Firm News Archives - Page 16 of 76

McKennon Law Group PC Voted Top California and USA Insurance Litigation Law Firm for 2017 and 2018

The Lawyers Worldwide Awards Magazine has announced McKennon Law Group PC as “Insurance Litigation Law Firm of the Year – California, USA” and “Insurance Litigation Law Firm of the Year –USA” for 2017.The Magazine recognizes each year a select number of leading professional firms, across the globe, for their individual areas of specialization, within their geographical location.McKennon Law Group PC was voted by its peers for this award and it was recognized foraexcellence in representing its life, health and disability policyholder clients against the biggest insurers in the world.

McKennon Law Group PC was also selected by Acquisition Finance Magazine for its ACQ5 award as “USA – Insurance Litigation Law Firm of the Year” for 2018.ACQ5-Acquisition Finance Magazine is a leading corporate magazine news site. It has been serving the finance sector since 2003, and provides a Global audience of over 159,000+ subscribers with the information behind the headlines.

Robert J. McKennon Recognized as 2018 “Super Lawyer – Insurance Coverage” and “Top 100 Insurance Lawyers in the State of California” for 2018

McKennon Law Group PC is proud to announce that its founding shareholder Robert J. McKennon has been recognized as one of Southern California’s “Super Lawyers” and appears in the 2018 edition of Southern California Super Lawyers magazine published in January 2018. Mr. McKennon has received this prestigious designation every year since 2011. Mr. McKennon was voted by his peers for this award and he was recognized forheand his excellence in representing its life, health and disability policyholder clients.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.

In addition, the American Society of Legal Advocates has recognized Mr. McKennon as one of the top 100 Insurance lawyers in the State of California for 2018.Mr. McKennon has received this designation every year since 2013. The American Society of Legal Advocates is an invitation-only, nationwide organization of top lawyers in practice today who combine excellent legal credentials with a proven commitment to community engagement and the highest professional standards.

Department of Labor Announces April 1, 2018 as Final Date For ERISA Claims Procedures Related to New ERISA Disability Insurance Regulations

Long-term and Short-Term Disability insurance cases dominate ERISA benefits litigation. According to the U.S. Department of Labor (“DOL”), the administrative agency given the authority to regulate employee benefits under, and to enforce the statutory provisions of, the Employee Retirement Income Security Act of 1974 (“ERISA”), disability insurance benefits claims account for almost two thirds of all benefits-related ERISA lawsuits and, based on rough estimates, these disability benefits claims are often denied. We wrote articles about these Regulations, which you can read here. Importantly, the Regulations give teeth to existing protections, enhancing requirements for independent claims administration, information disclosure and consequences for administrators who fail to comply.

The good news is that they are now finalized and will go into effect on April 1, 2018 without further delay. They will apply to disability benefits claims filed after April 1, 2018. As previously advised, the DOL published “final” regulations on December 19, 2016 revising the existing claims and appeals procedures regulations under ERISA for employee benefit plans providing disability benefits (“Final Regulations”). According to the DOL, the intent of the Final Regulations is to strengthen the current procedures by adopting some of the additional procedural safeguards and protections for disability plan claims that are already in place for group health plan benefits pursuant to the Patient Protection and Affordable Care Act.

The DOL’s January 2018 news release confirms that the substantive provisions of the Final Regulations will be retained:

The Department received approximately 200 comment letters from the insurance industry, employer groups, consumer advocates, and lawyers representing disability benefit claimants, all of which are posted on the Department’s website. Only a few comments responded substantively to the Department’s request for quantitative data to support assertions that the final rule would drive up disability benefit plan costs by more than the Department had predicted, cause an increase in litigation, and consequently reduce workers’ access to disability insurance protections. The information provided in the comments did not establish that the final rule imposes unnecessary regulatory burdens or significantly impairs workers’ access to disability insurance benefits.” Accordingly, the substantive provisions of the Final Regulations will apply to disability benefits for claims filed “after April 1, 2018.

With these Regulations, the DOL has attempted to protect disability insurance claimants from wrongful denials of long-term and short-term disability claims by attempting to minimize conflicts of interest, promote an open and robust discussion of the claim and ensure that administrators strictly comply with procedural protections for disability insurance claimants.

The Final Rule Delaying the Applicability Date (published 11/29/17) can be found at: https://www.federalregister.gov/documents/2017/11/29/2017-25729/claims-procedure-for-plans-providing-disability-benefits-90-day-delay-of-applicability-date
The Final Rule for Claims Procedures for Plans Providing Disability Benefits (published 12/19/16) can be found at: https://www.federalregister.gov/documents/2016/12/19/2016-30070/claims-procedure-for-plans-providing-disability-benefits

Court Rejects Third Party Administrator’s Demurrer to Insurance Bad Faith Claim Based on Plaintiffs’ Theory of Joint Venture Liability

Implied in every insurance contract is a promise of “good faith and fair dealing,” which means that the insurer must not take unreasonable steps to prevent an insured’s right to receive benefits under the policy. To comply with its promise to act in good faith, the insurer must adhere to certain duties, such as the duty to adequately investigate a claim made by an insured. An insurer acts in bad faith when it fails to meet those duties unreasonably and without proper cause. Determining whether there has been bad faith conduct is important, in part, because it directly affects the insured’s potential recovery. If the insurer is found to have acted in bad faith, the insured may have access to a substantial additional recovery, including attorneys’ fees, emotional distress, consequential and punitive damages. An insured’s ability to sue for insurance bad faith is his or her most potent and effective legal weapon to wield against rogue insurance companies. It is common knowledge that a policyholder can assert a bad faith claim against an insurer. But what about an insured’s ability to sue a Third Party Administrator (“TPA”)?

TPAs are not insurers, although they typically perform some of the insurer’s functions: billing, recordkeeping and processing of life insurance, disability insurance and medical insurance claims. Many insurers “outsource” such claims processing tasks to TPAs and grant TPAs broad discretion to interpret policy provisions, investigate claims and deny or approve claims as they see fit. But, although TPAs often spend the most “face-time” with individual policyholders, their primary relationship is with the insurance company and not the insured. Even though TPAs may commit bad faith by making unreasonable claims decisions, most traditional legal theories immunize TPAs from liability for claims handling misconduct. Rather, the insurer is typically liable for any bad faith conduct by the TPAs. Consequently, TPAs may lack incentives, financial or otherwise, to properly handle and process an insured’s life, health or disability insurance claim.

However, new legal theories adopted by McKennon Law Group PC appear to be shifting the course on TPA accountability. One theory our firm has successfully utilized in several recent cases is joint venture liability. Under joint venture liability theory, the policyholder alleges that, unlike agents or employees of the insurer, the TPA entered into the business of insurance as a joint venture with the insurer. As such, both the TPA and the insurer may be held legally accountable for their bad faith conduct. In this article, we discuss TPAs, joint venture liability theory and the Firm’s recent success in alleging the joint venture liability of a TPA.

Third Party Administrators
In the insurance industry, it is commonplace for a TPA to provide claims handling services for an insurer. Typically, the insurer funds the insurance policy and pays the benefits, whereas the TPA interprets the policy provisions, handles the claims, and ultimately decides whether a claim should be paid. Customarily, the insurer’s agents and employees are exempt from liability for breach of contract and bad faith. In other words, if the insurer’s long-term disability claims specialist improperly denies your claim, he would be immunized from a lawsuit because he is not a party to the contract for insurance and he acted as an agent of the insurer. This agent-principal theory also shields TPAs from liability for breach of contract and bad faith, despite the fact that TPAs are distinct, sophisticated entities often independently exercising broad discretionary authority in the administration of claims under the policy.

TPAs and Joint Venture Liability Theory
Despite the more traditional law that immunizes TPAs from bad faith liability, non-insurer defendants may be held liable under insurance contracts if they jointly ventured with the insurer. In this instance they are not considered agents or employees of the insurer, but instead a partner of sorts, known as a joint venturer, engaged in a particular business venture with an insurer. Where there is a joint venture, all are liable for agreements entered into by the joint venturers in furtherance of the joint venture. To establish a joint venture requires (1) an intent to become partners; (2) a community of interest in the undertaking; (3) an understanding to share profits and losses; and (4) authority and right to direct and control the conduct of all co-venturers with respect to the joint venture.

In Forest v. Equitable Life Assurance Society of U.S., No. C99-5173 SI, 2001 WL 1338809, at *5 (N.D. Cal. June 12, 2001), the court allowed plaintiff’s theory for TPA liability based on a joint venture theory. Plaintiff alleged that the companies, including two acting TPAs, Paul Revere and Provident Life, and one acting insurer, Equitable, were joint-venturers who were all subject to bad faith under California law. The “joint venture” encompassed a series of agreements between Equitable, Paul Revere and Provident Life, with the latter two offering claims management services similar to what many other TPAs also provide. The agreements supported inferences that Paul Revere, Provident and Equitable shared a community of interest in the business of claims administration and shared profits and losses through an incentive fee scheme. In response to a legal challenge to this joint venture liability, the court found that the TPA “Paul Revere exercised broad discretion and control while Equitable retained final authority in most matters.” The court also noted that the parties shared a variety of resources, including information, bank accounts, human resources and joint marketing development. Based on these agreements, the court found that “it cannot be said as a matter of law that Paul Revere, Provident Life and Equitable were not in a joint venture for the business of offering and providing disability insurance policies such as plaintiff’s policy.” Thus, the court upheld the bad faith claims against the TPAs, Paul Revere and Provident Life.

Sharkh v. Continentale Krankenversicherung A.G.
In a recent ruling in Sharkh v. Continentale Krankenversicherung A.G., No. SC127208 (L.A. Super. Ct. Jan. 17, 2018), the court found in favor of Plaintiffs, rejecting a legal challenge to Plaintiffs’ causes of action for breach of contract and bad faith as to Defendant and TPA Global Medical Management, Inc., (“GMMI”). In this lawsuit, Plaintiffs, represented by Robert McKennon and Scott Calvert of the McKennon Law Group PC, filed an amended complaint against Defendants Continentale Krankenversicherung A.G. (“Continentale”) and GMMI. The amended complaint alleged liability on multiple theories, including joint venture liability against GMMI based on the Defendants’ denial of numerous health insurance claims without good cause relative to two sick young children, one of whom who is gravely ill. On December 11, 2017, GMMI demurred to Plaintiffs’ amended complaint on the grounds that the breach of contract and bad faith causes of action alleged were improper. Specifically, GMMI asserted that it could not be subject to causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing (bad faith) because it was not a party to the underlying insurance contract, acting only as a TPA.

On January 3, 2018, Plaintiffs, via counsel, responded, opposing GMMI’s demurrer. As the opposition explained, GMMI and Continentale co-ventured into the business of health insurance. Both parties shared a community interest in profits and losses, as well as the ability to independently exercise broad discretionary authority. The policy also reflected an intent to become partners, identifying GMMI as the claims administrator. Following briefing, the court issued an order in favor of Plaintiffs, finding that the amended complaint sufficiently alleged a theory of joint venture liability in the administration of the health insurance policy at issue by both the TPA, GMMI, and the insurer Continentale.

Ultimately, an insured’s ability to hold TPAs accountable is a good thing for insureds. Without some accountability, TPAs will exercise unbridled discretionary authority over the claims handling process without any liability whatsoever.

Exceptions to the Exhaustion Requirement: When is an Appeal Futile Under ERISA?

If an insurer recently denied your claim, do not ignore the appeal requirements stated in the denial letter or you may lose the right to pursue your benefits. The Employee Retirement Income Security Act of 1974, or ERISA, protects most employee benefits, such as life insurance benefits, long-term disability income insurance benefits, accidental death and dismemberment insurance benefits and other such benefits offered through employer-sponsored plans. ERISA does so by establishing certain internal claims handling procedures, often referred to as “administrative remedies.” These administrative remedies govern the claims handling process when an administrator determines a plan participant’s eligibility for benefits. Although each employer-sponsored plan has different requirements, most contain provisions that require a plan participant to exhaust at least one level of internal appeal before he or she can file a lawsuit. Typically, where a plan participant fails to do so, he or she will also lose the ability to further pursue wrongfully denied life insurance, long-term disability insurance, accidental death and dismemberment insurance benefits.

In this blog article, we briefly cover the basics of the exhaustion doctrine under ERISA. We discuss a few well-recognized exceptions to the requirement, where the internal procedures are inadequate or pursuing an appeal would be futile because it is “doomed to fail.” Although these exceptions apply in limited circumstances, it is important to remember that a plan participant/insured bears the difficult burden of establishing that he meets these requirements. Ultimately, the safest route is to do everything you can to comply with the appeal procedures, even if you think doing so would be futile.

A Brief Discussion of the Exhaustion Requirement
ERISA does not expressly mandate exhaustion of administrative remedies before filing suit. The requirement that a plan participant first exhaust his or her administrative remedies is a court-established doctrine. However, the requirement for exhaustion does find its origins in the text of ERISA, which contemplates a “full and fair review” of adverse benefit determinations made in the administration of an ERISA-governed plan for life, health, disability, accidental and other employer-sponsored benefits. If the plan documents expressly require exhaustion, the individual plan participant is required to complete the internal appeal as stated in the plan.

The courts strongly support the “sound policy” of requiring a plan participant to exhaust administrative remedies for several reasons. First, Congress specifically authorized the courts to establish a “common law” for issues under ERISA, and like the closely related Labor Management Relations Act, ERISA common law also requires exhaustion. Second, exhaustion is consistent with the Legislature’s aims and goals in its enactment of ERISA, which protects employees from abuse of their benefit or pension plans by establishing internal review requirements. Third, allowing levels of internal review gives the ERISA plan or claims fiduciary the ability to fully consider its determination of benefits. For example, if the claims administrator denies disability benefits based on missing or incomplete medical records, the appeal allows the participant an opportunity to point out the missing information and ensure that the information appears before the claims administrator. That way, if the administrator decides to uphold its denial of benefits, it is at least based on a full set of facts in support of the individual’s claim. Finally, the doctrine also helps to achieve sound judicial policy by promoting the efficient use of judicial resources. Requiring internal review ensures that, by the time the denial of benefits reaches the federal court, the primary dispute revolves around the adequacy of the decision, not whether a decision was made at all.

Exceptions to Exhaustion: When are Appeals Futile or Inadequate Internal Procedures under ERISA?
Most courts promote strict adherence to the exhaustion requirement. Accordingly, the courts recognize exceptions to it in only a few circumstances. As a general matter, there are two well-established situations where the exhaustion requirement does not apply: if procedures are inadequate or the appeal is futile. The plan participant bears the burden of proving these exceptions apply.

Inadequate Internal Procedures
The first exception, inadequacy, is aptly named because it simply refers to a situation where the plan’s internal claims handling procedures provide an inadequate remedy. For internal review procedures to be inadequate, the claimant must show that the procedures followed by the claims administrator failed to comply with the terms of ERISA or its implementing regulations. To do so, the plan participant must specifically allege how the plan’s terms or the administrator’s actual conduct violated the statute or regulations. Further, a minor error, alone, does not establish inadequacy. Typically, if the administrator can demonstrate substantial compliance, the court will find the claims procedures adequate.

Futility
In contrast, futility applies where a resort to the plan’s internal, administrative remedies would be futile, pointless and “doomed to fail.” In one relatively recent unpublished Ninth Circuit opinion, the Court reversed and remanded the District Court’s opinion granting summary judgment in favor of the insurer based on a failure to exhaust administrative remedies in connection with a denied long-term disability claim. See Carey v. United of Omaha Life Ins. Co., 633 Fed.Appx. 478 (9th Cir. 2016). In finding the appeal “futile” and excused from further exhaustion, the Ninth Circuit looked to the claimant’s conduct following the denial and the language of the communications between the insurer and the claimant. Following the denial, the claimant filed a complaint with the California Department of Insurance, which in turn requested that the insurer reevaluate its decision. Following this request, the insurer wrote to the claimant, stating that it had “reviewed all of the documentation” and was “unable to approve” his long-term disability claim.

Relying on ERISA principles that the terms in an ERISA plan should be interpreted in an ordinary and popular sense, the Court determined that the insurer’s imprecise communications indicated to the claimant that pursuit of further review would have been futile as follows:

Because of the imprecision in United’s communications, however, a person in Carey’s position would have thought that United had reviewed the substance of his case and decided anew that he was not entitled to benefits. The plain language of the communications indicated to Carey that pursuing a further request for review—thinking that one had already occurred—would have been futile. C.f. Vaught, 546 F.3d at 628 (explaining this court’s “principle that terms in an ERISA plan should be interpreted in an ordinary and popular sense as would a [person] of average intelligence and experience” (internal quotation marks omitted)); Booton v. Lockheed Med. Benefit Plan, 110 F.3d 1461, 1463 (9th Cir.1997) (when communicating to claimants that benefits are denied, “the reason for the denial must be stated in reasonably clear language”). Id., at 479.

The Court found futility expressed in the communication quoted above, even though the same communication also reiterated the appeal procedures to the claimant.

In most cases, it will not be easy to prove an exception to the exhaustion requirement. Accordingly, the safest way to protect your benefits is to ensure that you understand and comply with the strict deadlines and requirements for an internal appeal, even if you think doing so would be futile or the procedures are inadequate.

Exhaustion of Administrative Remedies in ERISA: The Potential Death Knell of a Disability, Life or Health Insurance Claim

The Employee Retirement Income Security Act of 1974, or ERISA, establishes protections for most employee benefits offered through employer-sponsored benefit plans. ERISA requires that the plan and claims administrators adhere to certain internal procedures, often referred to as “administrative remedies,” when determining a plan participant’s eligibility for benefits. Typically, these administrative remedies include internal appeals directly to the insurer or claims administrator. Although each individual plan is different, most plans require at least one level of internal appeal, which you would have to “exhaust” before you can file a lawsuit. However, some plans require that an employee exhaust two levels of internal appeals before he or she can file suit.

Whether it is one or two levels of appeal, exhausting administrative remedies is incredibly important to your benefits claim because, if you do not, you may lose your ability to file a lawsuit to recover your benefits. In this article, we discuss the consequences of failing to meet the exhaustion requirement and explain the Ninth Circuit’s application of the exhaustion requirement to “disguised” benefits claims, such as the alleged statutory violation in Diaz v. United Agr. Employee Welfare Ben. Plan & Tr., 50 F.3d 1478 (9th Cir. 1995).

Why Exhaustion?
The text of ERISA does not, itself, require that the plan participant or beneficiary exhaust their internal administrative remedies before filing suit. However, a beneficiary seeking determination of rights or benefits under an ERISA plan must first exhaust administrative remedies, unless doing so is futile. See Amato v. Bernard, 618 F.2d 559 (9th Cir. 1980). The Ninth Circuit has held that the failure to exhaust acts as a bar only if the plan documents expressly mandate exhaustion prior to seeking judicial review. See Spinedex Physical Therapy USA, Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1298 (9th Cir. 2014). But, most plans do contain such a requirement.

Simply “Disguising” an ERISA Benefits Claim as a Statutory Violation Won’t Work
Where the claim is not a “repackaged” benefit claim and seeks equitable relief, exhaustion of administrative remedies may not be required. For example, it is well-settled Ninth Circuit precedent that breach of fiduciary duty claims, as opposed to benefits claims, are not subject to the exhaustion doctrine. But, a claimant may not dress a benefit claim as a statutory violation or breach of fiduciary duty where he or she failed to meet the exhaustion requirements. Some have tried, and the courts were not so easily fooled. In Diaz, supra, the Ninth Circuit directly addressed the importance of exhaustion by rejecting a claimant’s attempt to disguise his failure to appeal and “repackaging” a benefit claim as a statutory violation.

In Diaz, plaintiff sought relief for his medical plan’s failure to cover his daughter’s treatment for leukemia, based on an alleged statutory violation of the Consolidated Omnibus Budget Reconciliation Act, or COBRA, amendments to ERISA. Generally, the COBRA amendments to ERISA establish requirements regarding continued coverage for certain employees that experience a qualifying event, which would otherwise result in a termination of coverage. Because of the plaintiff’s seasonal work schedule, he experienced such “qualifying events” on a somewhat regular basis and, as a result, periods of intermittent coverage under the plan that triggered COBRA requirements.

These periods of intermittent coverage left plaintiff and his family without health insurance for the months of August and September 1990. Sadly, in September 1990, plaintiff’s daughter was diagnosed with leukemia and the plan denied her claims based on the policy’s pre-existing condition exclusion. Although the initial denial letters plaintiff received from the plan administrator contained a notice of appeal rights in both English and Spanish, plaintiff did not pursue the internal appeal to the insurer. Instead, he filed a lawsuit.

The District Court found in favor of the insurer because it determined that plaintiff failed to exhaust his administrative remedies, as he did not appeal the insurer’s initial denial as required under the plan. Plaintiff challenged the District Court’s decision, bringing it to the Ninth Circuit on alternative theories that 1) exhaustion principles do not apply to the claims as they are based on statutory violations and 2) even if exhaustion requirements did apply, exceptions for inadequacy and futility prevent his case from being barred.

Generally, the Ninth Circuit rejected both arguments as attempts to disguise an individual benefit claim that simply failed to take part in the internal appeals process. In assessing these arguments, the court found the case distinguishable from others that did successfully allege statutory violations or the futility or inadequacy of administrative review. The court determined plaintiff’s claim for relief based on a statutory violation was not at the heart of the claim. Instead, it was “an individual’s claim for plan benefits under a particularized set of facts,” which is just the type of case that led the courts to establish the exhaustion requirement in the first place.

To the courts, exhaustion of the ERISA-mandated internal remedies is necessary to ensure judicial review remains available in a benefits matter. The courts consider the doctrine “sound policy,” and consistent with the goals and aims of ERISA, as well as the efficient use of judicial resources. The alignment of these various competing policies in favor of exhaustion strengthens it, and if your benefits are important to you, taking an active role in ensuring that you comply with the review mandated under the plan should be, too; a failure to complete the latter may prevent you from pursuing the former, your benefits.

Note: If your ERISA claim has been denied, following the internal review procedures is integral to the success of your claim. It is also important to have experienced disability, health and life insurance attorneys, like those at the McKennon Law Group PC. Fill out our free consultation form today to set a time to discuss your claim with one of our attorneys, several of whom previously represented insurance companies and are exceptionally experienced in handling ERISA and Non-ERISA insurance claims.

Cohorst v. Anthem: When Does Waiver Apply under ERISA?

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. In ERISA cases, typically the plan’s terms govern. However, ERISA does recognize certain “equitable” doctrines for situations not necessarily covered by the terms of the employer-sponsored plan. One of those equitable doctrines is “waiver,” which the courts have established as the intentional relinquishment of a right under the plan. In this article, we address Cohorst v. Anthem, No. CV 16-7925-JFW (SKX), 2017 WL 6343592 (C.D. Cal. Dec. 12, 2017), a recent decision from the Central District of California, which rejected a health plan administrator’s decision to approve, and then later deny, an employee’s benefits based on a theory of waiver.

What are the equitable doctrines under ERISA?

ERISA section 502(a)(3), 29 U.S.C. section 1132(a)(3)(B), permits a plan participant or beneficiary to bring a civil action against fiduciaries to obtain “other appropriate equitable relief,” including the equitable remedies of reformation, waiver and estoppel, and surcharge, i.e., make whole relief. Unlike a benefit claim, requesting equitable relief relies on the fiduciary relationship between the plan or claims administrator and the participant. Under ERISA, a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.

Waiver under ERISA?

A court will find waiver where a party intentionally relinquishes a right or acts so inconsistently with an intent to enforce the right that it induces a reasonable belief that the right has been extinguished. For example, in Salyers v. Metro. Life Ins. Co., 871 F.3d 934, 938 (9th Cir. 2017), the court found waiver where the administrator accepted premium payments, but later denied a death benefit because participant failed to provide “Statement of Health” as required for eligibility. Furthermore, the insurer or plan administrator may not argue ignorance of a lack of coverage where its agent had such knowledge, as the court found in Salyers.

Cohorst v. Anthem

In Cohorst, supra, Plaintiff Aubrey Cohorst sued Anthem Health Plans of Kentucky, Inc., (Anthem) for its denial of a benefits claim under an employer-sponsored health plan governed by ERISA. The underlying dispute involved Anthem’s denial of coverage for Cohorst’s artificial disc replacement surgery, which required the use of a “Mobi-C” device. Cohorst’s doctor determined the surgery medically necessary, and consequently sought Anthem’s prior approval. In this initial approval process, Anthem confirmed its approval of the surgery, but did not specify the medical device that would be used. Anthem’s internal documents mirrored its initial approval, describing the surgery as “medical necessary” and meeting “criteria guidelines.”

When Cohorst’s physician contacted Anthem to confirm which medical device had been approved for surgery, Anthem told the doctor it approved the “Pro Disc-C” and not the “Mobi-C.” Shortly after this conversation, Anthem created a new reference number allegedly based on the request to use the “Mobi-C” device and overturned its original approval, finding the procedure to be “Experimental” or “Investigative” and thus not medically necessary under the terms of the plan. Ultimately, Cohorst underwent the surgery and Anthem refused to cover the costs associated with the surgery, a total of $140,434.25, of which, $130,000 was attributed to the cost of the surgery and $5,434.25 to the cost of the Mobi-C device.

Under a de novo standard of review, the court first evaluated the plan and the relevant exclusionary language, determining that the procedure did fall within the exclusion. Despite this, the District Court still found for Cohorst based on a theory of waiver. Emphasizing Anthem’s inconsistent behavior, the court held that Anthem waived its right to assert the exclusion when it first approved the surgery as medically necessary. That the “Mobi-C” device was not specifically approved was irrelevant, when a party intentionally relinquishes a right, as Anthem did in Cohorst, the doctrine of waiver applies.

If your ERISA claim has been denied, having an experienced disability, health and life insurance attorney matters to the success of your claim. Fill out our free consultation form today to set a time to discuss your claim with the McKennon Law Group’s attorneys, several of whom previously represented insurance companies and are exceptionally experienced in handling ERISA and Non-ERISA insurance claims.

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