Category: ERISA

Court Rejects ERISA Insurer’s Effort to Discredit Treating Physicians in Awarding Disability Benefits

A recent decision from federal court in Oregon is an interesting example of how ERISA disability benefit disputes can arise where the claimant suffers from complex and hard-to-diagnose conditions such as fibromyalgia. Since conditions like fibromyalgia defy easy identification, these cases often turn on the claimant’s treating doctor’s documentation of the claimant’s symptoms.

Jane Medefesser sued her LTD carrier, MetLife, after MetLife denied her disability insurance claim. Medefesser suffered from a host of medical conditions including fibromyalgia and migraines. Medefesser’s doctors opined her medical conditions impacted her ability to function even in a sedentary job.

MetLife initially approved Medefesser’s disability claim. But MetLife subsequently changed its position and terminated Medefesser’s benefits after an “independent” doctor hired by MetLife determined Medefesser could perform sedentary work. MetLife also relied on opinions from its physicians that Medefesser’s doctors were, supposedly, exaggerating Medefesser’s symptoms.

The court disagreed with MetLife that Medefesser’s doctors were exaggerating her symptoms. To the contrary, the court noted that, given the complexity of Medefesser’s condition, the treating doctors who personally examined Medefesser were in the best position to reliably assess her disability.

This ruling is notable because it addresses a common issue in ERISA disability cases involving conditions like migraines or fibromyalgia. Where the claimant’s disability arises from complex conditions that defy easy diagnosis, disability insurers have an incentive to rely on the supposed lack of “objective” findings or review by “independent” consultants. These consultants’ opinions typically boil down to: “if it doesn’t show up on an x-ray, it’s not real.” The Medefesser decision is a great example of a judge rejecting such an argument.

 

Ninth Circuit Emphasizes Importance of ERISA Claims-Handling Regulation in Reversing LTD Benefit Denial

ERISA-governed disability benefit claims are subject to the Department of Labor’s regulation requiring full and fair investigation of claims. The regulation includes rules requiring claims administrators apply plan provisions correctly and thoroughly investigate claims. A claims administrator’s failure to adhere to the rules expressed in the regulation can be the difference-maker if the benefit dispute proceeds to litigation. A recent unpublished Ninth Circuit Court of Appeals decision, Alves v. Hewlett-Packard Comprehensive Welfare Benefits Plan, emphasizes this.

Alves applied for short-term disability and long-term disability under his employee benefit plan. The plan’s claims administrator, Sedgwick, determined Alves’ condition did not render him disabled, i.e., that Alves could still perform his job duties. On that basis, Sedgwick denied both the short- and long-term disability claims. The federal district court agreed with Sedgwick.

The Ninth Circuit Court of Appeals reversed the district court. The Ninth Circuit agreed that Sedgwick’s decision Alves didn’t qualify for short-term disability benefits was adequately supported by Alves’ medical information. But the court found Sedgwick incorrectly evaluated Alves’ long-term disability claim. Sedgwick denied Alves’ long-term disability claim because Sedgwick concluded Alves failed to meet the plan’s one-week waiting period. The court concluded Alves’ clearly met this requirement. Accordingly, the court remanded Alves’ long-term disability claim to Sedgwick for further investigation. The Ninth Circuit admonished Sedgwick to follow ERISA’s rules requiring full and fair investigation of claims in reviewing Alves’ long-term disability clam on remand.

The Ninth Circuit’s opinion is unpublished, meaning it is only persuasive precedent. Lower courts may follow this decision if they find it persuasive, but they are not required to.

The Alves decision is an important reminder that ERISA claims administrators can be held accountable for failing to correctly apply plan provisions and failing to investigate claims in compliance with ERISA’s implementing regulation.

When is it “too late” to make an insurance claim?

Let’s say the insurance company denies your claim. They don’t dispute you had a covered loss, but they say you missed a deadline buried in your insurance policy requiring you to notify them of the claim within a certain time. Can they do that?

The answer, often, is no. But the devil’s in the details.

Virtually all insurance claims involve important deadlines. For instance, there can be deadlines to tell your insurance company about the claim, to provide the insurer with documentation about the claim, to appeal the insurer’s denial of a claim, or to file a lawsuit. Which deadlines apply and the effect of missing them depend on the details like the insurance policy fine print and whether the policy is subject to ERISA.

Because the rules can vary and the consequences of missed deadlines can be draconian, it’s critical to consult an attorney to know your rights and obligations. Here are some general examples:

Deadlines to notify your insurer about the claim. Most insurance policies require you to notify the insurance company of your claim within a certain time period. Sometimes it’s “as soon as possible.” Sometimes’s it’s a specific date, for example, within one year of the loss.

The consequences of missing a claims notice deadline vary, but, often, the insurer cannot deny your claim just because you missed the deadline to give them notice. If you’re in Washington State, most insurers can’t deny claims just because you gave them late notice – the insurer has to prove that your delay in giving notice hurt the insurer’s ability to investigate your claim. If your delay in giving notice doesn’t stop the insurer from investigating your claim, the insurer typically can’t use the late notice as an excuse to deny coverage.

That means if your insurer denies your claim because you gave them late notice, there is a good chance you could challenge the denial. But beware – this rule does not apply to every insurance policy, especially policies subject to ERISA.

Deadlines to provide the insurer with information about the claim. Most insurance policies contain language requiring the policyholder to cooperate with the insurer by providing information about the claim. That could include, for example, allowing the insurer access to your home for a homeowner’s insurance claim, or providing the insurer medical records for a disability insurance claim.

Many insurance policies contain no specific deadline for you to provide this information. However, insurers will sometimes give you an arbitrary deadline to provide information they demand. They may tell you they will deny the claim if they don’t receive certain information by a specific date.

Similar to the claims-notice deadline, insurers typically have to prove that your delay in providing information harmed their investigation in order to deny coverage on this basis. But there are exceptions, and it’s important to bear in mind that policyholders have an obligation to cooperate with their insurers, which generally includes responding to reasonable requests for information. And, as a practical matter, looking obstructionist rarely helped anyone’s court case.

Deadlines to appeal the insurer’s denial of a claim. Many insurance policies provide that, if the company denies a claim, the policyholder can “appeal” the denial internally. An internal appeal means the company takes another look at the claim and any new evidence the policyholder submits.

Policyholders often have deadlines, sometimes just a few weeks, to submit an appeal. In some insurance policies, the appeal is voluntary, so failing to submit an appeal on time is unlikely to affect your rights. Other insurance policies – especially those governed by ERISA – make the appeal mandatory. That means missing the appeal deadline can cause you to permanently give up your right to contest the denial or seek insurance benefits.

Deadlines to file a lawsuit if your claim is denied. If it becomes necessary to go to court to fight an insurance claim denial, it’s critical to know the applicable statute of limitations, i.e., the deadline by which you have to file a lawsuit. Failing to file suit within the statute of limitations can mean you permanently lose the right to go to court. Most statutes of limitations are at least year from the date of loss. But there are important exceptions that depend on the details. For example, many homeowner’s insurance policies require you file suit within one year of the date of loss. Also, ERISA-governed insurance policies typically have far shorter deadlines to file suit – sometimes measured in days.

The upshot is that filing a late claim doesn’t make it a foregone conclusion that you lose your right to insurance benefits. If the insurance company denies your claim because you missed a deadline, there are often steps you can take to contest the denial and, potentially, obtain insurance benefits notwithstanding the missed deadline. But it’s critical to have an attorney review the facts and your insurance policy to make sure you know what deadlines apply and the consequences of missing any deadlines.

Know Your Rights – ERISA Claim Deadlines

We’ve previously blogged about the importance of meeting deadlines in your claim for benefits under an ERISA-governed insurance policy.  Most ERISA plans have strict deadlines for submitting a claim, appealing the insurance company’s denial of your claim, and filing a lawsuit.  The deadlines are strict and ERISA is draconian about deadlines – missing them by even a day can cause you to permanently lose your claim with no recourse.

The good news is that the insurance company and ERISA plan have to follow their own deadlines in handling claims for benefits.  The federal Department of Labor, the agency with oversight over ERISA plans and insurance companies, has a regulation mandating ERISA plans and insurance companies subject to ERISA give ERISA claims full and fair review.  Part of this regulation requires insurers to decide ERISA claims within certain deadlines.

For claims under ERISA-governed disability insurance policies, the insurer must decide the claim within 45 days.  The insurer can extend this deadline by up to 60 days, but must show circumstances outside the insurer’s control in order to do so.  Also, the insurer must notify you of the extension before the initial deadline expires.  Even if the insurer gets the extension, they have to tell you the date they expect to decide your claim.

For claims under ERISA-governed group health insurance plans, the deadline depends on the type of claim. Urgent care claims must be decided within 72 hours. Claims involving an ongoing course of treatment must be decided within 24 hours. Pre-service claims must be decided within 15 days.  And post-service claims must be decided within 30 days. Like disability claims, these deadlines can sometimes be extended, but only under limited circumstances.

If the insurance company misses the deadlines, there are important consequences.  First, you’re entitled to file a lawsuit without waiting for the insurance company to finish its review.  That means you can have your case heard by a judge weeks or months before you otherwise might. Second, once you’re in court, the court may apply greater scrutiny to the insurer’s handling of your claim because the insurer disregarded the ERISA deadlines.

Importantly – and fairly – courts are holding insurance companies to these deadlines just as strictly as they hold claimants to deadlines.  In the recent case Fessenden v. Standard Reliance Life Insurance Company, the Seventh Circuit Court of Appeals held these deadlines are a “bright line”.  Writing “What’s good for the goose is good for the gander,” the court determined that the insurer’s missing the deadlines by even a day violates the rule and allows the claimant to file suit immediately.

 

ERISA Plans Can’t Discriminate Against Domestic Partners, Court Rules

In Washington, and many other states, domestic partners enjoy the same rights and legal protections as spouses.  The Ninth Circuit Court of Appeals recently confirmed that domestic partnerships’ equal treatment under state law extends to ERISA plans.

ERISA plans typically give the plan administrator broad discretion to interpret the terms of the plan.  This often means the plan administrator has huge leeway in deciding who qualifies for benefits under the plan.  If the plan document leaves any room for interpretation, courts often defer to the plan administrator’s decision about who gets benefits, even if the decision seems unfair or counter-intuitive.

The Ninth Circuit’s decision in Reed v. KRON/IBEW Local 45 Pension Plan ruled that ERISA plan administrators’ discretion does not extend to discriminating against domestic partners when deciding who qualifies for benefits under the plan.

In Reed, David Reed and Donald Gardner had been in a committed, long-term relationship for decades, ultimately becoming domestic partners.  Gardner subsequently retired and began receiving pension benefits under the ERISA pension plan sponsored by his former employer KRON television.  The KRON ERISA plan entitled the spouses of pensioners who passed away to surviving spouse benefits.

After Gardner passed away, Reed filed a claim for surviving spouse benefits.  KRON’s plan administrator denied Reed’s claim.  The plan administrator claimed it was within its discretion to interpret surviving spouses as excluding domestic partners.

The court acknowledged that ERISA plan administrators are entitled to broad discretion, but nevertheless ruled in Reed’s favor.  The court noted state law “afforded domestic partners the same rights, protections, and benefits as those granted to spouses” and nothing in ERISA required otherwise.  The Court ordered the ERISA plan to pay surviving spouse benefits to Reed.

The Reed case is an important reminder that ERISA plan administrators’ discretion is not unlimited, and also represents an important victory for domestic partners.