ERISA appeal – Seattle Insurance and ERISA Blog

ERISA at the Supreme Court: How Will Amy Coney Barrett’s Confirmation Shape the Legacy Left By Justice Ginsburg’s Seminal ERISA Opinions?

Amy Coney Barrett was recently confirmed to replace Ruth Bader Ginsburg on the U.S. Supreme Court. Justice Ginsburg is remembered as a champion of civil rights and gender justice. But Ginsburg is also responsible for some of the Court’s most important ERISA decisions. This invites us to look back on some of Justice Ginsburg’s most important ERISA decisions and speculate about how Justice Barrett might decide future ERISA cases.

Justice Ginsburg wrote the seminal opinion in Black & Decker Disability Plan v. Nord, 538 U.S. 822 (2003), the decision that set the standard for how ERISA Plans and ERISA-governed insurance companies must weigh the opinions of the claimant’s treating doctors. Nord rejected the rule that ERISA plans must defer to the claimant’s doctor’s opinions about the claimant’s medical condition in a disability insurance claim. But Ginsburg emphasized, and the other justices agreed, that ERISA Plans must give fair weight to claimants’ doctors’ opinions. Her opinions emphasizes: “Plan administrators, of course, may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician.” Nord protects ERISA claimants’ right to rely on their treating doctors in claiming benefits–a right that is particularly critical since claimants can rarely afford to hire a consulting physician for the purposes of an insurance claim.

A more technical but still important decision by Justice Ginsburg was UNUM Life Insurance v. Ward, 526 U.S. 358 (1999). Ward concerns the extent to which ERISA preempts (i.e., overrules) state laws that regulate insurance policies. Justice Ginsburg wrote the Court’s unanimous opinion finding that ERISA does not stop states from regulating insurance policies that are issued under employee benefit plans. This means that important state-law consumer protections for insurance policies still apply when the insurance policy is sponsored by an employer.

Justice Ginsburg also wrote the opinion in Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1 (2004) which confirmed ERISA can apply to a small business owner who participates in their own company’s benefit plan. Many small business owners are familiar with the frustrations of falling into a grey area where they lack the protections of status as an employee but also lack the advantages of being a large business. For ERISA benefits at least, this “worst of both worlds” scenario is less of a concern. The Yates decision held that the owner of a small business can participate in the business’ ERISA plan and thereby obtain the protections and favorable tax treatment that ERISA affords to plan participants.

These decisions reflect a legacy of implementing Congress’ intention in enacting ERISA of providing real protections to people who earn insurance and other benefits through their employment.

Justice Barrett’s record suggests she is likely to continue that legacy. Justice Barrett decided one important ERISA case during her tenure on the Seventh Circuit Court of Appeals (the federal court that hears appeals from Illinois and other midwestern states). In Fessenden v. Reliance Standard Life Ins. Co., 927 F.3d 998, 999 (7th Cir. 2019), then-Circuit Judge Barrett determined that ERISA plans, and ERISA-governed insurance companies, must strictly comply with ERISA’s rules requiring full, fair, and prompt review of insurance claims.

In that case, Donald Fessenden made a claim for disability insurance benefits through an insurance policy issued by Reliance through his employer’s benefit plan. Reliance denied his claim and Fessenden appealed the denial using the Plan’s internal administrative procedures. Reliance failed to decide the appeal within the deadline imposed by ERISA. That violation of ERISA had consequences that made it easier for Fessenden to pursue his benefits claim.

Reliance asked the Seventh Circuit to let it off the hook. Reliance argued its violation was “relatively minor” and the court should excuse the violation “because it was only a little bit late.” It characterized the ERISA deadline as a “technical rule.”

Then-Circuit Judge Barrett declined. Her ruling emphasized that ERISA deadlines matter to plan participants:

After all, the administrator’s interests are not the only ones at stake; delaying payment of a claim imposes financial pressure on the claimant. That pressure is particularly acute for a disability claimant, who applies for disability benefits because she is unable to work and therefore unable to generate income. Given the seriousness of that burden, the new regulations single out disability claims for quicker review than other kinds of claims.

Her decision also emphasizes that courts have repeatedly required strict compliance with deadlines by claimants, often at the urging of insurance companies. In requiring the same level of exactitude by ERISA plans and insurers, she observed: “What’s good for the goose is good for the gander.”

Insurance Regulators Investigating Aetna for Training Employees to Deny Coverage Without Reviewing Patient’s Medical Records

Aetna, the country’s third largest health insurer, is under investigation by state insurance regulators following Aetna’s admission that it routinely denies medical treatment coverage without reviewing the insured’s medical records. Aetna’s admission surfaced in a lawsuit by a California man who claimed Aetna improperly denied coverage for his medical treatment. The insured has a rare autoimmune disorder requiring monthly dosages of an expensive medication.

Aetna’s physician admitted in the course of the lawsuit that he routinely denied coverage for insured’s treatment without reviewing the insured’s medical records. Aetna’s training, the physician testified, permitted him to simply follow the recommendations of Aetna’s nurses.

Since the physician claimed to have followed Aetna’s normal procedures, other Aetna insureds may similarly have had coverage for necessary treatment erroneously denied by reviewing physicians who failed to examine their medical records.

Insurance coverage for chronic conditions has become a hot-button issue. In recent years, patients with rare chronic diseases have faced increasing challenges getting insurers to cover treatment. Insureds’ difficulty covering treatment for chronic diseases is often complicated by pharmaceutical companies’ increasingly common practice of raising prices on chronic disease medications by several hundred percent in a single increase.

Washington insureds who suspect their health coverage was improperly denied have ample legal recourse. If the insurance plan is through an employer, the federal Employee Retirement Income Security Act (“ERISA”) gives the patient the right to appeal a coverage denial, to sue in federal court if the appeal is wrongfully denied, and to obtain coverage and attorneys’ fees. For non-employer insurance, Washington’s Insurance Fair Conduct Act and Consumer Protection Act give insureds the right to bring a lawsuit to obtain coverage as well as exemplary damages and attorneys’ fees.

Plain language: What’s this ERISA thing and why should I care?

Most non-lawyers go through their lives never having heard of ERISA until one day they get a letter from their insurer saying their treatment isn’t covered or their claim is being denied and that they have a certain number of days to exercise their rights under ERISA. For most folks, insurance and an ERISA plan are indistinguishable – both of them are “the thing where you pay premiums” (or maybe your employer does), and then when “the bad stuff” happens (e.g., you get sick or disabled) they cover it. In reality, ERISA employee benefit plans are significantly different from non-ERISA insurance and the difference can affect your rights in important ways, both good and bad.

The upshot is ERISA is a federal law that regulates most employer-provided benefit plans, like health insurance, disability coverage or life insurance. If you get some sort of insurance coverage through your employer, odds are it’s subject to ERISA.

1. What’s ERISA? How do I know if it matters?
ERISA is short for the Employee Retirement Income Security Act. ERISA is a federal law passed in 1974 that establishes minimum standards for employee benefit plans. ERISA was the result of the pension reform movement that gained momentum after the infamous 1963 Studebaker corporation shut-down in which nearly ten thousand workers suddenly lost their pension benefits.

Congress enacted ERISA to protect employees participating in employer-provided benefit plans. ERISA requires benefit plans to disclose important information to participants, establishes minimum standards for benefit plans, and allows participants to file a lawsuit in federal court if their rights are violated.

There are some important exceptions, but generally ERISA applies to most employer-provided benefit plans. That means if you receive benefits such as health, disability or life insurance through your employer, ERISA likely applies. ERISA can apply even if your employer contracts with a separate insurance company or other entity to provide benefits, so even if your plan documents identify an insurer other than your employer, ERISA may still apply.

2. Why does ERISA matter?
ERISA’s important because it gives you significant rights in order to make sure that your benefit plan is treating you fairly. Among other things, ERISA provides participants two important rights. First, ERISA plan participants have the right to receive information about the benefits plan. For instance, ERISA requires that the administrator of a benefits plan (often the employer’s HR department) provide employees with the documents describing the plan’s terms, such as a Summary Plan Description, insurance policies and similar documents, upon the participant’s written request. ERISA also requires plans to provide participants with information the plan relies on in deciding claims for benefits (e.g., deciding whether a health plan will pay for certain treatment).

Getting this info matters: if you dispute your ERISA plan’s adverse decision (e.g., their refusal to cover your treatment) and you want to challenge it, having the information the plan relied on is a big help. For instance, a plan denying coverage for medical treatment because the plan’s doctor concludes the treatment is unnecessary would have to provide a copy of that doctor’s report. That’s a big deal because it lets you make sure the plan’s evidence actually supports their decision (e.g., that the medical report really does say your treatment is unnecessary). Taking this evidence to your own doctor or your lawyer is important in fighting the denial.

Second, ERISA gives plan participants the right to sue in federal court. Plan participants can bring a lawsuit to establish their right to benefits under an ERISA plan (e.g., to establish that their health plan covers certain treatment or that they are covered under a disability plan). Participants can also bring suit alleging that the people administering the plan breached their fiduciary duties or breached federal regulations requiring fair claims handling for ERISA plans.

Importantly, because Congress wanted to make sure ERISA plan participants could easily find lawyers to help them challenge the plan’s wrongful decisions, ERISA allows plan participants who are successful in an ERISA lawsuit to recover attorneys’ fees. That’s really critical, because it helps level the playing field – the ERISA plan or insurance company can afford to (and usually does) hire lawyers at large, multinational corporate law firms who charge hefty fees. Your typical employee can’t pay that kind of money. Without the ERISA attorney’s fee provision, individual employees would ordinarily never have access to the same legal representation as the ERISA plan.

3. What’s the catch?
Unfortunately, there’s a downside to ERISA for employees. ERISA imposes important deadlines and other requirements with which participants must comply in order to protect their rights. One important rule is that participants must notify benefit plans of claims within certain deadlines, and must challenge to adverse benefit decisions (e.g., a benefit plan’s refusal to cover treatment or pay disability benefits) within certain deadlines. Failing to meet these deadlines can mean losing your right to challenge a plan’s incorrect decision to deny coverage. ERISA also requires participants who dispute a benefits plan’s decision to use the plan’s appeal process before filing suit in court. An important rule is that, generally, only information submitted as part of the appeal can be used as evidence in any later lawsuit.

Unsurprisingly, ERISA plans and insurance companies aren’t always up front with their participants about what the rules are. That means that participants who want to challenge their benefit plan’s decisions must be certain they follow the plan’s appeal procedures in order to protect their rights. Failing to dot an “i” or cross a “t” can cause you to lose your right to dispute the plan’s decision.

4. Where Can I Learn More?
The most important place to look to answer questions about an ERISA plan is the Summary Plan Description and other plan documents. Pursuant to ERISA, 29 USC § 1024 and 1132, plan administrators must, upon written request, provide participants with the plan documents within 30 days of the request.

If you have questions about ERISA generally, a potential resource is the U.S. Department of Labor’s Employee Benefits Security Administration, which has authority over ERISA plans. EBSA has an ERISA Frequently Asked Questions page here.