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McKennon Law Group PC is proud to announce that its principal, Robert J. McKennon, has received his 2nd Global Award from Corporate LiveWire; this year’s award is for “Insurance & Reinsurance,” Newport Beach, California after last year’s 2015 Global Award for “Insurance & Risk Management.” The 2016 Corporate LiveWire Global Awards celebrate the achievements of the most successful individuals, companies and organizations in the Americas, Europe, Asia & Australasia, Africa & the Middle East, over the past year. Award categories include a wide variety of specialist fields including biotech and pharma, intellectual property, company formations and divorce law. The Global Awards honor those who standout for consistently showing best practice in every aspect of their work and who have excelled within their practice areas.
Robert J. McKennon Recognized as 2016 “Super Lawyer”
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 2016 edition of Southern California Super Lawyers magazine published on January 20, 2016.
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 recognized Mr. McKennon as one of the top 100 Insurance lawyers in the State of California for 2015. 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.
Mr. McKennon was also awarded the designation of 2015 “Top Rated Lawyer in Insurance Law and Coverage” by American Lawyer Media and Martindale Hubbell, leading providers of news and rating information to the legal industry.
Ninth Circuit Awards McKennon Law Group PC Their Full Attorneys’ Fees and Costs, Without Any Reduction
In April 2015, the United States Court of Appeals for the Ninth Circuit upheld a ruling by District Court Judge Cormac J. Carney awarding a McKennon Law Group PC client his past-due ERISA long-term disability plan benefits, plus interest. Following that decision, the McKennon Law Group filed a motion for attorneys’ fees and costs, which Sun Life Financial vigorously opposed. However, the Ninth Circuit rejected every argument that Sun Life made in opposing the motion for fees and costs. In reviewing the hourly rates charged by the McKennon Law Group and the time spent advocating on behalf of its client in the appeal, the Ninth Circuit determined that both were completely reasonable and appropriate. Based on this finding, the Ninth Circuit ruled that the McKennon Law Group was entitled to 100% of the attorneys’ fees and costs incurred and applied for on the appeal.
Department of Labor Proposes New, Claimant-Friendly ERISA Regulations for Disability Insurance Claims
From time to time, the U.S. Department of Labor promulgates new regulations governing disability insurance benefit claims and health insurance benefit claims that are governed by the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA. The regulations must be followed by plan administrators and claim administrators when reviewing disability insurance and health insurance benefit claims submitted by claimants. Recently, the Department of Labor proposed changes to the regulations governing long-term disability insurance benefit claims and short-term disability insurance benefit claims.
The proposed regulations, if approved, will benefit a claimant by providing greater access to information during the claims review process and requiring administrators to explain why their claim decision differs from State or Federal agencies that considered the claimant disabled and unable to return to work.
The stated purpose of the proposed new regulations, which can be found here, is to provide “procedural fairness” to claimants, as well as to adopt procedural protections and safeguards that are currently applicable to group health plans under the Affordable Care Act.
One of the changes is that a claims administrator would be required to “[a]llow a claimant to review the claim file and to present evidence and testimony as part of the disability benefit claims and appeals process.” In addition, the new regulations would:
Provide that, before an adverse determination on review is made, the plan administrator shall provide the claimant, free of charge, with any new or additional evidence considered, relied upon, or generated by the plan (or at the direction of the plan) in connection with the claim. Such evidence must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse determination on review is given, in order to give the claimant a reasonable opportunity to respond before that date.
Currently, until an adverse decision is made, the claims administrator is entitled to withhold from the claimant the entirety of the claim file. This allows the claim administrator to withhold opinions and reports regarding disability offered by paid physicians, who typically never examine the claimant, and any other evidence in the claim file. Refusing to allow the claimant access to the claim file while the claim is open forces the claimant to operate without a full and complete understanding of the opinions that the insurance company may be relying on in reviewing the claim. This makes it unnecessarily difficult for a claimant to know what information the insurer might deem important and sufficient to support the claim for disability insurance benefits.
Another important change is that denial letters must include “the basis for disagreeing with the views or decisions of any treating health care professionals or other payers of benefits who granted the claimant’s similar claims (including disability determinations by the SSA).” Recently, some district courts have ruled that a failure to distinguish contrary disability determinations, whether related to Workers’ Compensation Benefits, State disability insurance benefits or Social Security disability insurance benefits, will result in a reduction in the amount of discretion afforded to the administrator in abuse of discretion cases. This new regulation would codify this requirement nationwide and expand it, as it would force the administrator to explain in all claim denials why its opinion that a claimant is not disabled differs from conclusions reached by other entities after evaluating the same disabling conditions, medical evidence and job duties.
Finally, a failure by the administrator to follow these and other requirements will allow a claimant to consider the claim to be “deemed denied.” This would allow a claimant to be “deemed to have exhausted the administrative remedies under the Plan,” and proceed to litigation without the necessity of an appeal. However, the regulations also note that if a court finds the violation to be “de minimus,” then the matter would be remanded back to the plan administrator for further review. Given the risk of remand and resulting delay, a claimant might be reluctant to exercise this option.
As a whole, these regulations, if enacted, would greatly benefit claimants and should make it easier from them to understand the claim review process, the reasons for denial and easier to provide their administrators with documents to support their claims. Indeed, these proposed regulations would “give some teeth” to the requirement that insurers engage in a “meaningful dialogue” with the claimant.
Robert McKennon and Joe McMillen Publish Article: “When is Insurer’s Delay a Breach?”
The November 27, 2015 edition of the Los Angeles Daily Journal features an article written by Robert McKennon and Joseph McMillen of the McKennon Law Group entitled: “When is Insurer’s Delay a Breach?.” In the article, Mr. McKennon and Mr. McMillen discuss an important decision from the U.S. District Court for the Northern District of California, Travelers Indem. Co. of Connecticut v. Centex Homes, 11-CV-03638-SC (N.D. Cal., filed Oct. 8, 2015) in which the court wrestled with the issue of how much delay is too much before an insurer crosses the line and breaches its defense duty. In other words: What is the point at which an insurer’s delay in defending amounts to a breach of its duty to defend?
Mistreated by Your Insurer? Insurers May Not Be Able to Hide Behind ERISA Preemption to Defeat Claims for Intentional Infliction of Emotional Distress
Insureds obligingly pay premiums on their life, health and disability insurance policies and dutifully provide updated information upon request by their insurers, but often do not enjoy the same courtesy when they file an insurance claim. In extreme cases, antagonistic insurers engage in a host of tactics, including appointing claims examiners who refuse to return phone calls, conducting intrusive surveillance, accusing insureds of filing false claims or inundating the insured’s employer and treating doctors with document demands—only to deny the insured’s claim. Astonished by this treatment, many insureds wonder if they can sue them for emotional distress damages. The short answer is yes—but there are hurdles.
California law imposes in every insurance contract a covenant of good faith and fair dealing, and a wrongful denial may be in “bad faith.” The bad faith claim potentially allows the insured to seek emotional distress damages. However, there may be another approach: sue the insurer for intentional infliction of emotional distress. To succeed on such a claim, insureds must establish: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.
Policies governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) present additional hurdles. First, Section 514(a) provides that the ERISA federal statutes “supersede[s] any and all State laws insofar as they may … relate to any employee benefit plan.” Second, ERISA does not contain a comparable statutory recourse for bad faith by an insurer. Accordingly, insurers routinely defeat emotional distress claims and insurance bad faith claims by asserting that ERISA preempts these state law claims, as such claims directly relate to the insured’s denial of benefits. However, a relatively unsung line of cases show that in cases where the insurer’s actions are so far removed from the claims handling function, an insured may escape ERISA preemption and seek damages typically available under California, but not federal, law.
In his recent Order, United States District Judge William Alsup ruled that ERISA does not preempt (or, in other words, defeat) an insured’s claim for intentional infliction of emotional distress in certain cases, even though the insurance policy is otherwise governed by ERISA. Daie v. The Reed Grp., Ltd., No. C 15-03813 WHA, 2015 WL 6954915 (N.D. Cal. Nov. 10, 2015). After Aetna denied his claim for disability benefits and appeal under an employer-sponsored plan, Plaintiff filed suit asserting only one cause of action for intentional infliction of emotional distress. Plaintiff’s complaint alleged, among other things, that Defendants accused Plaintiff of lying about and exaggerating his condition, pressured him to take experimental medications and forced him to undergo rigorous medical examinations without considering the results.
Defendants moved to dismiss the claim based on federal preemption under ERISA. Judge Alsup denied the motion, explaining that ERISA completely preempts a state-law only if: (1) an individual at some point could have brought the claim under ERISA Section 502(a)(1)(B), which allows an ERISA “participant or beneficiary” to bring a civil action to recover benefits due, enforce his rights, or clarify his rights under the plan and (2) no other independent legal duty is implicated. Here, neither prong was satisfied. First, Plaintiff’s claim hinged on the Defendants’ harassing and oppressive conduct unrelated to the claims handling function. Second, Defendants had a duty not to engage in tortious conduct, which was independent of the Defendants’ duties under ERISA. Judge Alsup further noted that absent the denial of benefits, Daie would still have a claim for intentional infliction of emotional distress.
Other cases offer insight as to what type of actions by insurers may survive ERISA preemption. One example involves an insurance company who engaged in surveillance tactics, including falsely impersonating a bank lender to obtain personal information about a plaintiff (Dishman v. Unum Life Insurance Co. of America, 269 F.3d 974 (9th Cir. 2001)). Sarkisyan v. CIGNA Healthcare of California, Inc., 613 F. Supp. 2d 1199, 1208-09 (C.D. Cal. 2009) distinguishes what claims may, or may not be, preempted. In Sarkisyan, CIGNA denied authorization for a liver transplant for Plaintiff’s daughter, upheld the denial, and the girl passed away days later. The grief-stricken parents brought suit alleging several causes of action, including intentional infliction of emotional distress. CIGNA removed the case to federal court, then filed a motion to dismiss, contending Plaintiffs’ claims were expressly preempted by ERISA. The District Court ruled that Plaintiff’s state law claims for intentional infliction of emotional distress based on wrongful denial of coverage under their CIGNA health insurance plan related directly to CIGNA’s denial of benefits, and thus were preempted by ERISA. However, Plaintiffs’ state law claim for intentional infliction of emotional distress based on the verbal abuse, heckling, and “lewd hand gesture” by CIGNA employees was not preempted, because the claim was based on events occurring after the coverage decision, and thus did not directly relate to the claim decision.
These cases demonstrate that where a plaintiff’s allegations of intentional infliction of emotional distress clearly implicate an independent legal duty owed by the insurer, distinct from actions directly related to the claim for benefits, ERISA preemption does not defeat the claim. Indeed, these holdings are consistent with public policy concerns and serve as a disincentive to insurers who mistreat their insureds, or risk liability in the form of extra-contractual damages for intentional infliction of emotional distress.
