ERISA – Frequently Asked Questions
What Is ERISA?
ERISA is an acronym for the Employee Retirement Income Security Act of 1974. It is a federal statute that governs certain types of employee benefits, including life, health and short-term disability policies and long-term disability policies issued to employees by their employers. See 29 USC § 1001 et seq. Insurance policies written for members of employee groups are subject to the ERISA remedies to enforce such policies which typically preempt all state law claims. This means that certain limited remedies apply and that California’s remedies for breach of contract and breach of the implied covenant of good faith and fair dealing (or bad faith), such as consequential damages, future damages and punitive damages, do not apply.
When Is Employer-Provided Group Coverage Not Governed By ERISA?
ERISA specifically exempts employee benefit plans provided by governmental entities and religious organizations from its application. While each situation requires an independent analysis, typically, city, county and state employees such as teachers, police officers and other types of government workers are not subject to ERISA. Additionally, plans associated with churches or church-run entities (such as Catholic hospitals) are not subject to ERISA, unless they opt into ERISA. If an employer does not actually provide or arrange for a group policy, and its only function is to deduct premiums for a policy from an employees’ pay, ERISA will not apply. See When is an insurance policy governed by ERISA? below. It may be critical to your case whether ERISA applies to your long-term or short-term disability insurance claim. There are vast differences in the damages and remedies allowed depending on whether state or federal ERISA law applies.
When Is An Insurance Policy Governed By ERISA?
Individual v. Group Disability Insurance Policies
Generally speaking there are two types of disability, health or life insurance policies: “group” policies and “individual” policies. A group disability, health or life insurance policy is provided by an Employer and typically covers employees who are actively working for the employer at least 30 hours per week. The employee usually has no say in the type of coverage the policy provides. These policies are most often subject to ERISA. An individual policy is purchased typically without an employer’s involvement, usually through an insurance agent. The relationship is such that the individual who buys an individual disability, health or life insurance policy owns it and can pick and choose the types of coverage desired. These policies are typically not subject to ERISA. Most people with disability, health or life insurance coverage have a group policy governed by ERISA.
Requirements for a Disability, Health or Life Insurance Policy to be subject to ERISA
Although most group disability, health and life insurance policies are subject to ERISA, there are exceptions, even when the policies are not issued by a church organization or governmental entity. Federal courts have held that there are five basic requirements in order for a group disability, health or life insurance policy to be subject to ERISA:
- A “plan, fund, or program;”
- established or maintained by an employer or employee organization, or both;
- for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits;
- to participants or their beneficiaries.
The greater the involvement of the employer in sponsoring and making a group disability, health or life insurance policy available to employees, the greater the likelihood that ERISA will govern the policy. The federal courts have interpreted certain Department of Labor “safe harbor” regulations to mean that if all of the following factors are met, the disability insurance policy will not be governed by ERISA. The four factors are:
- No contributions are made by an employer or employee organization;
- Participation in the program is completely voluntary for employees or members;
- The sole functions of the employer or employee organization with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees or members, to collect premiums through payroll deductions or dues checkoffs and to remit them to the insurer; and
- The employer or employee organization receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions or dues checkoff.
If just one of these factors is not met, the disability insurance policy will be governed by ERISA. Even the simple and sole act of an employer negotiating a discount for disability, health or life insurance policies for eligible employees may be enough to render ERISA applicable.
What Is The Nature And Purpose Of ERISA Regulation?
ERISA was enacted to protect the interests of employees covered under employee benefit plans. Congress’ primary concern was with mismanagement of funds accumulated to finance employee benefits and the failure to pay such benefits. Accordingly, ERISA imposes a variety of requirements relating to participation, funding, vesting and enforcement of rights under employee benefit plans. See 29 USC §§ 1051–1086. It also sets various uniform standards and procedural safeguards concerning reporting, disclosure, claims handling and fiduciary responsibility for such plans and contains its own remedies to enforce these requirements. See 29 USC §§ 1021–1031, 1101–1114, 1132–1133.
Should You Hire An Attorney To Help You With Your ERISA Appeal?
The short answer is “Absolutely.”
If your claim for benefits under an ERISA plan is denied, you cannot immediately file a lawsuit to collect your benefits. Instead, you will be required to file at least one appeal with the very same company that denied your claim in the first place. While the insurance company is perfectly happy to allow you to conduct the appeal without the help of an attorney, by doing so, you might be handicapping your chances of winning a lawsuit if/when the company denies your appeal.
When you appeal your claim for benefits, the insurance company NEVER TELLS YOU that you will not be allowed to use new evidence to support your claim in your lawsuit. In most cases, you will instead be limited to the documents in the insurance company’s file. Thus, the worst thing you can do is simply tell the insurance company that you disagree with their decision and would like to appeal. But if you hire an attorney who has strong experience handling ERISA matters, including litigating them, that attorney can help ensure that your file contains all of the documents and information that you will need in your lawsuit. An attorney can also help identify problems with the insurance company’s initial review and make sure those problems are noted in the record for use in the litigation. In addition, when confronted with the arguments of experienced ERISA attorneys such as McKennon Law Group PC, the insurance company or plan administrator will often reverse itself and approve the claim for benefits.
Accordingly, when confronted with ERISA insurance claims appeals under a disability, life insurance or annuity plan governed by ERISA, the best thing you can do to increase your chances of appeal is to hire an experienced ERISA attorney to help you through the process.
Who May Sue To Enforce ERISA’s Remedies?
Only a plan participant, beneficiary or fiduciary may sue.
Who May Be Sued When ERISA Applies?
An action to recover benefits or enforce rights under the plan (29 USC § 1132(a)(1)(B)) lies against the plan itself or against the plan administrator (the person or entity designated by the plan) and against the claims administrator (typically the insurer that issued the group policy).
Are Jury Trials Allowed In ERISA Actions?
No. There is generally no right to a jury trial in ERISA actions. Rather, the “trial” is generally a hearing before the court based on the Administrative Record and, in some cases, evidence the court allows outside of the Administrative Record.
What Remedies Are Available To ERISA Plan Participants In An Action For Benefits Under The Plan?
ERISA provides an exclusive remedial scheme for insureds who have been denied benefits. A plan participant may sue “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). In addition, they may be entitled to attorney fees and interest, but these are discretionary. 29 USC § 1132(g). There is a presumption in favor of a fee award to successful ERISA plaintiffs “unless special circumstances would render such an award unjust.” McElwaine v. US West, Inc., 176 F.3d 1167, 1172 (9th Cir. 1999).
How Will A Court Interpret An ERISA Plan Document?
The court to interpret the plan by looking first to the terms of the plan itself. Nelson v. EG & G Energy Measurements Group, Inc., 37 F.3d 1384, 1389 (9th Cir.1994). Courts should then interpret plan terms in an ordinary and popular sense as would a person of average intelligence and experience. Allstate Ins. Co. v. Ellison, 757 F.2d 1042, 1044 (9th Cir.1985). If there is any ambiguity, the court will interpret the policy in favor of the insured. McClure v. Life Insurance Company of North America (LINA), 84 F.3d 1129, 1134 (9th Cir.1996). Courts will protect the reasonable expectations of applicants, insureds and intended beneficiaries regarding the coverage afforded by insurance carriers even though a careful examination of the policy provisions indicates that such expectations are contrary to the expressed intention of the insurer. See Gaines v. Sargent Fletcher, Inc., 329 F. Supp. 2d 1198 (C.D. Cal. 2004);Saltarelli v. Bob Baker Group Medical Trust, 35 F.3d 382, 386 (9th Cir. 1994)
Can A Participant Or Beneficiary Of An ERISA Plan Sue For Injunctive Relief?
Yes. An action for injunctive or other equitable relief may be brought by a plan participant, beneficiary or fiduciary to enjoin violations of ERISA or the terms of the plan to redress such violations. See 29 USC § 1132(a)(3). This is known a the “catchall” provision allowing relief for breach of fiduciary duty where “appropriate,” meaning only where no other adequate relief is provided by ERISA.
Can A Participant Or Beneficiary Of An ERISA Plan Sue For Breach Of Fiduciary Duty?
Yes. A suit for breach of fiduciary duty is authorized: “Any person who is a fiduciary … who breaches any of the responsibilities, obligations or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach and to restore to such plan any profits of such fiduciary ….” 29 USC § 1132(a)(2). Damages are however limited to damages suffered by plan and the action must be maintained for damages caused to the plan itself, rather than to individual participants. The fiduciary is liable only for restitution (to make up any losses suffered by the plan, and to restore to the plan any ill-gotten profits obtained through use of plan assets) and “such other equitable or remedial relief as the court may deem appropriate.” 29 USC §§ 1109(a), 1132(a)(2).
Who Qualifies As A Plan Fiduciary?
A plan fiduciary is a person or entity who renders investment advice for a fee or other compensation or has any discretionary authority or discretionary responsibility in the administration of an ERISA plan. See 29 USC § 1002 (21)(A). An insurer is an ERISA fiduciary if it has discretionary authority in the control of plan assets. In most cases, insurers who act as claims administrators are fiduciaries.
What Are Some Of The Important Time Limits And Rules Applicable To Claims Handling In ERISA Cases?
- Initial claims handling decisions must be completed within 90 days or 45 days for disability claims. The Plan Administrator is allowed to request one 90-day extension or two 30-day extensions for disability claims. 29 CFR § 2560.503–1(f).
- If a claim is denied or adversely decided, the plan administrator must give the beneficiary written notice stating the specific reasons for the denial and “written in a manner calculated to be understood” by the beneficiary. It is improper for the administrator to add a new reason for denial in its final decision without allowing the claimant to present evidence. See Saffon v. Wells Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 872 (9th Cir. 2008).
- The plan must also afford a reasonable opportunity to any beneficiary whose claim has been denied for a “full and fair review by the appropriate named fiduciary.” 29 USC § 1133; 29 CFR § 2560.503–1(h). This means that at least one appeal must be provided to plan participants and beneficiaries and 180 days must be provided within which to file the appeal. The administrator must decide the appeal in 60 days, or 45 days for disability claims. 29 CFR § 2560.503–1(i).
- If an ERISA plan fails to establish or follow the above claims procedures, the claimant is deemed to have exhausted the administrative remedies available under the plan and may pursue the remedies available under ERISA § 502(a). 29 CFR § 2560.503–1(l); see Gatti v. Reliance Standard Life Ins. Co., 415 F.3d 978, 981, fn.1 (9th Cir. 2005).
Is A Plan Participant Required Exhaust All ERISA Appeal Rights Before Filing A Lawsuit?
It depends, but typically “yes.” A plan participant must pursue at least one ERISA appeal before filing a suit. This is known as the doctrine of exhaustion of administrative remedies. 29 USC § 1133. This also applies to plans administered by insurance companies. See 29 CFR § 2560.503–1(g)(2). However, this defense is subject to waiver, estoppel, futility and similar equitable considerations. Vaught v. Scottsdale Healthcare Corp. Health Plan, 546 F.3d 620, 627, fn.2 (9th Cir. 2008). Further, while some plans offer the right to file a second appeal, typically, a claimant can file a lawsuit after the first appeal.
What Is The Scope Of Judicial Review In ERISA Actions?
There are two standards of judicial review that are applied in ERISA cases: de novo and abuse of discretion. Under the de novo standard of review, the court must look at the information in the Administrative Record without giving any deference to the claims administrator’s decision. Under the abuse of discretion standard of review, the court usually must give some level of discretion to the claim administrator’s decision. However, if the claims administrator has a conflict of interest, the court must decide to what extent its actions are consistent with the conflict of interest such that the discretion afforded should be reduced. Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 971 (9th Cir. 2006) (en banc).
In states other than California, which standard of judicial review is applied depends on whether the plan confers discretion for determining eligibility on the claim administrator. Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S. Ct. 2343, 2348–2349 (2008). Whether the plan confers such discretion is one of the most important determinations that can be made in these actions. Federal courts must conduct a de novo review on any adverse decision of ERISA plan benefits unless the plan “unambiguously” conferred discretionary authority on the plan administrator or fiduciary to make such decisions. Such a de novo review applies both to the administrator’s interpretation of the plan’s coverage and to factual determinations upon which the administrator denied the claim.
However, in California, pursuant to California Insurance Code Section 10110.6, Plan language that confers discretion on a Plan Administrator is “void and unenforceable.” California Insurance Code Section 10110.6 applies to any ERISA Plan or Policy that was offered, issued, delivered, or renewed after the effective date of the statute, which is January 1, 2012, but before Plaintiff’s claim accrued. See Gonda v. The Permanente Med. Grp., Inc., 2014 WL 186354, at *2 (N.D. Cal. Jan. 16, 2014); Cal. Ins. Code § 10110.6(b) (providing that “renewed” means “continued in force on or after the policy’s anniversary date”); see also Grosz–Salomon v. Paul Revere Life Ins., 237 F.3d 1154 (9th Cir. 2001) (an ERISA cause of action based on a denial of ERISA benefits accrues at the time benefits are denied).
If The De Novo Review Standard Applies, Can The Court Look Beyond The Administrative Record To Decide The Case?
Yes. On de novo review, the court may consider evidence outside the administrative record, such as the deposition testimony. See Jebian v. Hewlett-Packard Co. Employee Benefits Organization, 349 F.3d 1098, 1110 (9th Cir. 2003). Indeed, the Court should admit extrinsic evidence if it cannot conduct an adequate de novo review of the claim decision with the extrinsic evidence. Opeta v. Northwest Airlines Pension Plan, 484 F.3d 1211, 1217 (9th Cir. 2007) sets forth the factors that should be considered when determining whether to admit extrinsic evidence and include (1) circumstances in which there is additional evidence that the claimant could not have presented in the administrative process; (2) consideration of complex medical questions or issues regarding the credibility of medical reports; and (3) “instances where the payor and the administrator are the same entity and the court is concerned about impartiality.”
What are the kinds of actions by a claims administrator/insurer that will reduce the level of discretion afforded to it on review by a court of law?
- Procedural violations of ERISA “when a plan administrator’s actions fall so far outside the strictures of ERISA that it cannot be said that the administrator exercised the discretion that ERISA and the ERISA plan grant.” Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 971 (9th Cir. 2006) (en banc)
- Keeping the policy details secret from the employees, offering them no claims procedure, and not providing them in writing the relevant plan information. Id.
- Employing game of “hiding the ball” against the claimant by failing to advise claimants of documents needed to obtain approval of claim, and failing to submit forms to claimant or his doctors that would have elicited the information needed. Boyd v. Aetna Life Ins. Co., 438 F.Supp. 2d 1134, 1153–1154 (C.D. Ca. 2006).
- Overstatement of and excessive reliance upon claimant’s activities in the surveillance videos; decision to conduct a paper review rather than an “in-person medical evaluation;” and insistence that claimant produce objective proof of his pain level. Metropolitan Life Ins. Co. v. Glenn, 544 U.S. 105, 128 S. Ct. 2343, 2348 (2008); Montour v. Hartford Life & Accident, 588 F.3d 623, 2009 WL 2914516 (9th Cir. 2009).
- Encouraging participant to file for SSDI benefits and, when benefits are awarded by Social Security Administration, failure to deal with and distinguish the contrary disability decision.Montour v. Hartford Life & Accident, 588 F.3d 623, 2009 WL 2914516 (9th Cir. 2009)
- Failure to provide the claimant a description of any additional material or information “necessary” to “perfect the claim,” and to do so “in a manner calculated to be understood by the claimant.” 29 CFR § 2560.503–1(g); Saffon v. Wells Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 870 (9th Cir. 2008).
- Failure to make “full and fair” assessment of claims and clearly communicate to claimants the “specific reasons” for benefit denials. White v. Sun Life Assur. Co. of Canada, 488 F.3d 240, 246 (4th Cir. 2007).
- Erroneous interpretation of the terms of the ERISA plan. Taft v. Equitable Life Assur. Soc., 9 F3d 1469, 1472 (9th Cir. 1993).
- Erroneous factual findings that constitute “clearly erroneous findings of fact” in making benefit determinations. Id.
- Failure to obtain a physician’s recommendation, reliance on medical reports that are not credible, and mischaracterization of its rationale for denying benefits. McCauley v. First Unum Life Ins. Co., 551 F3d 126, 132 (2d Cir. 2008).
- “Tainting” medical file reviewer in the medical review process by giving the reviewer inaccurate negative information regarding the claimant. DeLisle v. Sun Life Assur. Co. of Canada, 558 F.3d 440, 445 (6th Cir. 2009).
- Failure to “consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment” which is being rendered. See 29 C.F.R. § 2560.503-1(h)(3), 3(iii).
- Taking new positions or adding new reasons for denying benefits in a final decision, thereby precluding the plan participant from responding to that rationale for denial at the administrative level. Abatie v. Alta Health & Life Insurance Company, 458 F.3d 955, 969 (9th Cir.2006) (en banc).
- Failure to comply with ERISA’s procedural requirements. Abatie v. Alta Health & Life Insurance Company, 458 F.3d 955, 969 (9th Cir.2006) (en banc).
- Rendering a decision without explanation, construes a provision of the plan in a way that conflicts with the plain language of the plan, or relies on clearly erroneous findings of fact.Boyd v. Bell, 410 F.3d 1173, 1178 (9th Cir.2005); Eley v. Boeing Co., 945 F.2d 276, 279 (9th Cir. 1991)(“[A]n administrator also abuses its discretion if it relies on clearly erroneous findings of fact in making benefit determinations.”)
- Ignoring the plan language which requires a review of actual job duties and instead referencing occupational duties as they might be performed in the national economy. SeeLasser v. Reliance Standard Life Ins. Co., 344 F.3d 381, 385-86 (3d Cir. 2003)
- Emphasizing a report that favored a denial of benefits while deemphasizing other reports suggesting a contrary conclusion, and failure to provide its independent experts with all of the relevant evidence. Metropolitan Life Ins. Co. v. Glenn, 544 U.S. 105, 128 S. Ct. 2343, 2348 (2008).
- Failure to provide participant with all bases for its denial and suggesting alternate reasons for denial after the fact. See 29 C.F.R. § 2560.503-1(g)(1)(i); Jebian v. Hewlett-Packard Co. Employee Benefits Organization, 349 F.3d 1098, 1104 (9th Cir. 2003); Rodden v. Jefferson Pilot Financial Ins. Co., 591 F. Supp. 2d 1113, 1126 (N.D. Cal. 2006).
- When denying a claim based on lack of objective evidence, not providing “a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary.” 29 C.F.R. § 2560.503(g)(iii); Booton v. Lockheed, 110 F.3d 1461, 1463 (9th Cir.1997)(“if the plan administrators believe that more information is needed to make a reasoned decision, they must ask for it.”); Boyd v. Aetna, 438 F. Supp. 2d 1134, 1154 (C.D. Cal. 2006).
- Failure to “[p]rovide claimants the opportunity to submit written comments, documents, records, and other information relating to the claim.” 29 C.F.R. § 2560.503-1(h)(2)(ii);Volynskaya v. Met Life, 2007 WL 3036110 (N.D.Cal. 2007).
- Insurer’s doctor not analyzing whether participant was disabled from performing her own occupation, as required by the plan, and instead only opining generally that participant could perform light or sedentary work. See Sabatino v. Liberty Life Assurance Co. of Boston, 286 F. Supp. 2d 1221, 1231 (N.D. Cal. 2003).
- Adding new terms to the Plan, particularly when those terms are both imprecise and impose a higher evidentiary burden on a claimant, requiring that disability be proved by “compelling objective” evidence. See Saffle v. Sierra, 93 F.3d 600, 608 (9th Cir.1996) (“Imposition of conditions outside the plan amounts to arbitrary and capricious conduct.”) (quotation omitted); see also Saliamonas v. CNA, 127 F. Supp. 2d 997, 1000 (N.D. Ill. 2001)
- Construing the Plan’s definition of total disability to exclude persons who could work a full-time, or forty hour work week, when there is evidence that a participant worked longer hours than a forty hour work week. See Rosenthal v. The Long-Term Disability Plan of Epstein, Becker & Green, P.C., 1999 WL 1567863 (C.D. Cal. 1999); Garrison v. Aetna Life Ins. Co., 558 F. Supp. 2d 995 (C.D. Cal. 2008).
- Construing the Plan’s definition of total disability to factor “accommodation” into the criteria for total disability. Saffle v. Sierra Pacific Power Co. Bargaining Unit Long Term Disability Income Plan, 85 F.3d 455, 460 (9th Cir.1996); Garrison v. Aetna Life Ins. Co., 558 F. Supp. 2d 995, 1004 (C.D. Cal. 2008).
- When denying a claim, failing to explain to a claimant what additional information is need to support a claim for benefits. Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 2011 U.S. App. LEXIS 4386 (9th Cir. Cal. Mar. 7, 2011) (“An administrator does not do its duty under the statute and regulations by saying merely ‘we are not persuaded’ or ‘your evidence is insufficient.’ Nor does it do its duty by elaborating upon its negative answer with meaningless medical mumbo jumbo.” )
- Conducting a “pure paper” review of the claim, rather than conducting an in-person medical evaluation. Montour v. Hartford Life & Accident Ins. Co., 588 F.3d 623, 633 (9th Cir. 2009) (as amended)
- Failure to provide reports created by in-house nurses and physicians and any so-called “independent” physicians with whom the insurer/administrator have consulted at the time of the claim denial when denying a claim. Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 2011 U.S. App. LEXIS 4386 (9th Cir. Cal. Mar. 7, 2011)
- A consulting physician and insurance company’s failure to consider the side-effects of a long-term disability claimant’s prescription medication on her ability to perform her job duties is an abuse of discretion. See Doty v. Hartford Life & Accident Ins. Co., 2012 U.S. Dist. LEXIS 104951 (D. Md. July 27, 2012).
- Failure to follow up with claimant or his treating physicians regarding the limitations he listed in his self-assessment and failure to engage in a meaningful dialogue with the claimant. See Galloway v. Lincoln Nat’l Life Ins. Co., 2011 U.S. Dist. LEXIS 45866 (W.D. Wash. Apr. 28, 2011).
- Claim Administrator’s (1) failure to properly credit the reliable medical evidence in the file; (2) failing to distinguish, or even acknowledge, the SSA’s contrary disability determination; (3) choosing to rely on a pure paper review, rather than conducting an in-person medical evaluation; (4) failure to secure relevant records, including the SSA file; (5) failure to request any specific evidence that it, or its reviewing physicians, concluded was necessary to “prove up” the claim; and (6) violating ERISA procedures by “tacking on” a new reason for denying benefits in its final decision, thereby precluding the claimant from responding to the rationale for the denial at the administrative level. See Sterio v. HM Life, 2010 U.S. App. LEXIS 4615 (9th Cir. Cal. Mar. 4, 2010).
- Requiring the claimant to provide “objective evidence” of his disability, even though that requirement was not contained in the Plan language, failure of the administrator (which was MetLife) to inform the claimant that he did not attach relevant medical information to his claim submission and instead made a claim decision based on an incomplete record, and failure to consider whether the claimants HIV status affected his ability to return to work and not obtaining his SSA file or addressing the SSA’s conclusion that he was disabled. See Hagerty v. American Airlines Long Term Disability Plan, 2010 U.S. Dist. LEXIS 91995, 2010 WL 3463620 (N.D. Cal. Sept. 3, 2010)
- Insurance company cannot demand objective evidence of fibromyalgia in the absence of other evidence that calls the claimant’s credibility into question. See Mossler v. Aetna Life Ins. Co., 2014 U.S. Dist. LEXIS 89046, 2014 WL 2944085 (C.D. Cal. June 30, 2014)
- Attempting to influence and “taint” a medical reviewer’s conclusions by, among reasons, including in the documents reviewed the insurer’s initial denial letter, thus violating ERISA’s requirement that the appeal be independent from and it not “afford deference to” the initial denial. See 29 C.F.R. 2560.503-1(h)(3)(ii), (h)(4) (requires claim fiduciaries to “[p]rovide for a review that does not afford deference to the initial adverse benefit determination and that is conducted by an appropriate named fiduciary of the plan who is neither the individual who made the adverse benefit determination that is the subject of the appeal, nor the subordinate of such individual.”
- When the Plan Administrator fails to provide reviewing physicians with a job description that includes the insured’s specific job duties and/or does not consider those specific job duties when assessing whether the insured is disabled under an “own occupation” definition of disability. See Doe v. Unum Life Insurance Co. of America, 2014 U.S. Dist. LEXIS 162042 (E.D. Pa. Nov. 18, 2014); see also Kuntz v. Aetna, Inc., 2013 U.S. Dist. LEXIS 70019, 2013 WL 2147945, at * 10 (E.D. Pa. May 17, 2013 ) (“failure to address how Kuntz was expected to perform the duties of her job given her ailments also supports a finding that the denial of benefits was unreasoned”); Miller v. American Airlines, Inc., 632 F.3d 837, 855 (3d Cir. 2011); Loomis v. Life Insurance Co. of North America, 2011 U.S. Dist. LEXIS 66636, 2011 WL 2473727, at *6 (E.D. Pa. June 21, 2011).
- A plan or claims administrator has an obligation to obtain medical records from physicians of which it is aware when there is medical evidence referenced in the administrative record that supports the claim for disability. Harrison v. Wells Fargo Bank, N.A., __ F.3d __ (4th Cir. 2014).
- Even under a de novo review, a failure to conduct an IME raises questions about the thoroughness and accuracy of the claim decision. McKenna v. Aetna Life Ins. Co., ___ Fed. Appx. ___ (6th Cir. August 14, 2015)
- A reliance on peer reviewers who present their opinions in a conclusory fashion, making it unclear how they reached contrasting opinions from those of the insured’s attending physicians, is improper and such conclusions should not be relied upon over the opinions of the insured’s attending physicians. Carrier v. Aetna Life Insurance Company, 2015 WL 4511620, at *12-13 (C.D. Cal. July 24, 2015).
- It was an abuse of discretion for Liberty Life to (1) fail to consider how State regulations regarding the claimant’s occupation impacted her ability to perform her occupation; (2) fail to consider the claimant’s age in the any occupation analysis when the Plan specifically listed age as a relevant factor; and (3) fail to consider the claimant’s actual skills, and lack thereof, when conducting a transferable skill analysis. Mackey v. Liberty Life Assurance Company of Boston, __ F. Supp. 3d. __, 2016 WL 915271 (W.D. Ark., Mar. 7, 2016)
What Are The Rights And Protections Of Participants Under ERISA And What Documents And Information Are Participants Entitled To Receive?
ERISA provides that all plan participants shall be entitled to:
- Receive Information about Your Plan and Benefits;
- Examine without charge at the plan administrator’s office and at other specified locations such as worksites and union halls all documents governing the plan, including insurance contracts and collective bargaining agreements and copy of the latest annual report (Form 5500 Series) filed by the plan with the U.S Department of Labor.
- Obtain upon written request to the plan administrator copies of documents governing the operation of the plan including insurance contracts, amendments thereto, summary plan descriptions and collective bargaining agreements and copies of the latest annual report (Form 5500 Series).
- Receive a summary of the plan’s annual financial report. 29 U.S.C. § 1024(b)(1)-(5).
With respect to adverse claims decisions, ERISA provides that all plan participants shall be entitled to:
- Receive written or electronic notification of any adverse benefit determination, including the specific reason or reasons for the adverse determination; Reference to the specific plan provisions on which the determination is based; A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; A description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of the ERISA Act following an adverse benefit determination on review. 29 C.F.R. § 2560.503-1(j); 29 C.F.R. § 2560.503-1(g)(1)(i); 29 U.S.C. § 1133.
- Receive all documents upon which the claims administrator 1) relied in making its adverse claims decision, or 2) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination. These documents include the Administrative Record regarding the claim, all surveillance reports and videos, investigative reports, emails, medical reports, activity logs, telephone logs, expert and consultation reports, vocational reports, correspondence to or from physicians, attorneys, accountants or other service providers employed or retained to render advice on behalf of the plan or its fiduciaries. 29 C.F.R. § 2560.503-1(m)(8)
- Receive any internal rule, guideline, protocol, or another similar criterion that was relied upon in making the adverse claims decision. 29 C.F.R. § 2560.503-1(m)(8)
- Receive a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary. 29 C.F.R. § 2560.503-1(h)(2)(iii)
What Types Of Discovery Are Allowed In ERISA Cases?
While the discovery was previously disallowed in ERISA cases, written discovery and depositions are now permitted when the insurer served as both the payor and the claims administrator and thus operated under a “structural conflict of interest.” See Klein v Northwestern Mutual Life Ins. Co., 806 F. Supp. 2d 1120, 1125 (S.D. Cal. 2011); Tremain v. Bell Industries, Inc., 196 F.3d 970, 976-977 (9th Cir. 1999); Abatie v. Alta Health & Life Insurance Co., 458 F.3d 955, 970 (9th Cir. 2006).
In light of these cases, courts have permitted claimants to conduct discovery on a large variety of topics, including, but not limited to:
- In ERISA cases, courts allow discovery addressing the compensation of in-house medical personnel, including how much money they receive and what percentage of their total salary is provided by administrator, the performance evaluations of the medical professionals, the number of claims handled and the number of claims approved by the claims administrator, the disability approval rate by doctor, the training given to medical personal in relation to reviewing claims of disability and procedures manuals, guidelines and other documents relating to the handling of claims. Klein v Northwestern Mutual Life Ins. Co., 806 F. Supp. 2d 1120 (S.D. Cal. 2011).
- Discovery was permitted regarding the standards provided by the administrator for the doctors to follow in assessing the specific disability of the claimant and the administrator’s quality control standards and the procedures by which it ensured that its claims reviewers decided claims accurately. Lee v Kaiser Foundations Health Plan Long Term Disability Plan,2010 U.S. Dist. LEXIS 84037 (N.D. Cal. July 14, 2010).
- Depositions of the independent reviewing physicians are appropriate in an ERISA action. Liu v. Standard Insurance Co., 457 F. Supp. 2d 1030 (C.D. Cal. 2006).
- It is permissible for a claimant to conduct discovery into the number of claims granted or denied based in any way upon medical reviews by the outside medical reviewer, as well as employment agreements, invoices and the amounts paid by the insurer to the third-party medical review company. Dilley v. MetLife, 256 F.R.D. 643 (N.D. Cal. 2009).
- The insurer’s policies regarding the use of independent medical examinations are appropriate for discovery in ERISA cases. Sheakalee v. Fortis Benefits Insurance Co., 2008 U.S. Dist. LEXIS 116519 (E. D. Cal. 2008).
- Claimant was permitted to conduct discovery into the performance evaluations for the medical consultants and the outside vendors providing medical reviews. Knopp v. LINA, 2009 U.S. Dist. LEXIS 120267 (N.D. Cal. Dec. 28, 2009).
- The court allowed depositions of the insurer, the vocational consultant involved and the physician peer reviewer. Fowler v. Aetna Life Insurance Co., 615 F. Supp. 2d 1130, 1136 (N.D. Cal. 2009).
- Discovery permitted into the number of claims an insurer approved and denied following a review by physician retained through an outside vendor, as well as into amount of money paid for outside medical reviews. Walker v. MetLife, 585 F. Supp. 2d 1167, 1176 (N.D. Cal. 2008).
- Claimants are allowed to conduct discovery into the approval rate by doctors. Zewdu v. Citigroup Long Term Disability Plan, 264 F.R.D. 622, 627 (N.D. Cal. Feb. 12, 2010).
- Discovery permitted regarding the administrator’s general approval and termination rates for long-term disability claims. Wilcox v. MetLife, 2009 U.S. Dist. LEXIS 2977 (D. Ariz. Jan. 8, 2009).
- The administrator was required to produce the claims manuals and procedures utilized during the relevant time period. McCurdy v. Metropolitan Life Insurance Co., 2007 U.S. Dist. LEXIS 25917 (E.D. Cal. 2007).
- The discovery allowed the administrator’s performance evaluations. Sullivan v. Deutsche Bank Americas Holding Corp., 2010 U.S. Dist. LEXIS 8414 (S.D. Cal. 2010); Parish v. Aetna Life Ins. Co., 2013 U.S. Dist. LEXIS 108873 (E.D. La. August 2, 2013) (orders administrator to produce performance evaluations for those employees that reviewed the plaintiff’s claim).
How Do You Choose A Law Firm To Prosecute Your ERISA Appeal Or Lawsuit?
There are a number of options available to handle the payment of attorneys’ fees for your ERISA case. Your payment options will often depend upon the facts and merits of your individual case. Significantly difficult or complex cases, or cases with minimal evidentiary proof, necessarily require more work and have lower chances of success. Depending upon the facts of your case, a law firm may require you to make a retainer payment upfront and then pay them on an hourly basis.
Another more popular option is for a law firm to handle your ERISA insurance case on a contingency fee basis, in which you pay nothing out of pocket and the firm collects a percentage of the total amount recovered. Indeed, the vast majority of the ERISA long-term disability, health or life insurance claim cases handled by the McKennon Law Group are handled on a contingency fee basis, in which we are only paid if we recover money for our clients.
Additionally, ERISA provides the judge with discretion to award attorneys’ fees and costs to either party. The United States Supreme Court has indicated that an ERISA fee claimant must also have achieved some degree of success on the merits in order to collect attorneys’ fees. Insurers are almost never awarded attorney’s fees while claimants, if they meet this standard, almost always are awarded attorney’s fees. If we are able to secure an attorneys’ fees award (which typically happens following a successful trial and in some settlements), based on the language in our retainer agreements, this may allow you to keep all or most of your long-term disability, health or life insurance policy benefits.
McKennon Law Group PC will provide you with a free consultation to evaluate your long-term disability, health or life insurance claim/case options.
How Do You Choose A Law Firm To Prosecute Your Erisa Appeal Or Lawsuit?
Choosing the right law firm to prosecute your ERISA case can have a significant impact on your case and is perhaps the most important decision you can make with respect to your long-term disability, health or life insurance claim/case. ERISA is a highly specialized area of law involving specific time limits and complex procedural regulations. While fee structures play a significant role in the decision, picking a law firm with significant experience and specialization in ERISA long-term disability, health or life insurance claims is of utmost importance. Before a lawsuit can be filed against an insurance company or employer, the plan participant must appeal a claim denial before he or she can file a lawsuit. Therefore, hiring a law firm with experience not only in pursuing litigation cases in federal court but also with experience in preparing administrative appeals, is essential. Knowing what to provide to the insurer or employer and knowledge of and citation to pertinent federal ERISA law in your appeal can often mean the difference between an insurer agreeing to reinstate your claim and losing an appeal.
Even if an insurer refuses to reinstate an ERISA long-term disability, health or life insurance claim after an appeal, a strong appeal can often significantly increase chances of success in court. Finding a law firm like McKennon Law Group PC that specializes in ERISA long-term disability, health or life insurance claims, has significant experience in appealing claim decisions and has a proven track record of overturning denials of such claims in court provides you with a much higher likelihood of being awarded your disability benefits. You should also consult an attorney’s qualifications on their website, as well as testimonials from prior clients about the firm, to assist you in your search for the best short-term disability, long-term disability, health or life insurance claim attorneys. Law firms such as McKennon Law Group PC that specialize in ERISA short-term disability, long-term disability, health or life insurance claim matters will have valuable strategies and insights to navigate the complex process of overturning a denial of insurance benefits.
What Is The Process Of Submitting An ERISA Short-Term Disability, Long-Term Disability, Health Or Life Insurance Claim?
Prior to filing a claim for ERISA short-term disability, long-term disability, health or life insurance claim benefits, it is very important that you read and understand the terms of your insurance policy/insurance certificate/summary plan description. A detailed overview of the ERISA plan terms is usually contained within a summary plan description, group policy or insurance certificate, and it should be reviewed to make sure that you meet the plan’s requirements and understand the procedures for filing a claim. Some important provisions contained within your policy that you must pay attention to are provisions explaining waiting and elimination periods, the description of benefits covered and definitions of terms like “Disabled,” “Own Occupation,” “Maximum Benefit Period” and “Any Occupation.” It is important that you understand whether the definition of “disabled” contained in your policy means you are unable to perform your own or usual occupation or earn a percentage of your regular income from that occupation, or if after a specified period of time you must be unable to perform in “any gainful occupation” for which you are fitted by education, training and experience. The plan is required to specify where to file your claim, what to file with your claim and who to contact if there are questions about your plan.
What is required to file a claim varies, however, a typical claim procedure requires that you submit a notice of claim to your insurer or employer. You should go online to the appropriate website review claim procedures, complete or download forms, etc. You also can call the insurer or your employer’s HR department to learn more about filing a short-term disability, long-term disability, health or life insurance claim and to gain access to the appropriate claim forms you will need to submit. After the provider receives the notice of claim, it will usually send additional forms that you will need to complete and a list of documents you must submit to prove your short-term disability, long-term disability, health or life insurance claim. It is important to remember that these documents typically must be submitted within a specified time frame set forth within the ERISA plan documents. One document that must be signed is a disclosure authorization that authorizes your health care providers, employers, financial institutions and other entities to provide information to your insurance provider so that they can evaluate your claim and administer coverage. Your cooperation with the claim is required to successfully submit a claim for short-term disability, long-term disability, health or life insurance benefits. It is to your benefit to give the insurer or your employer all documentation you have in support of your claim as this will become part of the “Administrative Record,” and will support your claim if an appeal of the decision is required. Once your claim is submitted, your insurer must make a decision on your short-term disability, long-term disability, health or life insurance claim within a certain period of time.
What Is The Difference Between A Short-Term Disability Policy And A Long-Term Disability Policy?
The time period for which benefits are paid is the main difference between a short-term disability policy and a long-term disability policy. Short-term disability insurance is intended to cover individuals who cannot work for a brief period of time. It typically covers the first few months when you cannot work, usually three to six months, but then it ends. Some short-term policies can last for up to one year or more, but such short-term disability policies are rare. Short-term disability payments start almost immediately after you become disabled, after a very short waiting period of usually a few days to two weeks. This waiting period is sometimes called the elimination period. The maximum benefit period and the elimination period depend on the terms of your particular policy.
Long-term disability insurance, in contrast, does not start paying immediately but lasts much longer. The waiting period is usually three to six months of continuous disability before payments start. Once they start, payments can last for years. As long as you are still disabled, long-term policies typically cover you through age 65 or to your Social Security retirement age.
Long-term disability and short-term disability insurance policies are designed to cover similar, yet different risks, as short-term disability insurance is for minor, temporary disability of a few months in duration while long-term disability insurance is designed to cover you for disabilities that prevent you from working for months to years or, even permanently. However, if you have both a short-term disability insurance and a long-term disability insurance policy, you can make a claim on the first policy while the waiting period on the second policy is running. Thus, a long-term disability policy is more expensive, but is important because it will pay you a large percentage of your pre-disability income through retirement age. This can be thirty or more years in the case of a long-term disability.
How Do Other Disability Benefits Or Workers’ Compensation Benefits Affect Your Claim?
Long-term disability and short-term disability policies usually include a provision called “Offsets,” “Other Income Benefits,” “Income Which Will Reduce Your Disability Benefit” or a similar name. These provisions allow the insurer to reduce or completely offset the monthly disability benefit that you would otherwise receive under the policy by the amount of the “other income” paid to you during the same time period. Each policy is different, but the insurer is usually allowed to reduce your monthly disability benefit by the following types of “other income:” (1) disability benefits paid under a different disability insurance policy; (2) Social Security disability benefits; (3) California State disability benefits; (4) disability benefits, both temporary and permanent, paid under Workers’ Compensation laws; (5) retirement plan benefits funded by the employer that issued the group policy; (6) unemployment compensation; (7) amounts received in a personal injury lawsuit settlement or judgment for loss of earnings; and (8) amounts received as sick leave, salary continuation, vacation pay and personal time off. For example, if your monthly disability benefit under your policy is $1,000 and you receive Workers’ Compensation benefits of $400 per month, your disability insurer would only be responsible to pay you $600 per month while you are receiving Workers’ Compensation benefits. Once you stop receiving Workers’ Compensation and, assuming you are still disabled, your monthly disability benefit would increase to $1,000.
Sometimes an insured receives so much in “other income” payments that it totals more than her monthly disability benefit. In that case, the insured is entitled to receive only a “minimum benefit,” the amount of which is defined in the policy. Many times the minimum benefit is the higher of 10% of the full monthly benefit or $100 per month.
If your disability insurer denies your claim, but you were approved to receive disability from Social Security, the State of California or Workers’ Compensation, oftentimes your insurer will completely ignore that disability finding in its denial of your claim. Experienced ERISA attorneys such as the McKennon Law Group PC can use that to your advantage. Federal courts have ruled that where a disability insurance company denies a claim without explaining why its decision differs from that of the Social Security Administration, it tends to show that the insurer did not properly evaluate the insured’s claim.