Disability insurance is meant to provide a financial lifeline when individuals are unable to work due to illness or injury. However, it is common for insurers to deny or limit disability claims based on a stringent application of the “any occupation” standard of disability in a long-term disability (“LTD”) policy and the imposition of short benefit periods for mental health conditions.

The Eighth Circuit Court of Appeals recently issued a decision, Weyer v. Reliance Standard Life Ins. Co., __ F. 4th __, 2024 WL 3577374 (8th Cir. Jul. 30, 2024), that can help support arguments made by claimants that their disability is based on an “any occupation” standard of disability and that their disability is based on a physical condition, not a mental-nervous condition, and therefore their benefits should be paid after 24 months.

Ms. Weyer made a claim for LTD benefits, which Reliance Standard approved and paid for two years. Her medical conditions included chronic fatigue syndrome/myalgic encephalomyelitis, Lyme disease, migraine headaches, neurocognitive disorder, brain fog, clostridium difficile colitis, irritable bowel syndrome, HHV-6, and malnourishment, anxiety and depression. The policy contained a typical provision that for the first two years of LTD benefits, the claimant is considered disabled if she is unable to perform the “material duties” of her own occupation, and after two years of receiving LTD benefits, she is considered disabled is she is unable to perform the requirements of any occupation. The Policy also had a 24-month limit on mental-nervous disabling conditions.

After Reliance Standard paid her LTD benefits for two years, it terminated her benefits on the basis that she did not meet the new definition of disabled and because the mental-nervous limitation applied.

Ms. Weyer had presented evidence of her inability to work from five treating doctors. Based on the evidence provided by these doctors, she was limited to being on the couch or in bed most of the time, with no screens, reading, or driving; the most activity she did was taking a gentle stroll for about 45 minutes on some days. Reliance Standard relied on evidence provided by a peer review doctor who reviewed her medical records but did not examine her or have any direct contact with her. Additionally, Reliance Standard presented video evidence of someone mowing a lawn, but it did not identify the person in the video as Ms. Weyer.

The district court used a de novo standard of review, meaning that it reviewed the administrative record and decided the case on the same evidence Reliance Standard had used to make its determination to terminate Ms. Weyer’s LTD benefits. The court found in Ms. Weyer’s favor and determined that she was entitled to LTD benefits pursuant to the terms of the policy. Ms. Weyer had presented ample evidence from her treating doctors supporting her claim.

Reliance Standard appealed to the Eighth Circuit Court of Appeals, arguing that Ms. Weyer was not disabled under the policy and even if she was, her physical disabling conditions were caused or contributed by her mental nervous condition, and therefore her LTD benefits would be limited to two years, which it had already paid.

The Eighth Circuit affirmed the district court’s decision that Weyer was entitled to LTD benefits beyond two years. It held that the district court, as the factfinder, reasonably interpreted what it saw as the overwhelming evidence in the record establishing that Ms. Weyer lacked even sedentary work capacity. On the other hand, the evidence cited by Reliance Standard in support of its decision to terminate benefits was viewed by the Eighth Circuit as not enough to conclude that a definite and firm mistake has been made.

The court also found no fault with the district court’s findings that Ms. Weyer’s physical conditions independently rendered her disabled and that Ms. Weyer’s anxiety and depression were not the cause of her disability but “simply downstream effects of her physical illness.” Reliance Standard had argued that even if Ms. Weyer was disabled due to physical conditions, that her mental nervous conditions had caused or contributed to those physical conditions, such that the mental nervous policy limitation applied and limited her LTD benefits to two years. However, the court found that at best, “there are two permissible views of the evidence,” Avenoso v. Reliance Standard Life Ins. Co., 19 F.4th 1020, 1026 (8th Cir. 2021), a determination which “is not enough for us to conclude the district court clearly erred,” Sloan v. Hartford Life &Accident Ins. Co., 475 F.3d 999, 1005 (8th Cir. 2007). The court also found that Reliance Standard had not pointed to any evidence in the record “leav[ing] us with a definite and firm conviction a mistake has been made.” Buchl v. Gascoyne Materials Handling &Recycling, L.L.C., 100 F.4th 950, 962 (8th Cir. 2024).

Had Ms. Weyer not properly addressed Reliance Standard’s determination as to her LTD benefits, she would have been left without benefits after two years, despite being indefinitely unable to work based on her physical condition. Despite the evidence from five treating doctors supporting her claim, Reliance Standard still terminated her benefits relying almost exclusively on its own peer review doctor and questionable evidence like a video of an unidentified person mowing a lawn. This happens all too often, where an insurance company will simply ignore a mountain of evidence while pointing to one or two minor points, which may not even be relevant to the issue. This is one reason that seeking legal counsel to handle a disability matter can be the difference between receiving LTD benefits under a policy and LTD benefits being improperly terminated after two years, or even denied altogether.

Weyer highlights the importance of providing complete evidence and properly addressing the insurer’s claim review and reasons for denying a claim or terminating benefits.

Navigating the complexities of an ERISA (Employee Retirement Income Security Act of 1974) disability claim can be daunting, especially when your health and financial stability are on the line. One of the most critical players in the process of obtaining disability benefits under an ERISA policy is your healthcare provider. Understanding the role your healthcare providers play in your ERISA disability claim can have a dramatic impact on the outcome of your claim.

The Importance of Medical Evidence

Your medical evidence will be critical to substantiate your disability claim. Your healthcare providers’ documentation is pivotal in proving that your condition meets the criteria outlined in your disability policy. This evidence includes detailed medical records, test results, treatment histories, and ongoing health assessments. You must be able to show that your medical conditions cause restrictions and limitations that result in your inability to perform the substantial duties of your occupation or any occupation for which you are qualified by education, experience and training.

Detailed Medical Documentation

Your healthcare provider’s medical documentation must be comprehensive and precise. It should detail your diagnosis, the severity of your symptoms, treatment plans, and how your condition affects your ability to work. Insurers scrutinize these records to determine if your condition is as serious as you claim it is. Incomplete or vague documentation can lead to claim denials. Even something as minor as your healthcare provider making a handwritten note that is illegible or states information contrary to your assertions or claim can lead the insurance company to deny your claim.

Regular and Consistent Treatment

Consistency in treatment is another crucial aspect of your ERISA disability claim. Regular visits to your healthcare provider demonstrate that your condition is severe and ongoing. It also shows that you are actively seeking treatment and following medical advice. Insurers may view gaps in treatment or missed appointments as evidence that your condition is not as serious as you claim and use these things as justification for denying your claim.

Functional Capacity Evaluations

A significant part of your healthcare provider’s role involves conducting or referring you for functional capacity evaluations (FCEs). These evaluations assess your physical and mental capabilities and limitations. The results provide objective and subjective evidence about what activities you can and cannot perform, which is crucial for determining your ability to work. Your healthcare provider’s interpretation and endorsement of these evaluations carry substantial weight in your claim.

Detailed Letters and Reports

Your healthcare provider can also provide detailed “certification” letters and reports to support your claim. These documents, used to certify to the insurance company that you are disabled, should outline your medical history, current condition, prognosis, and how your disability prevents you from performing your job duties. A well-crafted letter from your healthcare provider, clearly connecting your medical condition to your inability to work, can be instrumental in securing your disability benefits.

Coordinating with Other Healthcare Providers

If you are seeing multiple healthcare providers, it is essential that your primary healthcare provider coordinates with them to ensure consistency in your medical records. Discrepancies between different providers’ notes can undermine your claim and lead to a denial. Consistent and corroborative reports from all your healthcare providers strengthen your case by presenting a unified picture of your disability.

Responding to Insurer Requests

Throughout the ERISA disability claims process, insurers may request additional information or clarification about your medical condition. Your healthcare provider must respond promptly and thoroughly to these requests. Delays or incomplete responses can result in claim denials or unnecessary delays in getting a decision or your benefits.

Expect the Insurer to Downplay Your Medical Evidence

Insurers often downplay medical evidence or “cherry pick” specific details from your medical records. They will take these details out of context while overlooking other significant evidence to present an inaccurate picture of your condition in order to justify denying your claim. You should be prepared for this by being familiar with your medical records and how they address your conditions, diagnoses, and symptoms.

Insurers will also utilize peer review or “paper review” specialists, or “independent” healthcare providers, hired by the insurer, to review your medical records and provide an opinion to the insurer as to whether you are able to do your job. Unsurprisingly, these healthcare providers often cherry pick your records and provide opinions that are overwhelming favorable to the insurer. Your healthcare provider can work with you to respond to unfavorable conclusions in paper review reports.

Preparing for Independent Medical Examinations (IMEs)

Insurers often require claimants to undergo independent medical examinations (IMEs) with physicians that they choose. While these physicians are supposed to be impartial, they are hired and paid by the insurance company, which can create a conflict of interest. Your healthcare provider can help you prepare for these exams by ensuring you understand what to expect and by providing you with a comprehensive summary of your medical condition to present during the IME.

The Appeals Process

If your initial claim is denied, your healthcare provider’s role becomes even more critical during the appeals process. He or she may need to provide additional evidence or write more detailed reports on

your behalf. An experienced and supportive healthcare provider can be a valuable ally during this challenging phase.

Communicating with Your Healthcare provider

Effective communication with your healthcare provider is essential. Keep your healthcare provider informed about your symptoms, how they affect your daily life, and any changes in your condition. Be honest and detailed during your consultations and ensure your healthcare provider understands the importance of detailed and accurate medical records for your disability claim.

Understanding the role your healthcare provider plays in your ERISA disability claim is essential for navigating the complexities of the process and improving your chances of a successful outcome. From providing comprehensive medical documentation to responding to insurer requests and supporting you during appeals, your healthcare provider is a crucial ally. By choosing an experienced healthcare provider, maintaining regular treatment, and ensuring effective communication, you can strengthen your claim and work towards securing the disability benefits you need. If you have any questions about your disability claim or your healthcare provider’s role in your claim, reach out to the experienced attorneys at the McKennon Law Group PC for a free consultation.

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law designed to protect the interests of employee benefit plan participants and their beneficiaries. While ERISA applies to various types of employer-sponsored benefit plans, its application to self-funded health and disability plans is particularly significant and is not well understood. Understanding how ERISA governs self-funded plans can be vital to ensuring that you can adequately protect the rights to which you are entitled as a plan participant or beneficiary under an ERISA plan.

What is a Self-Funded Plan?

A self-funded (or self-insured) health and disability plan is one in which the employer assumes the financial risk for providing healthcare and disability benefits to its employees. Unlike fully insured plans, where an insurance company underwrites the policy and bears the risk, a self-funded plan means the employer directly pays any benefits. Often, employers will contract with third-party administrators (TPAs) to handle claims processing and administrative duties, but the financial responsibility remains with the employer.

Key ERISA Provisions for Self-Funded Plans

1. Preemption of State Laws: A prominent feature of ERISA is its preemption clause – as federal law, ERISA, rather than state law, governs employee benefit plans. It also exempts employers from state insurance regulations. This aspect of ERISA benefits self-funded plans by allowing employers to operate with uniform expectations, and therefore higher efficiency, regardless of what state they are in. Because they are not typically considered insurance under state laws, these plans are generally not saved from preemption.
2. Fiduciary Duties: ERISA imposes stringent fiduciary responsibilities on those who manage and control plan assets. Fiduciaries must act solely in the interest of plan participants and beneficiaries. This includes adhering to prudent management practices, avoiding conflicts of interest, and ensuring that plan assets are used appropriately. For self-funded plans, the employer or designated fiduciaries must be diligent in meeting this duty; when an employer breaches a fiduciary duty owed to an employee, the employee may pursue its damages directly from the employer, as opposed to an insurance company or third party.
3. Plan Documentation and Reporting: ERISA mandates comprehensive documentation and reporting requirements for self-funded plans. For example, plan participants must be provided with a Summary Plan Description as well as information about any updates or amendments to the plan, and a report of the Plan must be filed every year with the Department of Labor.
4. Claims and Appeals Procedures: ERISA requires self-funded plans to establish fair and transparent claims and appeals procedures. Plans must give participants a process for filing claims and appealing denied claims. The purpose is to ensure that each claim gets a full and fair review.

Advantages and Drawbacks of Self-Funded Plans under ERISA

Many employers choose self-funded plans based on the advantages they offer under ERISA, including:

1. Cost Savings: Fully insured plans include factors that employers can avoid by self-funding, like insurance profit margins, risk charges, and administrative costs. This tends to be particularly beneficial to large employers with predictable healthcare expenses.
2. Plan Customization: Self-funded plans allow employers to obtain coverage that fits their specific needs, including features unavailable in fully insured plans, like wellness programs or disease management initiatives.
3. Control Over Plan Design: Employers have more control over the terms and conditions of the plan, allowing them to make decisions that best align with their business objectives and employee needs. This includes determining coverage levels, provider networks, and cost-sharing arrangements.
4. Cash Flow Benefits: Self-funding can save employers substantial money in high insurance premiums, allowing them to put the money they would otherwise spend on premiums to better use.
5. Preemption of Adverse State Laws: Self-funded plans are typically not governed by state laws that otherwise apply to insured plans.

While self-funded plans offer numerous benefits, they also present challenges that employers must navigate to ensure compliance and effective plan management:

1. Financial Risk: The main issue with self-funded plans for employers is the assumption of financial risk. Employers must be prepared to cover unexpected high-cost claims, which can be particularly challenging for smaller employers.
2. Regulatory Compliance: Maintaining compliance with ERISA’s fiduciary duties, reporting requirements, and claims procedures can be complex and challenging. Employers must stay informed about regulatory changes and ensure their plan administration practices meet ERISA’s standards.
3. Administrative Burden: Managing a self-funded plan requires significant administrative effort. Employers often rely on TPAs for claims processing and plan administration, but they must still oversee these activities to ensure compliance and effective plan operation; self-funded employers may be held liable even when a TPA is at fault for violating a claimant’s rights.

For employers, self-funding a plan may have both benefits and drawbacks. Self-funding allows employers more flexibility with plan design and can help keep premium payments as low as possible. However, self-funding employers also take the risk of having to cover unpredictable and expensive claims. If you or someone you know has brought a claim under a self-funded ERISA plan that you think has been improperly denied, reach out to the McKennon Law Group PC for a consultation at no charge.

The Employee Retirement Income Security Act of 1974 (ERISA) provides standards for private employer-provided group insurance plans, including disability, life, accidental death and dismemberment, pension and health insurance plans. One of ERISA’s critical protections is its provision of a federal cause of action for participants and beneficiaries to recover benefits due under a plan.

Understanding ERISA Claims and Insurer Obligations

ERISA imposes fiduciary duties on plan administrators and insurers – they are required to act in the best interests of plan participants. This includes:

• Providing complete and accurate information: Insurers must ensure that plan participants receive necessary documentation, such as Summary Plan Descriptions (SPDs) and explanations of benefits.
• Processing claims promptly and fairly: Insurers must adhere to established timelines for processing claims and appeals, providing clear and detailed reasons for any denials.
• Upholding fiduciary duties: Insurers must act with the utmost care, skill, prudence, and diligence when managing plan assets and handling claims.

Unfortunately, insurers often mishandle ERISA claims, which can cause financial hardship because of a claim denial or by an undue delay of benefits. Insurers can mishandle claims in many ways:

• Disability insurers cherry-picking claimants’ medical records and intentionally interpreting them in a way that is unfavorable to their claims.
• Insurers giving more credence to medical reviewers than to the claimants’ own treating doctors. Insurers will pay “independent” peer review specialists, or “paper review” doctors and nurses who never interact directly with the claimants or their treating physicians and provide opinions based on nothing more than reviewing the medical records available to them.
• Insurers sometimes mailing time-sensitive notices to the wrong address or not mail notices at all, then lapsing a life insurance policy based on failure to pay a premium or provide information within a certain time.
• Insurers improperly relying on exclusions or other policy provisions in a manner not tenable under existing law or not consistent with the applicable facts.

When insurers fail to meet these obligations, plan participants can seek recourse through the process set forth by ERISA:

Administrative Appeals

Step 1: Review the Denial Letter

When an ERISA claim is denied, the insurer must provide a written denial letter detailing the specific reasons for the denial, referencing the plan provisions on which the denial is based, explaining the procedure for appealing the decision and giving a date by which the appeal must be filed. This letter is crucial as it outlines the grounds for the denial and the steps the participant must take to challenge it. To submit an effective appeal, you must first know what issues or items the appeal should address.

Step 2: File an Appeal

ERISA mandates that plans establish a fair and reasonable process for participants to appeal denied claims. You typically have 180 days from the date of receipt of the denial letter to file an appeal. The appeal must be thorough and include:

• A detailed explanation of why the denial is incorrect: This should address the reasons provided in the denial letter and cite relevant plan provisions and medical evidence.
• Supporting documentation: Include all relevant medical records, expert opinions, personal statements and any additional evidence that supports the claim.

Step 3: Await the Decision

The insurer is required to review the appeal and issue a decision within a specified timeframe. For a disability claim, for example, the decision must be issued within 45 days, unless the insurer has a legitimate need for more time, in which case it can take up to 45 more days as long as it provides written notice of its need for more time (“special circumstances”) before the first 45-day deadline. If the appeal is denied, the insurer must provide a detailed explanation of the reasons for the denial and notify the participant of their right to file a lawsuit in federal court under ERISA.

Filing a Lawsuit in Federal Court

Once your appeal is denied, you have exhausted your administrative remedies and can file a lawsuit in federal court. ERISA grants federal courts jurisdiction over these claims, though some plans allow claimants the option of filing suit in state court.

Damages Available Under ERISA

ERISA provides for only specific, limited damages:

• Recovery of benefits: You can seek payment of the benefits due under the plan.
• Statutory penalties: For particular violations, such as failure to provide requested plan documents, you can seek statutory penalties.
• Attorney’s fees and costs: ERISA allows you to recover attorney’s fees and costs by making a motion for the court to order the insurer to pay your fees and costs. The court does not automatically award fees and costs – it requires a demonstration of some success on the merits of the case, and the court has broad discretion in whether to award fees and costs and if so, how much to award.

Evidence and Administrative Record

ERISA cases are often decided de novo, meaning that the court essentially steps into the insurer’s role of reviewing the information included in your initial claim, the insurer’s claim file, and your appeal and decides whether a claim denial was appropriate without any deference to the claim administrator’s decision. The administrative record is complete when the insurer issues its final determination on your appeal, and you will only be able to admit additional evidence that goes outside the administrative record in limited circumstances. For example, if you had a claim for Social Security Disability Income benefits pending at the time the insurer denied your appeal, then the Social Security Administration later issues a decision on your SSDI claim, the court may use discretion to admit the SSA decision into evidence.

In cases that are not decided de novo, the court determines whether the insurer’s decision was an abuse of discretion. This standard of review is highly deferential to the insurer, meaning the court will find in the insurer’s favor as long as it determines that the insurer had at least some reasonable basis for denying your claim. For example, it is an abuse of discretion for an insurer to purposely exclude important evidence, like MRI or x-ray imaging when providing records to an independent review specialist. However, this standard of review is more difficult for ERISA plan participants and their beneficiaries as insurers or employers have broad discretion in deciding claims.

Additional Remedies and Considerations

• Extra-Judicial Complaints: You can file a complaint with certain administrative agencies. For example, you can submit a complaint to the Department of Labor’s Employee Benefits Security Administration (EBSA), which oversees ERISA compliance. While the EBSA does not represent individual participants, it can investigate potential violations and take enforcement action against insurers. Additionally, you may submit a complaint to the appropriate state agency that oversees insurance matters, for example, the California Department of Insurance.
• State Law Claims: ERISA generally preempts state law claims related to employee benefit plans. However, you may still be able to pursue state law claims in certain limited situations. You can also pursue recourse in state court if your policy is exempt from ERISA. For example, group insurance plans provided by religious and government organizations and self-funded policies are typically not governed by ERISA.

Conclusion

When your insurer or employer mishandles your ERISA claim, you are not without recourse. By understanding the steps involved in filing administrative appeals, pursuing litigation in federal court, and exploring additional remedies, you can protect your rights and secure the benefits you are entitled to. Given the complexities of ERISA, seeking legal counsel experienced in ERISA litigation can significantly enhance the likelihood of a successful outcome. If your ERISA claim has been denied or you are considering submitting a claim, reach out to the experienced ERISA attorneys at the McKennon Law Group PC for a free consultation.