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The Wednesday July 11, 2012 edition of the Los Angeles Daily Journal featured Robert McKennon’s and Scott Calvert’s article entitled: “Equitable Relief in the Ninth Circuit Just Got Better for Consumers.” In it, Mr. McKennon and Mr. Calvert discuss two important Ninth Circuit rulings allowing certain equitable relief to ERISA plan participants that have definite pro-consumer holdings. The article is posted below with the permission of the Daily Journal.
MetLife Cannot Require an IME After Failing to Comply with ERISA Deadlines Following a Remand of Disability Claim
In Kroll v. Kaiser Foundation Health Plan Long Term Disability Plan, 2012 U.S. Dist. LEXIS 25063 (N.D. Cal. February 10, 2012), the Court refused to require that the plaintiff appear for an independent medical examination (“IME”) because Metropolitan Life Insurance Company (“MetLife”) failed to request the IME within 45 days, as required by 29 C.F.R. § 2560.503-1. With the ruling, the District Court confirmed that the time limits set forth in the Department of Labor regulation apply to claims that are remanded to an ERISA administrator following litigation. On May 13, 2011, the Court ruled that MetLife abused its discretion and improperly denied plaintiff’s claim for long-term disability (“LTD”) benefits made under an ERISA-governed employee welfare benefit plan. With the ruling, the Court ordered that MetLife pay all benefits due under the policy’s “own occupation” definition of disability, and remanded the claim back to MetLife for a determination under the “any occupation” definition. In connection with the remand, plaintiff’s counsel wrote to MetLife’s counsel requesting the forms needed to pursue the remanded LTD claim. On May 16, 2011, he was informed that MetLife would let him know what documents and information would be required. Unwilling to wait for MetLife to act, in June 2011, plaintiff sent MetLife just under 1,000 pages of medical records in connection with her claim. Five months later, in October 2011, MetLife finally provided plaintiff with claim forms and requested information to review the claim. MetLife also ordered the plaintiff to appear for an IME, but her counsel objected that the request was untimely pursuant to 29 C.F.R. § 2560.503-1(f)(3). With the plaintiff refusing to appear for the IME, MetLife filed a motion to compel the examination. While MetLife argued that 29 C.F.R. § 2560.503-1 did not apply to its actions because the disability claim was remanded to MetLife following litigation, the District Court noted that MetLife failed to provide any authority to support that position. The Court ultimately rejected MetLife’s argument, explaining that the plain language of the regulation, which “sets forth minimum requirements for employee benefit plan procedures pertaining to claims for benefits by participants and beneficiaries,” applies to the remand of the LTD claim. In denying MetLife’s motion, the District Court explained that:
Pursuant to 29 C.F.R. § 2560.503-1(f)(3), Defendants had until June 27, 2011, to either make a determination on Plaintiff’s claim, or make a determination that more time was needed to resolve Plaintiff’s claim and notify Plaintiff. Defendants did neither. After hearing nothing from Defendants, Plaintiff, on her own initiative, sent over her medical records to Defendants. The first time Defendants indicated that they needed more information was in October 2011, five months after the Court remanded the claim for consideration.
Given MetLife’s failure to act within the time limits set by 29 C.F.R. § 2560.503-1, the District Court held that “it is too late for [MetLife] to further delay by seeking an IME.” Finally, the District Court ruled that “[p]ursuant to 29 C.F.R. § 2560.503-1(l), Plaintiff’s claim for long term disability benefits under the ‘any occupation’ standard is deemed exhausted,” and the plaintiff could therefore initiate further litigation regarding MetLife’s failure to pay benefits under the “any occupation” definition. This case highlights a claimant’s remedies when a claims administrator/insurer does not follow the applicable ERISA deadlines. It is nice to see the courts protecting claimants when insurers such as MetLife blatantly violate the applicable ERISA and Department of Labor deadlines.
California Court of Appeal Affirms Ruling That a Mental Disorder Accompanied by Physical Symptoms is Not Subject to a Policy’s Two-Year Limitation for Mental Claims
In 2009, the California Court of Appeal in Bosetti v. The United States Life Ins. Co., 175 Cal. App. 4th 1208 (2009) addressed whether a two-year benefits limitation on disability insurance payments for “mental, nervous or emotional disorder[s]” could properly serve to limit benefits payable to an insured who was disabled from depression and anxiety, but who also complained of interrelated physical impairments. The California Insurance Litigation Blog summarized that holding, but basically, the Court ruled that the policy’s two-year mental limitation was ambiguous and an insured would reasonably expect that disabling depression arising from a physical condition, would not be subject to the limitation. (The Court also ruled that there was a genuine dispute regarding whether U.S. Life’s claim decision violated the covenant of good faith and fair dealing.)
The 2009 ruling reversed the summary judgment issued in favor of The United States Life Insurance Company in the City of New York (“U.S. Life”) and the matter was remanded for trial. After a presentation of the evidence, a jury ruled in Bosetti’s favor. However, U.S. Life filed two motions – for a judgment notwithstanding the verdict and for a new trial. While U.S. Life conceded that Bosetti demonstrated that her disability had a physical component, the insurer argued that she failed to prove that her physical symptoms had caused her disability prior to March 3, 2003 (the date she was terminated from her job). The trial judge granted both motions, and Bosetti filed another appeal.
In an unpublished opinion, the Court of Appeal considered the trial court’s ruling on both of the post-verdict motions. First, after reviewing the available record, the Court determined that the verdict in Bosetti’s favor was supported by substantial evidence, including specifically that her depression caused the disabling physical symptom of an increase in her fibromyalgia pain. Based on these facts, the Court reversed the trial court’s ruling on the motion for judgment notwithstanding the verdict. In reaching this conclusion, the Court of Appeal affirmed its earlier ruling that a limitation on coverage for “mental, nervous or emotional disorders of any type” does not apply if the insured‘s disability was caused, in any part, by her physical symptoms.
However, with respect to U.S. Life’s motion for a new trial, the Court of Appeal explained that the trial judge is afforded great deference and “an order granting a new trial `must be sustained on appeal unless the opposing party demonstrates that no reasonable finder of fact could have found for the movant on [the trial court’s] theory,’” Applying this standard, the appellate court affirmed the order granting a new trial after finding that there was also substantial evidence that would have supported a verdict in U.S. Life’s favor.
While the case was remanded to the trial court for a second trial, the Court of Appeal did not overturn its 2009 ruling, and thus Bosetti I and its position regarding mental disabilities with physical symptoms should still be considered good law.
McKennon Law Group Founding Partner Robert McKennon Featured in January 2012 Issue of Forbes Magazine
Los Angeles – Noted Southern California insurance and business litigator Robert J. McKennon was featured in the “Southern California Legal Profiles” section of the January 2012 issue of Forbes Magazine in an article highlighting his experience as a top Southern California insurance and business litigation attorney.
Mr. McKennon and his firm are highlighted as the only insurance and business litigation attorney/firm in Forbes’ special focus on the Southern California attorneys. Mr. McKennon is lauded as a “widely recognized [] expert on life, health and disability insurance law” who has “extensively written and lectured nationally in the insurance field.” The article continues:
“After representing Fortune 500 insurers for 25 years at a large California law firm, McKennon realized he was destined to take that expertise to the policyholders when he consistently won evaluative mock trial verdicts against his insurer clients, the last four of which resulted in $17 million, $33 million, $250 million and $500 million verdicts from the jurors. All of them included punitive damages.”
“We mount aggressive litigation against even the most powerful adversaries. And we are not afraid to go to trial against them,” Mr. McKennon says about why he and his firm are successful.
The Forbes magazine story is the latest recognition for Mr. McKennon, who was also recently named as a 2012 Southern California super lawyer, an honor given to fewer than 5% of Southern California lawyers.
In an ERISA Case, What Actions Will Reduce the Level of Discretion Afforded the Claims Administrator/Insurer?
This article continues our series of articles answering basic questions about insurance law and the Employee Retirement Income Security Act of 1974 (commonly referred to as “ERISA”). This one addresses: In a lawsuit governed by ERISA, what actions taken by the claims administrator (usually an insurance company such as Blue Cross/Blue Shield or CIGNA) will reduce the level of discretion the court gives the insurance company’s decision when reviewing the decision for an abuse of discretion?
Under ERISA, the court does not necessarily review the claims decision by simply attempting to determine whether the insurance company made the “correct” decision. Instead, the court first looks to see whether the plan documents unambiguously confer discretion for determining eligibility on the claim administrator. If discretionary language is present, the abuse of discretion standard of review applies, and the court is required to give some level of deference to the claim administrator’s decision. However, even if such discretionary language is present, the discretion given the claim administrator’s decision is not absolute. Specifically, courts have ruled that the following acts will reduce the level of discretion give to the claims administrator’s decision:
- Rendering a decision without explanation, construing a plan provision in a way that conflicts with the plain language of the plan or relying on clearly erroneous findings of fact.
- “Hiding the ball” by failing to advise claimants of documents needed to obtain approval of claim and an explanation of why such material or information is necessary, and failing to submit forms to claimant or his doctors that would have elicited the information needed.
- Overstatement of and excessive reliance upon claimant’s activities in the surveillance videos and conducting a paper review rather than an “in-person medical evaluation.”
- Encouraging participant to file for Social Security Disability Insurance and, when benefits are awarded by Social Security Administration, failing to deal with and distinguish the contrary disability decision.
- Failing to obtain a physician’s recommendation and relying on medical reports that are not credible.
- “Tainting” medical file reviewer in the medical review process by giving the reviewer inaccurate negative information regarding the claimant.
- Failing to consult with a health care professional who has appropriate training and experience in the applicable field of medicine.
- Emphasizing a report that favored a denial of benefits while deemphasizing other reports suggesting a contrary conclusion, and failing to provide its independent experts with all of the relevant evidence.
- Failing to provide all bases for its denial and suggesting alternate reasons for denial after the fact, thereby precluding the claimant from responding to that rationale for denial at the administrative level.
- Adding new terms to the Plan, particularly when those terms are both imprecise and impose a higher evidentiary burden on a claimant, such as requiring that disability be proved by “compelling objective” evidence.
These are just a select few of the acts that courts have ruled require that the insurer’s decision not be afforded full discretion. Numerous other actions will also cause a court to review a claim decision with something less than full discretion. For additional information on this and other insurance matters you can visit the FAQ section of our website: www.mslawllp.com.
If you need to consult with an attorney about a possible ERISA or insurance bad faith matter, please contact our office.
Buying Disability Insurance: What You Should Be Looking For
What Are the Advantages of Buying Disability Insurance? What Should You Be Looking for in a Disability Policy? McKennon Law Group PC partner Robert J. McKennon has been litigating disability insurance claims for over twenty-five years and gives his advice on buying disability insurance.
What are some advantages to private disability insurance?
- Benefits you receive if you become disabled will be tax-free, as long as you paid the insurance premiums with after-tax money;
- Own occupation policies ensure you for your inability to perform the substantial and material duties of your own occupation in the usual and customary manner and with reasonable continuity. This California law standard is very favorable for consumers when insurance companies determine when you are disabled;
- The policy is not tied to your current occupation. This means you can move around to different occupations and still maintain your policy;
- Once you obtain it, as long as you timely pay your premiums, most policies do not allow insurers to cancel disability policies, no matter your change in health;
- If you buy disability insurance when you are earning a high income, most policies provide that the benefits at the time you apply for a disability policy are based on a percentage of your income and your benefits will be locked in even if your income substantially diminishes;
- If you buy a policy with lifetime benefits and if you are permanently disabled, you now have a nice “annuitized” income for the remainder of your life;
- Your greatest asset is your earning capacity and disability insurance insures that asset – it should be an important part of your financial planning.
What are some important things to look for when considering disability insurance?
- Be sure the policy is “guaranteed renewable” and “non-cancellable.” This guarantees that policy premiums cannot be changed as long as you pay them and your policy must be renewed every year no matter your health condition;
- Be sure the policy provides benefits to age 65 or lifetime;
- Look for disability policies that have “accident” or “injury” definitions that pay benefits for your lifetime;
- Although more expensive, always buy “own occupation” policies (with an occupational specialty rider if applicable);
- “Residual benefits” are available as an optional rider. This benefit essentially allows you to collect partial disability benefits while you work if you can only work part-time or I can work full-time but can perform some, but not all, of your occupational duties. I recommend against buying this rider because it is expensive and, under California law, it is mostly likely not necessary. In addition, such a rider/provision can be interpreted to disallow total disability benefits when a residual rider is in place (insurers often make this argument);
- If you can afford it, a cost-of-living rider will protect your future benefits from inflation;
- Buy a policy with a right elimination period (time when you are disabled but you not entitled to receive benefits) – the longer this period, the less expensive your policy.
Once you become disabled, it is vitally important that you fully understand all provisions of your policy and that you obtain necessary counsel if your claim is denied. If you have any questions about your disability coverage, your individual disability claim or ERISA disability claim, please contact us.
