ERISA Archives - Page 33 of 56 - McKennon Law Group

Attending Physician’s Certifications of Disability: How Important Are They for Disability Insurance Claims Under ERISA?

Many employees are covered by group short-term disability insurance and/or group long-term disability insurance. These plans provide benefits to employees who cannot return to work because of illness or injuries that prevent them from performing their work activities. The Employee Retirement Income Security Act of 1974 (“ERISA”) governs most of these insurance plans. Unfortunately, sometimes an insured becomes disabled and must support his claim for disability benefits. The insured’s attending physician typically has examined the insured and determines that he cannot return to work. The insured will want to use his physicians’ certification of disability to support his disability by submitting it to his insurer. A common question is: Must an insurance company accept the treating physician’s opinion regarding the insured’s disability?

The answer is: not necessarily. The insurance company need not always accept and give credence to the treating physician’s opinion. The Supreme Court of the United States addressed this issue in Black & Decker Disability Plan v. Nord, 538 U.S. 822 (2003). In Nord, Kenneth Nord worked for Black & Decker. Black & Decker had a disability plan that provided benefits when an employee suffered “the complete inability… of a Participant to engage in his regular occupation with” Black & Decker. Id. at 825. The disability plan was governed by ERISA. Nord developed degenerative disc disease, which was confirmed by a Magnetic Resonance Imaging scan. Nord consulted with an orthopedist. Both his primary treating physician and the orthopedist agreed that Nord was disabled.

Nord applied for disability benefits, but Black & Decker denied his initial claim. Nord filed an administrative appeal. Black & Decker then referred Nord to a neurologist for an independent medical examination. The neurologist determined that whereas Nord did suffer from degenerative disc disease, he could still work with minor accommodations and pain medication. Black & Decker denied Nord’s administrative appeal.

Nord sued in district court to enforce his rights under ERISA. Both parties filed motions for summary judgment. The district court granted summary judgment for Black & Decker. On appeal, the Ninth Circuit reversed the district court. The Ninth Circuit relied on Social Security Disability law in determining that the treating physician must be awarded special deference and, if a plan administrator disagreed with a treating physician’s opinion, the administrator must provide specific reasons for its decision. The Ninth Circuit held that the specific reasons must be supported by substantial evidence.

The Supreme Court reversed the Ninth Circuit’s ruling. The Supreme Court explained that nothing in ERISA mandated that a treating physician’s opinion receive special deference from an insurance company. On the other hand, in the Social Security context, regulations did in fact require such a result. The Supreme Court explained that determining whether a treating physician should receive such deference was a question best left to Congress or an administrative agency. The Supreme Court overturned the Ninth Circuit’s ruling and remanded the matter for further proceedings. See id. at 834.

Just because an insurer need not give special deference to a treating physician’s opinion, that does not mean that an insurer can ignore the opinion. The Supreme Court expressed sympathy for concerns that treating physicians, “as a rule, have a greater opportunity to know and observe the patient as an individual.” Id. at 832. The Supreme Court also did not question the “concern that physicians repeatedly retained by benefits plans may have an incentive to make a finding of not disabled in order to save their employers money and to preserve their own consulting arrangements.” Id. (internal quotations omitted). The Supreme Court emphasized that “Plan administrators, of course, may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician.” Id. at 834. Nord makes clear that a treating physician’s opinion can serve as a significant piece of evidence, but the opinion may not, but often can, necessarily establish disability in of itself.

Courts have been critical of insurers that fail to adequately address a treating physician’s opinion. For example, in Yox v. Providence Health Plan, 659 F. App’x 941 (9th Cir. Sept. 9, 2016), the Ninth Circuit examined whether an insurer had abused its discretion in denying a claim for dental services under an ERISA plan. After the insurer denied the claim, the insured brought suit in district court. The district court found that the insurer had abused its discretion in denying the claim. The Ninth Circuit affirmed. The court based its holding on three grounds: failure to follow certain procedural requirements; failure to properly assess the substance of the insured’s claim, including the assessment of a treating physician; and the presence of a structural conflict of interest.

With respect to the insured’s treating physician’s clinical evaluation, the court stated that, “Moreover, [insurer] arbitrarily refused to address the clinical evaluation submitted by Yox’s treating dentist. When [insurer] did address the evaluation provided by another dentist, it discounted the dentist’s opinion as ‘insufficient’ without further explanation. [Insurer’s] conclusory opinion does not satisfy its duty under ERISA.” Id. at 944.

Other circuits have also expressed skepticism and criticized plan administrators that fail to give the proper weight to the opinions of treating physicians. See Evans v. Unum Provident Corp., 434 F.3d 866, 877 (6th Cir. 2006) (“The Supreme Court nonetheless admonished that plan administrators many not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician.”) (internal quotations omitted); Michaels v. The Equitable Life Assurance Soc’y of the United States Employees, Managers, and Agents Long-Term Disability Plan, 305 F. App’x 896 (3d Cir. 2009) (overturning a district court’s ruling in part for failing to credit evidence from a treating physician). Insurers cannot rely upon conclusory statements when addressing a treating physician’s assessment. The insurer generally must provide a more thorough and reasoned opinion as to why it will discount the treating physician’s opinion.

In fact, it is incumbent on an insurer’s reviewing doctors explain why his or her opinions differ from the physicians who actually examined the insured. If this is not done, the opinion should carry little weight with a court. See Carrier v. Aetna Life, 116 F. Supp. 3d 1067, 1081-1083 (C.D. Cal. 2015) (An insurer’s reliance on peer reviewers who present their opinions in a conclusory fashion, making it unclear how they reached contrasting opinions from those of the insured’s attending physicians, is improper, and such conclusions should not be relied upon over the opinions of the insured’s physicians).

Courts tend to give a great deal of respect to a treating physician’s opinions and without them, a disability claim may be denied. Having a strong certification letter from a physician can be very helpful, if not critical, to a disability insurance claim. If all of an insured’s doctors are in agreement that the claimant is disabled, then a court will likely be critical in its assessment of an insurer who denies that claim.

Do Arbitration Clauses in Employment Contracts Automatically Preclude Employees From Litigating ERISA Claims?

Many times, employees must sign written employment contracts before beginning a new position. These contracts generally set forth the terms of the relationship between the employer and employee. They also establish both the rights and responsibilities of the two parties. Employers often include an arbitration clause in their employment contract. This means that any disputes that arise between the employer and employee must be settled through arbitration, rather than through the courts.

But what happens when an employee sues his employer not on his own behalf, but on behalf of another entity for claims that the employee cannot bring in his individual capacity? For instance, in the context of ERISA, employees who participate in an employer-sponsored ERISA plan can bring a claim for breach of fiduciary duty on behalf of the ERISA plan against the employer. If the employee signed an arbitration agreement, does that preclude the employee from litigating this particular claim in court?

The Ninth Circuit Court of Appeals recently addressed this issue in the matter of Munro v. University of Southern California, No. 17-55550 (9th Cir. July 24, 2018). In Munro, nine current and former employees of the University of Southern California (“USC”) brought suit against their employer for breach of fiduciary responsibility in the administration of two ERISA plans offered by the employer (collectively, the “Plans”). The relief sought by the plaintiffs included the following: a determination as to the method of calculating losses; removal of breaching fiduciaries; a full accounting of Plan losses; reformation of the Plans and an order regarding appropriate future investments

Since the plaintiffs/employees all signed arbitration agreements as part of their employment contracts, USC filed a motion to compel arbitration, arguing that the arbitration agreements bar the plaintiffs from litigating the claims at issue. The district court denied USC’s motion and ruled that the arbitration agreements, which the employees entered into in their individual capacities, do not bind the Plans because the Plans did not themselves consent to arbitration of the claims. The Ninth Circuit upheld the district court’s ruling, finding that the claims for breach of fiduciary duty fall outside the scope of the arbitration agreements. In reaching its decision, the court turned to the language of the arbitration agreements, which state that the parties agreed to arbitrate “all claims…that Employee may have against the University or any of its related entities…and all claims that the University may have against Employee.” The court noted that this language does not extend to claims that other entities have against the University.

The Munro court concluded that the ERISA claims for breach of fiduciary duty were not claims that the “Employee may have against the University or any of its related entities.” Rather, the employees brought the claims on behalf of the Plans, and, since the Plans never consented to arbitration of the claims, the arbitration provision did not apply in this instance. In reaching its conclusion, the court looked to the case of United States ex rel. Welch v. My Left Foot Children’s Therapy, LLC, 871 F.3d 791 (9th Cir. 2017), which dealt with a similar issue, specifically, whether a standard employment arbitration agreement covered qui tam claims brought by the employee on behalf of the United States under the False Claims Act (“FCA”). The court in Welch found that because the underlying fraud claims asserted in a FCA case belong to the government and not to the employee, the claims were not claims that the employee had against the employer and therefore were not within the scope of the arbitration agreement. Welch, 871 F.3d at 800 & n.3. In Munro, the Ninth Circuit found similarities between the type of claim brought in Welch and the ERISA claims at issue in Munro. Specifically, the court noted that the ERISA plaintiffs did not seek relief for themselves, but rather sought recovery for injury done to the Plans. This was evident in the relief sought by the plaintiffs, which included removal of breaching fiduciaries, a full accounting of Plan losses, and reformation of the Plans. Furthermore, since the Plans were not parties to the arbitration agreements between the employer and employees, and therefore never consented to arbitration, the court could not compel arbitration in this instance.

The issue of whether a party can be compelled to arbitrate an ERISA claim where the party did not sign an arbitration agreement arose in a prior Ninth Circuit decision, Comer v. Micor, Inc., 436 F.3d 1098 (9th Cir. 2006). The plaintiff in Comer participated in an ERISA plan offered by his employer. The plan trustees retained a company, Salomon Smith Barney, Inc. (“Smith Barney”) to provide investment advice. The plan and Smith Barney entered into an investment management agreement that contained an arbitration clause. After Comer sued Smith Barney for breach of fiduciary duty under ERISA, Smith Barney moved to compel arbitration. The court found that pursuant to ordinary contract and agency principles, Comer could not be bound to the terms of a contract he did not sign and could not enforce. Therefore, the arbitration agreement did not apply to Comer’s ERISA claim. The same argument could be made in Munro, where the Plans were not signatories to the individual employment contracts and, therefore, were not bound by the arbitration agreements.

In summary, even though an employee has signed an employment contract containing an arbitration provision, this does not necessarily preclude the employee from bringing a lawsuit against his employer for ERISA violations when the employee is suing on behalf of the ERISA plan and not simply in an individual capacity. In such cases, the claims belong to the ERISA plan itself and, if the plan did not consent to arbitration, then this opens the door for the employee to bring his ERISA breach of fiduciary duty claim in federal court.

“Sole Cause” Provisions in Accidental Death and Dismemberment Policies: Are ERISA Claimants Getting a Fair Shake?

According to the Centers for Disease Control, unintentional injury is the leading cause of death among people ages 1 to 44. For this reason, Accidental Death and Dismemberment (“AD&D”) Insurance should be an essential component of insurance coverage for most families. As preventative care expands and baby boomers remain active, accidental deaths will likely continue to rise as the leading cause of death among individuals. While AD&D coverage is important to protect families from unforeseen injuries and death that can have severe financial repercussions, insurance companies do not like to pay these claims as they often attempt to limit the scenarios in which an insured can recover an AD&D benefit by placing “sole cause” provisions in AD&D policies. These provisions include restrictive language requiring that an insured’s loss be the direct result of accidental injury, independent of other causes. Using this language, insurance companies attempt to deny benefits on the basis that an illness or preexisting condition caused or contributed to an accident.

It should not be surprising that insurers interpret these “sole cause” provisions expansively in an attempt to deny AD&D benefits. We recently wrote here about the important and insured-friendly Ninth Circuit Court of Appeals decision in Dowdy v. Metro. Life Ins. Co., 890 F.3d 802 (9th Cir. 2018). In Dowdy, the court rejected an insurer’s claim denial and held that diabetes did not substantially contribute to amputation of beneficiary’s leg below the knee after he suffered a serious injury to his leg as a result of an automobile accident, and therefore loss was covered. The court further held that the exclusion for “any loss caused or contributed to by illness or infirmity” did not apply to the role that diabetes played in causing the amputation.

In Kellogg v. Metropolitan Life Insurance Co., 549 F.3d 818 (10th Cir. 2008), the Tenth Circuit addressed such a provision and looked at whether the insured’s death was caused by his purported seizure prior to car accident. Kellogg is recognized as one of the leading cases regarding accidental injury/losses involving pre-existing medical conditions and involved an AD&D claim governed by ERISA.

In Kellogg, a witness observed the insured experience an apparent seizure immediately before driving off the road and crashing into a tree. The insured later died of a brain hemorrhage resulting from injuries sustained in the crash. The insured was covered under a policy that provided benefits if the insured had an “accidental injury that is the Direct and Sole Cause of a Covered Loss.” The policy defined “Direct and Sole Cause” as a “direct” and “independent” cause of loss. The policy also contained an exclusionary clause exempting from coverage “any loss … caused or contributed to by … physical or mental illness or infirmity.” The insurer denied the claim for AD&D benefits, reasoning the accident would not have happened but for the insured’s illness. The Tenth Circuit rejected that rationale, concluding “the car crash—not the seizure—caused the loss at issue, i.e., [the insured’s] death, and therefore the exclusionary clause of the policy does not apply.” Id. at 831.

The Tenth Circuit further looked at the plain meaning of the ERISA Plan provisions and the inequality of bargaining position between insurance companies and insureds. The court found that these rules of construction, including contra proferentem, apply equally to ERISA cases governed by federal common law. The court noted that the “[t]he Plan does not contain an exclusion for losses due to accidents that were caused by physical illness, but rather excludes only losses caused by physical illness.” Id. at 832. Ultimately, the Court determined that a “reasonable policyholder would understand this language to refer to causes contributing to the death, not to the accident.” Id.

The Kellogg court explained that courts have long rejected attempts to preclude recovery on the basis that the accident would not have happened but for the insured’s illness. “As then-Judge Taft wrote in Manufacturers’ Accident Indemnity Co. v. Dorgan, 58 F.945, 954 (6th Cir. 1893), “if the deceased suffered death by drowning, no matter what was the cause of his falling into the water, whether disease or a slipping, the drowning, in such case, would be the proximate and sole cause of the disability or death, unless it appeared that death would have been the result, even had there been no water at hand to fall into. The disease would be but the condition; the drowning would be the moving, sole, and proximate cause.” Id. Yet, like those courts, the Kellogg court rejected MetLife’s denial decision, and remanded the matter to the district court “with directions to enter judgment in favor of Kellogg on the administrative record.” Kellogg, supra at 833.

Other courts following this analysis have come to the same conclusion. In Ferguson v. United of Omaha Life Insurance Co., 3 F.Supp.3d 474, 483 (D. Md. 2014), the District Court of Maryland applied the analysis of Kellogg where an insurance company denied AD&D benefits due to the insured’s medical insurance. In that case, the insured suffered from epilepsy that caused him to suffer an apparent seizure twice while swimming. The first incident, in February 2010, led to his near-drowning and a three-day hospitalization, and the second incident, on September 15, 2010, resulted in his death. The court considered whether there was substantial evidence that the insured actually suffered a seizure that caused him to drown on September 15, 2010, and thus, whether it was a seizure that caused him to drown.

The district court in Ferguson went on to opine that a provision that excludes sudden, unexpected, unforeseeable and unintended events that are independent of sickness and all other causes “would appear to eliminate the possibility of any event ever being considered an accident.” Id. at 486. The district court added, “If the insured slips and falls on an icy sidewalk, it would not be an accident under this language because the presence of ice on the sidewalk would be a cause of the event.” Id.

When taken literally, these “sole cause” provisions would exclude coverage for a number of common sense scenarios that would reasonably be labeled an accident. Following the analysis in Kellogg, courts have considered the cause of loss to be independent of the cause of the accident. These courts have denied coverage only when the disease or pre-existing condition was a cause of the death or injury, not when it was simply the cause of the accident that lead to a death or injury.

Conclusion

While AD&D insurance provides coverage for any accidental death or dismemberment, it is often difficult to separate pre-existing conditions and disorders that may have contributed to an accident from the accident itself. This complicates the coverage analysis in AD&D policies with “sole cause” provisions. For instance, it is plausible to surmise that an individual’s history of heart disease caused her to have a heart attack while driving, which then caused an accident resulting in death. An insurer will use the “sole cause” provision to argue that the heart attack caused or contributed to the accident. However, considering the analysis of Dowdy, Kellogg and opinions following these decisions, a court must separate the loss of the insured from the accident, and consider whether the insured would have suffered a loss but for the circumstances of the accident. Under this analysis, even when though a pre-existing condition or disease may have caused or contributed to an accident, recovery of AD&D benefits is likely.

Where Did My Long-Term Disability Benefits Go? Termination of Benefits Without Improvement of Insured’s Medical Condition

Many people purchase accidental death and dismemberment insurance or disability insurance to protect themselves should they ever become injured and unable to work. If they become injured, they file a claim with their insurance company, and, after a potentially lengthy process, the insurance company may start to pay disability or accidental death and dismemberment benefits. Sometimes, however, after initially paying disability benefits, an insurer will suddenly change its stance on the insured’s disability and terminate the benefits. But there is a problem: The insured has not recovered, and his medical condition has not become better. The insured still cannot return to work. If the insured was disabled, and nothing has changed, why the sudden termination of benefits? Thankfully, courts also question such a change of position.

Many courts have questioned an insurers’ termination of benefits when the insurer lacks evidence that the insured’s health has improved. For example, the Ninth Circuit Court of Appeals has criticized a termination of benefits because the benefits had already been paid for a year and the insurer lacked evidence that the insured’s health had improved. See Saffon v. Wells Fargo & Co. Long-Term Disability Plan, 522 F.3d 863, 871 (9th Cir. 2008) (“After all, MetLife had been paying Saffon long-term disability benefits for a year, which suggests that she was already disabled. In order to find her no longer disabled, one would expect the MRIs to show an improvement, not a lack of degeneration.”) (emphasis in original). The Eighth Circuit also criticized an insurer for similar conduct. In that case, the Eighth Circuit noted that “[n]othing in the claims record justified [the administrator’s] decision that a change of circumstances warranted termination of the benefits it initially granted.” Walke v. Group Long-Term Disability Ins., 256 F.3d 835, 840 (8th Cir. 2001).

Courts view the failure to establish improvement as a factor in a larger assessment of whether the insurance company improperly terminated the insured’s benefits. The case of Backman v. Unum Life Insurance Company of America, 191 F.Supp.3d 1053 (N.D. Cal. 2016), provides a good example of this analysis. In Backman, Crosscheck, Inc. employed Janet Backman as an accounting manager. Crosscheck, Inc. purchased a long-term disability plan with Unum Life Insurance Company of America. The Employee Retirement Income Security Act of 1974 (“ERISA”) governed the plan. Ms. Backman, who was covered under the plan, developed lower back pain and pain in her right leg. The pain became so significant that she ceased working. On February 16, 2012, she applied for long-term disability benefits. In April 2012, Unum approved the claim based on Ms. Backman’s medical records, claim information and conversations with her doctors. Ms. Backman also applied for Social Security Disability Insurance (“SSDI”) benefits. The Social Security Administration awarded her SSDI benefits in November 2012.

After Unum terminated Ms. Backman’s benefits, Ms. Backman filed an administrative appeal with Unum. Unum denied the appeal, concluding that her “report of pain and its limiting effects on [her] functional capacity [is] out of proportion to the clinical/diagnostic findings.” Id. at 1057. During the administrative appeal process, Unum’s medical examiners reviewed Ms. Backman’s medical records and concluded that she could return to work. When denying the appeal, Unum placed heavy emphasis on its own medical consultants and gave little weight to the opinions of Ms. Backman’s treating physicians. Unum also placed little weight on Ms. Backman’s subjective reports of pain. Ms. Backman sued Unum in the Northern District of California.

The court ruled that Ms. Backman “continued to be disabled within the meaning of the LTD Plan as of December 2013, and was entitled to have the Plan disability benefits continue.” The court based its ruling on a number of factors. The court disapproved of Unum’s favoring of its experts over Ms. Backman’s treating physicians, the discounting of the award of SSDI benefits and the failure to place any significant weight on Ms. Backman’s subjective reports of pain.

In its analysis, the court also emphasized the “lack of evidence of a change in condition.” Id. at 1070. The court stated:

Unum’s justification for the 2013 termination of Backman’s benefits is further undermined by its initial 2012 disability determination, which included subjective reports of pain that were essentially unchanged at the time of the termination . . . the Plan here paid benefits for two years before determining that plaintiff was no longer disabled by her radiculopathy and back pain . . . [Another courts has] concluded it was not proper for [a] Plan to find the medical evidence was sufficiently objective proof for an initial award of benefits only to require “more objective” evidence of pain to avoid termination of those benefits. [Here] the Plan’s termination of benefits appears particularly inappropriate given the lack of evidence suggesting that the claimant’s pain had improved or her admittedly degenerative condition had reversed course. Though there are conclusory statements in the Unum consultants’ notes to the effect that Backman’s condition had improved since the disability determination, the Court’s review of the evidence does not support that conclusion. While Unum is not held to a particular standard to show changed conditions, the credibility of its consultants’ conclusions to terminate benefits are undermined when there is no evidence of improvement. (internal citations omitted)

As Backman shows, courts look to a variety of factors to determine whether an insurer has properly terminated an insured’s benefits. The lack of evidence of improvement is one of those factors. When an insurer terminates benefits without signs of the insured’s improvement, there are often other improprieties that, when viewed as a whole, will compel a court to reverse a termination of benefits.

Sitting: If you are Unable to do it, are you Totally Disabled Under a Long-Term Disability Policy?

While most people tend to have a common-sense view of what it means to be disabled, under long-term disability (“LTD”) policies, an insured must satisfy the terms of a disability policy and its specific definitions of “disability” to receive LTD benefits. Within the first two years of a disability claim, “disability” in a policy is normally defined as the inability to perform the essential duties of one’s own job. Thereafter, “disability” is usually defined as being prevented from performing one or more essential duties of any occupation for which an insured is qualified by education, training and experience. This “own occupation” versus “any occupation” analysis is the source of a substantial amount of judicial opinion.

Insurance companies typically argue that even if an insured is unable to perform the essential duties of a job, an insured can perform some type of sedentary desk job, where sitting is a large component of the workday. The battle usually turns to whether a disabled employee can perform full-time work where sitting is a large component of the workday.

In a recent case in the Western District of Washington, the court in Reetz v. Hartford Life and Accident Ins. Co., 294 F.Supp.3d 1068 (W.D. Wa. 2018) addressed this analysis as it related to a sedentary occupation. In Reetz, the court considered whether the claimant Kirsten Reetz (“Ms. Reetz”) was disabled under the plan’s “own occupation” standard and “any occupation” standard, where she was only able to sit for 30 minutes at a time for a total of six hours a day.

Ms. Reetz began working at Byram Health Care, Inc. (“Byram”) as a senior customer service representative in October 1999. As described by Byram, the position was a sedentary level occupation, requiring six hours of sitting at a time, for a total of seven hours of sitting per day. Alternating sitting and standing as needed was not allowed. There would be a 30-minute break during the eight-hour work day, and a typical work-week consisted of 40 total work hours, with 35 of those hours spent sitting.

While at Byram, Ms. Reetz participated in an LTD benefit plan (“Plan”) administered by Hartford Life and Accident Insurance Company (“Hartford”). The Plan “offers benefits for the 90-day elimination period and two years following that period if the claimant cannot perform the essential duties of his or her own occupation. But after those two years, the Plan will only pay benefits if the claimant is unable to perform the essential duties of any occupation for which he or she is qualified.” Id. at 1072.

Ms. Reetz worked at Byram until March 2014, when she took leave due to persistent pain resulting from fibromyalgia, a musculoskeletal pain disorder, and spondyloarthropathy, a form of inflammatory arthritis. Ms. Reetz submitted a claim for benefits on March 10, 2014, and Hartford paid her benefits from March 7, 2014 to June 5, 2014. Hartford initially approved LTD benefits on June 23, 2014 and paid LTD benefits to Ms. Reetz through April 2016. Due to her spondyloarthropathy, lumbar back pain and fibromyalgia, Ms. Reetz’s treating physician noted that Ms. Reetz could only sit for 30 minutes at a time, for a total of four to six hours a day.

Utilizing a vocational case manager, Hartford identified ten occupations it believed Ms. Reetz could perform. The identified occupations were sedentary occupations that involved sitting and clerical work. With this information, Hartford determined Ms. Reetz was no longer disabled as defined in its Plan and terminated Ms. Reetz’s benefits by an April 28, 2016 letter. Hartford concluded that since Ms. Reetz’s job required her to sit most of the time and Ms. Reetz was limited to sitting for 30 minutes at a time for a total of six hours a day, she was able to perform the essential duties of her own occupation. Hartford further concluded that there were several sedentary occupations for which she was qualified that were within her physical capabilities. Thus, Hartford deemed Ms. Reetz capable of performing the essential duties of her own occupation or any occupation.

Ms. Reetz appealed the LTD denial decision, but Hartford upheld its determination. Ms. Reetz subsequently filed suit under ERISA, which sets minimum standards for many LTD plans and serves to provide protection for individuals in these plans. ERISA allows employees like Ms. Reetz to recover benefits under a covered plan, like the Plan with Hartford.

The federal court looked at the requirements of Ms. Reetz’s job and the medical record to determine whether Ms. Reetz had established by a preponderance of the evidence that a sickness prevented her from performing the essential duties of her own job. The court found that evidence that Ms. Reetz could only sit for 30 minutes at a time for a total of no more than six hours per day was persuasive that Ms. Reetz could not perform her own occupation. The court also found there to be no evidence of improvement in Ms. Reetz’s condition and found her award of Social Security Disability benefits constituted evidence of her disability. The court also gave weight to Ms. Reetz’s treating physicians over Hartford’s independent reviewing physicians, as Hartford’s doctors did not examine Ms. Reetz in person.

The court then considered whether Ms. Reetz established by a preponderance of the evidence that a sickness prevented her from performing the essential duties of any occupation for which she was qualified. In assessing this, the court reviewed the Ninth Circuit opinion, Armani v. Northwestern Mutual Life Insurance Co., 840 F.3d 1159 (9th Cir. 2016). In Armani, the Ninth Circuit held that where the claimant’s attending physicians agreed he could sit at most four hours per an eight-hour workday, he was unequivocally disabled from performing his own sedentary occupation as a full-time controller and disabled from any other sedentary occupation, because sedentary jobs require mostly sitting and generally at least six hours per day. Id. at 1163-64.

In light of the Armani opinion, the court accorded significant weight to the evaluation of her treating physicians, who concluded that Ms. Reetz could sit for only 30 minutes at a time for a total of less than six hours a day. Because Ms. Reetz could only sit for half-an-hour at a time for, at most, six hours a day, the court found she could not perform any sedentary occupation. The court added that even if Ms. Reetz were able to sit for more than six hours per day, she would need the significant accommodation of taking breaks every half hour. This supported the finding that she was disabled from “any occupation.”

Conclusion

Many disability insurance claimants suffer a debilitating disease or condition that makes sitting painful or requires them to stand or walk around frequently to manage pain. The Reetz court provides guidance for insureds who are unable to sit for long periods of time, especially when insureds are limited to sitting for only 30 minutes at a time. Although many courts and the federal government’s Dictionary of Occupational Titles define sedentary jobs as requiring sitting for six hours per day, the Reetz opinion looked not at the total time sitting, but the restrictions of periods of time a person is able to sit. Importantly, the court noted that even if an insured can sit for more than six hours per day, taking breaks every half hour would be a significant accommodation to support a finding of disability. Thus, this opinion helps to expand the extent to which an insured may claim disability benefits due to difficulty sitting for long periods of time.

The Latest Frontier for Forum Selection Clauses: ERISA Policies

Letters denying an insured’s claim often end by listing what steps an insured can take to challenge an unfavorable determination. Assuming all administrative appeals have been exhausted, this generally involves filing a lawsuit. Depending on the language in the underlying insurance policy, the denial letter may state that if an insured wishes to bring suit, they must bring suit in a specific court in a particular state that could be on the other side of the country. Clauses in contracts, such as insurance policies, that require filing suit in a particular jurisdiction are called “forum selection clauses.”

Courts often enforce forum selection clauses. When determining whether to enforce a forum selection clause, a court will ask if the forum selection clause is “fundamentally unfair.” Many people would question the fairness of forcing a Californian to bring suit in Vermont or Connecticut in order to vindicate their rights under an insurance policy bought in California. Unfortunately for insureds, courts make the question of fundamental fairness rather complicated. To make the determination, courts consider three factors: “(1) whether the forum selection clause was motivated by bad faith; (2) whether accession to the forum selection clause was obtained by fraud or overreaching; and (3) whether a plaintiff was ‘given notice of the forum provision and, therefore, presumably retained the option of rejecting the contract with impunity.’” Laasko v. Xerox Corp., 566 F.Supp.2d 1018, 1024 (C.D. Cal. 2008) (quoting in part Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991)). The Supreme Court stated that “forum-selection clauses should control except in unusual cases.” Atlantic Marine Construction Co. v. U.S. District Court for Western District of Texas, 571 U.S. 49, 64 (2013).

A further complication arises when the Employee Retirement Income Security Act of 1974 (“ERISA”) governs a policy or plan with a forum selection clause. ERISA provides a systematic framework for the determination of an insured’s rights under many insurance policies. ERISA governs numerous life, accidental death and dismemberment, health and disability insurance policies. When drafting ERISA, Congress attempted to protect the rights of insureds so that venue of an ERISA lawsuit is in a location that is typically close in proximity to the insured. ERISA provides that:

Where an action under this subchapter is brought in a district court of the United States, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be served in any other district where a defendant resides or may be found.

29 U.S.C. § 1132.

ERISA provides for a wide variety of locations where an insured may file a lawsuit to vindicate their rights. If a policy governed by ERISA includes a forum selection clause, can an insurer require that a matter be venued in a particular court thousands of miles away from the insured? Most appellate courts have yet to rule on this issue. However, all appellate courts to have addressed the issue agree that courts should enforce forum selection clauses in policies governed by ERISA if the clauses are not “fundamentally unfair.” In the ERISA context, courts look to the same factors previously listed.

To date, only two appellate courts have addressed this issue. The Sixth Circuit Court of Appeals addressed the issue in Smith v. Aegon Companies Pension Plan, 769 F.3d 922 (6th Cir. 2014). The Seventh Circuit Court of Appeals addressed the issue in In re Mathias, 867 F.3d 727 (7th Cir. 2017). Both courts upheld the enforcement of the forum selection clauses in their respective cases. Both courts reasoned that 29 U.S.C. section 1132 speaks in terms of permission. See, e.g., Smith, 769 F.3d at 932 (“ERISA’s venue provision is permissive: suit ‘may be brought’ in one of several districts.”). The courts noted that no language in 29 U.S.C. section 1132 contains a command. The courts further emphasized that because courts have a strong tendency to honor forum selection clauses in contracts, and here the statute does not clearly prohibit forum selection clauses, ERISA does not deny an insurer the right to have a forum selection clause in a plan.

In each appellate opinion, one of the three judges dissented. The dissenting judges presented largely identical arguments. The dissenters focused on how ERISA was meant to guarantee that insureds had ready access to a convenient court where the insured could bring suit. The dissenters reasoned that Congress intended for insureds to have the chance to conveniently vindicate their rights in court. Furthermore, unlike other forum selection clauses, insurance companies and employers negotiate the contents of ERISA policies. The insured/plan participant almost never takes part in those negotiations and thus has no chance to advocate for a plan that does not have a forum selection clause. A forum selection clause, so the dissenting judges reasoned, denies insureds some of the very rights Congress intended to establish and protect.

The Secretary of Labor also addressed the applicability of ERISA to forum selection clauses. The Secretary argued as amicus curiae in several cases, including Mathias and Smith. The Secretary consistently argues that ERISA supersedes forum selection clauses. For example, in Mathias, the Secretary argued “that the statute ought to be read to protect . . . the interests of participants in employee benefit plans . . . by providing for appropriate remedies, sanctions, and ready access to the Federal courts[.]” Mathias, 867 F.3d at 735 (internal quotations omitted). The Secretary concludes that such a reading of ERISA results in the invalidation of forum selection clauses. To date, the Secretary has had little success in persuading courts not to honor the clauses.

A majority of appellate courts have yet to address this issue. Possibly, other circuits will rule contrary to their already decided sister courts. To date, only a handful of district courts have struck down forum selection clauses in insurance plans governed by ERISA. McKennon Law Group PC will soon be briefing this issue in an ERISA pension case advocating for a district court in Orange County, California to reject the application of a forum selection clause in an ERISA plan.

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