Firm News Archives - Page 27 of 76

ERISA Law Update: Supreme Court to Address When Church-Affiliated Plans are Governed by ERISA

In our article of August 15, 2016 entitled “When is a Group Long-Term Disability Insurance Plan Not an ERISA Plan? When it’s Established and Maintained by a Church to Qualify as an ERISA-exempt Church Plan – That’s When,” we discussed a Ninth Circuit Court of Appeals ruling in Rollins v. Dignity Health, 2016 WL 3997259 (9th Cir. July 26, 2016), which decided when church-affiliated pension plans are subject to the Employee Retirement Income Security Act of 1974. Agreeing with the Third and Seventh Circuits, the Ninth Circuit held that ERISA’s church plan exemption applies only if a church “established” the plan. The United States Supreme Court on Friday December 2, 2016 accepted and consolidated three cases, including Rollins, that consider whether pension plans operated by church-affiliated organizations are subject to ERISA.

In class action lawsuits, employees suing St. Peter’s Healthcare System, Advocate Health System and Dignity Health claim the Christian-affiliated hospitals are evading ERISA’s minimum funding and reporting requirements, which place these plans in financial risk.

The plaintiffs are seeking retroactive penalties for past violations of ERISA. The church-affiliated hospitals have defended these suits in part by invoking their reliance on interpretations by federal agencies (the Internal Revenue Service, the Department of Labor and the Pension Benefit Guaranty Corporation) that enforce ERISA and have interpreted the church plan exemption in ERISA to apply to church-affiliated organizations, even if a church itself did not initially establish the pension plan.

The question presented in these cases is whether the church plan exemption applies so long as a pension plan is maintained by an otherwise qualifying church-affiliated organization, or whether the exemption applies only if, in addition, a church initially established the plan.

Our Take: this case presents highly important issues to church-affiliated plans and we’ll bet that the Supreme Court reverses these decisions. These recent decisions have upset the settled expectations of many church-affiliated ministries, which provide benefits to millions of current and former employees across the country. Those religious employers, many for decades, have relied on the agencies’ established, unanimous administrative interpretation when designing their benefits programs.

Health Insurance Law Update: Medical Providers Seeking Payment from Insurers Must File a Quantum Meruit Lawsuit Within Two Years of the First EOB

The most common complaint McKennon Law Group PC hears from medical providers is that insurers refuse to pay for the services provided to their insureds, even after the medical provider sought and obtained a pre-authorization from the insurer for the services provided to a patient. After submitting a bill to the insurance company, all too often, a physician or other medical professional receives an Explanation of Benefits (“EOB”) letter indicating that either the insurer will not pay the claim at all or it will only pay a fraction of the amount billed.

After receiving the EOB, medical providers typically utilize the insurer’s voluntary appeal process in an effort to secure full payment. That appeal process can drag on for years. In Vishva Dev, M.D., Inc. v. Blue Shield of California Life & Health Insurance Co., 2 Cal. App. 5th 1218 (2016), the California Court of Appeal ruled that the two-year statute of limitations for a quantum meruit claims begins to run when a doctor first receives an EOB letter even when the insurer offered an appeal and then delayed that process.

In Vishva, a physician filed a complaint asserting breach of contract and quantum meruit claims seeking larger payments for emergency care rendered to three different patients. A quantum meruit claim seeks payment of a reasonable sum of money for services rendered. In response, Blue Shield of California Life Insurance Company and Blue Shield of California (collectively, “Blue Shield”) filed a motion for summary judgment on the quantum meruit claim, on the grounds that the lawsuit was initiated more than two years after the physician received the initial EOB for each patient.

The physician opposed the motion for summary judgment on the grounds that the filing deadline was tolled during the lengthy appeal process in which he engaged at the invitation of Blue Shield, and did not start until the final EOB was issued. The trial court granted Blue Shield’s motion, and on appeal, that judgment was upheld on the grounds that the statute of limitations begins to run upon the first unequivocal denial of payment in writing, that is, the date of the original EOB.

The Court, citing numerous California Supreme Court rulings in homeowner’s insurance cases, also rejected the doctor’s argument that Blue Shield was estopped from raising that statute of limitation defense because the doctor reasonably relied on the appeals process to resolve any payment issues. The Court held that Blue Shield’s decision was established with the original EOB, and the appeal process was a mere “extension of a courtesy” that did not extend the statute of limitation. Finally, the Court advised that ruling otherwise would create a situation where an insurer may inadvertently extend the statute of limitations period by responding to a mere inquiry, which would contravene the public policy of encouraging insurers to respond to new, substantive facts.

The lesson from this ruling is clear, if you are a medical provider and intend to file a lawsuit against an insurance company seeking payment for services rendered to a patient, you must bring that lawsuit within two years of the date of the initial EOB, or you will have forfeited your ability to assert a quantum meruit claim.

The California Department of Insurance Unveils New Online Tool to Search for Life Insurance Benefits

Today, the California Department of Insurance launched a new online tool, the Life Insurance Policy Locator, which is available to help consumers search for possible life insurance policy or annuity proceeds anywhere in the nation.

“Many potential beneficiaries are unaware that they are due life insurance benefits and are unsure where to begin searching for a lost policy,” said Insurance Commissioner Dave Jones. “The Life Insurance Policy Locator was created to simplify this process and ensure consumers receive the benefits they are entitled to.”

Created by The National Association of Insurance Commissioners (NAIC) the service is designed to offer consumers who may suspect they or a family member is the beneficiary of a life insurance policy or annuity, but may now have some of the key information typically needed to search, such as a policy number or name of the insurer.

The national service provides consumers with search capabilities to help find a deceased person’s lost life insurance policies and annuities. An estimated
$1 billion in benefits from life insurance policies are unclaimed, according to Consumer Reports.

Consumer requests are encrypted and secured to maintain confidentiality. Participating insurers will compare submitted requests with available policyholder information and report all matches to state insurance departments through the locator. Companies will then contact beneficiaries or their authorized representatives. This service is free of charge.

For tips on searching records, the department urges consumers to visit the California Department of Insurance website. If a person finds a life insurance policy for a deceased relative but cannot locate the company, they can call their Consumer Hotline at1-800-927-4357.

In 2015, life insurers paid more than $74 billion in insurance policy benefits to consumers nationwide. Since 2010, state insurance regulators have investigated unclaimed life insurance benefits. To date, nearly 23 regulatory actions have resulted in returning more than $6.75 billion life insurance proceeds to U.S. consumers.

McKennon Law Group PC regularly handles life insurance matters and inquiries from consumers requesting assistance with their life insurance claims and unpaid life insurance benefits. If you have a life insurance claim that has been denied, please call us for a free consultation at 1-800-682-4137.

Ninth Circuit Creates Bright-Line Rule in ERISA Disability Cases: the Inability to Sit for More Than Four Hours Precludes Work in a Sedentary Occupation

It is very common for an insurance company to deny a claim for long-term disability insurance governed by ERISA after concluding that a claimant can perform the duties of a sedentary occupation. The U.S. Department of Labor’s Dictionary of Occupational Titles (DOT) states that “[s]edentary work involves sitting most of the time, but may involve walking or standing for brief periods of time.” In other words, an occupation is classified fbifas “sedentary” when a majority of the work can be performed while sitting down, and the job does not require much, if any, movement and heavy lifting.

Insurers often assert that disability insurance claimants can work in a sedentary occupation, regardless of the physical restrictions from which the claimants suffer, including the ability to sit for four-to-six hours per day at a sedentary job. However, this practice was recently rejected by the Ninth Circuit Court of Appeals in Armani v. Northwestern Mutual Life Insurance Company, __ F.3d __, No. 14-56866, 2016 WL 6543523, *3-4 (9th Cir. November 4, 2016), which created a bright-line rule that a person who cannot sit for more than four hours a day cannot perform a sedentary occupation.

In Armani, a case governed by ERISA, the Ninth Circuit held that, when all of claimant’s attending physicians agreed he could sit at most four hours of an eight-hour workday, he was unequivocally disabled from performing his own sedentary occupation (and from any other sedentary occupation), because sedentary jobs require mostly sitting and generally at least six hours per day. After citing numerous cases that offered similarly findings, the Armani court stated:

[T]hese cases reflect the logical conclusion that an employee who is unable to sit for more than half of the workday cannot consistently perform an occupation that requires sitting for “most of the time.” We agree with this commonsense conclusion and hold that an employee who cannot sit for more than four hours in an eight-hour workday cannot perform “sedentary” work that requires “sitting most of the time.” Id. at *4 (emphasis added).

Given the finding by the claimant’s treating physicians that he could not sit for more than four hours, the Armani court ruled that the claimant was entitled to long-term disability benefits. This ruling was made despite the fact that the insurer’s medical consultants disagreed with the insured’s attending physicians about the claimant’s sitting limits. The insurer’s paid physicians concluded, based on reviewing his medical records, that the claimant had no sitting restrictions or limitations that would prevent him from performing a full-time sedentary job (when the insurer had contended sedentary work involves sitting most of the time). Id. at *2. The Ninth Circuit placed no weight on the insurer’s paper review opinions and, despite them, stated there was “undisputed evidence that . . . Armani was unable to sit for more than four hours a day” based solely on the attending physicians’ opinions. Id. at *4 (emphasis added).

Overall, this is a very good ruling for disability insurance claimants who are unable to sit for more than four-to-six hours a day. With this ruling, insurers are precluded from asserting that a claimant can work at a sedentary job if he or she cannot sit for more than four hours a day. In fact, the Armani court even suggested that someone who can sit for more than four, but less than six hours a day, would also be precluded from sedentary work as the court cited to several decisions holding that a disability claimant who is unable to sit for more than six hours per day is disabled.

If you are an employee covered under your employer’s group short-term disability, long-term disability, life insurance or health insurance policy and had your claim denied, do not give up. If your insurer denied your claim without examining you, or, even after you were awarded Social Security disability benefits, there is a good chance we can help. You should immediately contact the McKennon Law Group, a law firm specializing in ERISA insurance and employee benefits litigation. Let us decide whether your claim was wrongfully denied and let us see if we can assist you.

Robert McKennon and Scott Calvert Publish Article: Insurers turn to Drones

In the October 18, 2016 edition of the Los Angeles Daily Journal, Robert McKennon and Scott Calvert of the McKennon Law Group published an article regarding the use of drones by insurance companies in their insurance claims investigations. In the article entitled “Insurers Turn to Drones,” Mr. McKennon and Mr. Calvert explained that insurers are increasingly using drones as part of the insurance claims handling/investigation process, including disability insurance claims, but noted the use of drones is regulated by a series of Federal, State and local laws. In addition, the article noted that courts are increasingly questioning the use of and reliance on surveillance by insurance companies in ERISA and non-ERISA insurance cases.

The article is posted below with the permission of the Los Angeles Daily Journal.

Insurers Turn to Drones

By Robert J. McKennon and Scott E. Calvert

Insurance companies have the right, and indeed the duty, to thoroughly investigate claims. In California, an insurer’s failure to reasonably investigate an insurance claim may result in bad faith liability.See Egan v. Mutual of Omaha Ins. Co., 24 Cal. 3d 809, 819 (1979);Guebara v. Allstate Ins. Co., 237 F.3d 987, 996 (9th Cir. 2001).

In the process of those investigations, insurers often secretly enlist private investigators to gather information on their insureds. With respect to disability insurance claims, for example, insurers typically hire private investigators to follow and videotape their insureds whenever they ventured out of the home, whether to take the trash out, go to a doctor’s office, or travel to the grocery store. Typically, insurers will attempt to use that surveillance to assert that their insureds are capable of working and not entitled to disability benefits, often overstating the level of activity depicted on tape and the conclusions that can be drawn from such surveillance.

However, with technological advances, the methods of surveillance are changing. Recently, insurance companies started moving beyond the proverbial “guy in a van” method of surveillance, and began using unmanned drones to conduct photographic and video surveillance. There are many different kinds of drones, but some can travel on auto-pilot to a preset location, and slowly fly above an insured and his property, undetected, while taking high-resolution photos and video. Others need to be operated by someone who keeps the aerial vehicle within the line of sight.

Drones, also referred to as unmanned aerial systems (UASs) or unmanned aerial vehicles (UAVs), are increasingly being used for commercial purposes. The use of drones is regulated both by the Federal Aviation Administration (FAA), and a variety of state and local laws and regulations. Those regulations have not prevented insurance companies from making drones part of the claim review process. In 2015, multiple insurance companies, including AIG, State Farm Mutual and USAA, were granted permission by the FAA to use drones for commercial purposes. More recently, in July, the FAA promulgated rules permitting the use of drones weighing less than 55 pounds for all commercial applications, including by insurance companies.

Most often, drones are used for claims involving property and casualty insurance, to examine the condition of tall buildings or inspect property in hard-to-reach locations or even disaster areas. However, the neither the FAA nor any other authority strictly limits the use of drones to these specific situations.

Some private investigators believe that drones are preferable to more traditional methods of surveillance, as they can often provide quicker, cheaper and safer surveillance and documentation while also reducing the risk than an investigator will be spotted, and can be used to gain access to otherwise inaccessible locations.

With FAA approval, insurers are working to research and develop best practices, safety and privacy protocols, and procedures as they further develop plans for operational use. Privacy protocols will be especially important as insurers can be sued if they obtain surveillance that impermissibly intrudes on an insured’s privacy. Thus, even with FAA approval to utilize drones, insurance companies are not simply permitted to use drones in every situation in order to attempt to assert that an insured does not qualify for benefits. They will have to be prudent using them.

As drones multiply in number and category, cities and states are setting their own boundaries. For example, while over the last two years Gov. Jerry Brown repeatedly vetoed bills that would have criminalized the use of drones in certain situations, including over wildfires, schools, prisons and jails, he did sign a law modifying California Civil Code Section 1708.8 so that the definition of a “physical invasion of privacy” now includes sending a drone into the airspace above someone’s land in order to make a recording or take a photo. A person who violates the “airspace above the land of another person” is now liable for up to three times the amount of any general and special damages caused by the invasion, as well as a civil fine between $5,000 and $50,000. While this change was developed mainly to prevent paparazzi from flying drones over private property, it would equally apply to insurance company employees and contractors conducting surveillance of insureds.

Florida has gone a step further, as the Freedom from Unwarranted Surveillance Act provides a private right of action which can be pursued when a drone is used to take pictures or video that would not be otherwise available to someone standing on ground level. Cities are also passing similar laws. For example in 2015, Poway, in San Diego County, passed an ordinance banning the use of drones in any open space or rural residential area.

In light of these rules, in any case involving photographs or videos taken by drone, attorneys on either side of litigation involving such evidence are well-advised to ensure that the evidence was gathered within the confines of the law.

While insurers often use the results of surveillance to assert that an insured does not qualify for insurance benefits, courts are increasingly weary of how insurance companies use and interpret video footage. For example, in one influential 9th U.S. Circuit Court of Appeals case involving a long-term disability insurance claim,Montour v. Hartford Life & Accident Insurance Co., 588 F.3d 623 (9th Cir. Cal. 2009), the insurer relied on surveillance footage of the claimant engaged in short periods of activity over four nonconsecutive days and concluded he was capable of sustaining this activity in a full-time occupation. The court criticized the insurer’s decision, explaining the insurer over-relied on footage and this bias pervaded its decision process, eventually ruling that the claimant was entitled to long-term disability benefits.

Similarly, inBeaty v. Prudential Insurance Co., 313 Fed. Appx. 46, 49 (9th Cir. 2009), the 9th Circuit rejected the insurer’s attempt to rely on “unsupportable inferences from a surveillance video and reports which show the plaintiff engaging in a variety of normal day-to-day activities” and criticized the insurer’s failure to explain how activities show “she can perform the duties of her occupation.”

Other courts have likewise ruled that an overstatement of a claimant’s activities in surveillance is improper, and warn that activities observed for a short amount of time do not necessarily translate into full-time work capacity. For example, inThivierge v. Hartford Life, 2006 WL 823751, *11 (N.D. Cal. Mar. 28, 2006), the district court held that activities observed “for a couple of hours on five out of six days she was under surveillance does not mean that Plaintiff is able to work an eight-hour a day job.”

Thus, while insurers increasingly use drones to gather information on their claimants, gathering and using that information to support claims denials may not be as easy as it seems. This is especially true in the case of disability insurance claims. Not only are insurers obligated to obey an increasingly number of federal, state and local rules and regulations limiting the use of drones, but courts are growing increasingly weary of insurers’ attempts to over-rely on surveillance. Thus, while surveillance, especially the use of drones, becomes increasingly popular in insurance investigations, insurers will have to be especially wary of its use in making decisions on their insurance claims.

McKennon Law Group PC Voted Top USA Insurance Litigation Firm for 2016

The Lawyers Worldwide Awards Magazine has announced McKennon Law Group PC as “Insurance Litigation Law Firm of the Year – USA” for 2016. 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.

Insurers Turn to Drones

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