lifestyle extremely stressful.” Id., *8. Rather, because “[o]bjective tests support plaintiff’s disability”, the Court concluded that “plaintiff’s condition prevents her from driving and significantly impairs her physical and cognitive ability” such that “the Court finds that plaintiff is disabled under Hartford’s LTD Plan.” Id., *8-9. In reaching this conclusion, the Court was not persuaded by the insurer’s consulting physicians, concluding that the consultants neither correctly addressed the actual work required of the plaintiff nor the effects of her disability thereon. Id., *9-10.

McCulloch underscores that a disability claim must be evaluated under the proper classification of a claimant’s “occupation” as determined by the claimant’s actual duties. In making this determination, evidence is relevant as to the effects of the disability on the tasks inherent to the claimant’s actual work. Accordingly, delineating the claimant’s actual duties may preclude an insurer from introducing evidence not relevant to the claimant’s “occupation.”

We have significant experience in handling ERISA and non-ERISA disability insurance cases in which an insurer denied a claim based on a lack of objective evidence or a claimant has a disability condition that is subjective in nature and difficult to prove and measure. If your insurer or plan administrator has denied your disability claim, please contact McKennon Law Group PC for a free consultation so that we may assess your matter.

In the January 4, 2021 issue of the Los Angeles Daily Journal, the Daily Journal published an article written by the McKennon Law Group PC’s Robert J. McKennon entitled “ERISA Ruling Expands Protection for Employees, Beneficiaries.” The article addresses a recent case by the Ninth Circuit Court of Appeals, Beverly Oaks Physicians Surgical Center, LLC v. Blue Cross and Blue Shield of Illinois, which found that while anti-assignment provisions in ERISA matters are valid and enforceable, plan administrators can waive the right to assert and enforce these provisions when their actions are inconsistent with the provision or they are aware that the claimant is acting as an assignee. This opinion will greatly benefit employees who have medical insurance and sign agreements with their medical providers to assign their rights to collect payment from their health insurers. The Ninth Circuit’s opinion will be not only useful for claimants/employees who have health insurance claims, but also those who have disability, life or other employee benefit claims as the decision in Beverly Oaks will serve to prevent employers and insurers from making misrepresentations regarding ERISA plan terms and/or taking actions inconsistent that which they had previously represented.

By Robert J. McKennon

The Employee Retirement Income Security Act of 1974, or ERISA, governs most employer-sponsored benefit plans. ERISA establishes protections for employees in the administration of their employer-sponsored benefits, requiring that the administrator adhere to certain requirements when determining a plan participant’s eligibility for benefits. Typically the ERISA plan’s terms govern, although that is not always the case.

All too familiar to patients of health care providers are agreements that assign to the health care providers their right under an ERISA plan to collect insurance benefits under their patients’ health insurance plans. However, most health insurance plans have anti- assignment provisions that prohibit insureds from assigning their right to collect insurance proceeds directly. Anti-assignment provisions in ERISA plans are valid and enforceable. Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d 1476, 1481 (9th Cir.1991); Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d 1282, 1296 (9th Cir. 2014). Therefore, courts have prevented health care providers from suing insurers under ERISA where health insurance plans have anti-assignment provisions, thus frustrating the efforts of health care providers to collect insurance proceeds to satisfy unpaid claims.

In its landmark 2011 decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), the U.S. Supreme Court signaled a broad expansion of the availability of equitable remedies under ERISA. The doctrines of equitable estoppel and waiver have provided plan participants with methods of forcing an employer or insurance company to honor their representations and take responsibility for previous conduct. But what about applying these equitable doctrines for the benefit of health care providers? There has been some recent good news for them.

The recent case of Beverly Oaks Physicians Surgical Center, LLC v. Blue Cross and Blue Shield of Illinois, 2020 DJDAR 132372 (Dec. 18, 2020) further expands protection for employees and their beneficiaries by expanding the circumstances their medical providers can sue insurers directly based on an assignment, even where the plan at issue contained an anti-assignment provision. In Beverly Oaks, the U.S. 9th Circuit Appeals Court allowed an out-of-network healthcare provider to assert equitable claims under ERISA seeking a direct recovery of unpaid claims from Blue Cross and Blue Shield of Illinois (BCBS).

Beverly Oaks Physicians Surgical Center, LLC (Beverly Oaks) performed out-of-network procedures on 14 patients who had employer-sponsored health insurance plans administered by BCBS. Each patient signed a form granting the center the right to collect benefits on their behalf. The center sought and obtained preapproval for each claim from BCBS, the latter stating it would typically pay between 50% to 100% of the claim.

After performing the procedures, the Beverly Oaks submitted the claims to collect ERISA benefits. BCBS either denied every claim or paid a small reimbursement amount and paying only $140,000 of the total $1.4 million of benefits sought. At no time during the pre-surgery conversations or during the administrative claim process did BCBS advise Beverly Oaks that it intended to assert an anti-assignment provision as a basis for denying reimbursement sought under a patient assignment of benefits.

Beverly Oaks filed a lawsuit alleging that BCBS waived or was equitably estopped from asserting the anti-assignment provision in the plan since BCBS did not assert that provision in pre-surgery telephone conversations or the administrative claim process. BCBS argued that the anti-assignment provision was valid and enforceable, even though the first time BCBS asserted the provision as a defense to payment was in litigation. The district court agreed that the anti-assignment provision was valid and enforceable. Beverly Oaks appealed.

In reversing the trial court’s order, the appeals court found that while anti-assignment clauses are valid and enforceable, plan administrators can waive the right to assert and enforce these provisions when their actions are inconsistent with the provision or they are aware that the claimant is acting as an assignee.

The court defined waiver as follows: “Waiver is ‘the intentional relinquishment of a known right.’ Gordon v. Deloitte & Touche LLP Grp. Long Term Disability Plan, 749 F.3d 746, 752 (9th Cir. 2014) (citing Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1559 (9th Cir. 1991) (Waiver occurs when ‘a party intentionally relinquishes a right, or when that party’s acts are so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished.’)).

The court found that Beverly Oaks had plead adequate facts to support waiver, including Beverly Oaks indicated on the claim form submitted to BCBS that it was acting as its patient’s assignee, BCBS processed each claim, denied in full or underpaid Beverly Oaks’ billed charges, and at no time during pre-surgery telephone conversations or the administrative claim process did BCBS raise the anti-assignment provision as a basis to deny benefits. This was to enough to show that BCBS should have been aware that Beverly Oaks sought to collect plan benefits through a patient assignment. The court also commented on BCBS’ silence and payment during the claims process, commenting that this behavior was “’so inconsistent with an intent to enforce’ the anti-assignment clause as to ‘induce a reasonable belief that [the right to enforce the clause] ha[d] been relinquished.’” The court held that “Blue Cross thus cannot raise the anti-assignment provision for the first time in litigation when Blue Cross held that provision in reserve as a reason to deny benefits.”

In addition to waiver, the court found the alleged facts also plausibly showed that BCBS made actionable misrepresentations upon which Beverly Oaks reasonably relied and therefore, were equitably estopped from raising the anti-assignment provisions. “Equitable estoppel ‘holds the fiduciary to what it had promised and operates to place the person entitled to its benefit in the same position he would have been in had the representations been true.” Specifically, the court pointed to telephone conversations between BCBS representative and Beverly Oaks wherein the representative stated that Beverly Oaks was eligible to receive payment, thus inducing Beverly Oaks to move forward with the claims process. In addition to traditional requirements to establish equitable estoppel, under 9thCircuit authority, Beverly Oaks also had to allege (1) extraordinary circumstances; (2) that the provisions of the plan at issue were ambiguous such that reasonable persons could disagree as to their meaning or effect; and (3) that the representations made about the plan were an interpretation of the plan, not an amendment or modification of the plan. The court held that these requirements were properly alleged facts that show a BCBS made a promise that it reasonably should have expected to induce action or forbearance on Beverly Oaks’ part, combined with a showing of repeated misrepresentations over time. Thus, the 9th Circuit reversed and remanded the case the case to the district court.

While federal courts consistently find anti-assignment clauses in ERISA matters enforceable, the decision in Beverly Oaks will have wide-reaching implications not only for medical providers, but also for plan participants and their beneficiaries. Plan and claim administrators must beware that making misrepresentations regarding plan terms, making representations about whether a procedure is covered or failing to raise certain defenses during the pre-claim and claim administrative review process could give rise to equitable claims that inure to the benefit of plan participants, their beneficiaries, and to their assignees. Because waiver and equitable estoppel serve as some of the legal systems’ fundamental checks on the fairness of a party’s actions and these doctrines serve to prevent employers and insurers from performing actions contradictory to what they have previously guaranteed or established via their words or conduct, decisions like Beverly Oaks are to be lauded.