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Ever-Reinforced Insurers
Spar Applicants
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The EMPLOYEE RETIREMENT INCOME SECURITY ACT, commonly known as
the ERISA law is the subject of constant
interpretation and by the courts. Congress enacted ERISA in 1974
as a federal statute to govern rights to certain benefits
sponsored by employers, such as disability, pension, health, life
and severance benefits. The act was enacted to protect individual’s
rights to receive benefits. However, recent 2003 Court rulings have
caused some disability applicants to question whether the Act should
not be renamed to represent its underlying meaning that: “Ever-Reinforced
Insurers Spar Applicants."
The major blow to disability benefits applicants, came when the United States Supreme Court handed down its ruling in Nord v. Black & Decker Disability Plan, 123 S.Ct. 1965 (2003).
Nord, an employee of a subsidiary of the Black & Decker Corporation,
enrolled in his employer’s disability benefits plan.
The employee was later diagnosed with sciatica, a degenerative disc
disease along with chronic pain. Nord applied for disability benefits
under the plan. Supporting his entitlement to benefits, Nord had
the written support of his two treating physicians who were of the
opinion that Nord was unable to engage in the duties of his regular
occupation. Black & Decker
referred Nord to its own neurologist who examined Nord and disagreed
with the assessment of Nord’s treating physicians. The Black &
Decker neurologist believed Nord could perform the duties of his
regular occupation. After Nord exhausted all appeals through the
insurance company, he appealed his final denial of benefits to the
district court under the ERISA law. The district court affirmed
the insurance company’s determination.
The Ninth Circuit Court of Appeals reversed the district court’s decision. The Court of Appeals held that the district court should have applied a less deferential standard of review, in other words, that the district court should not have given the insurance company’s decision as much weight as it did. The Court of Appeals also determined that the “treating physician rule” applied to the case. The “treating physician rule”, according to the Court of Appeals, states that a plan administrator who rejects a claimant’s treating physician opinion must come up with specific reasons for the administrator’s decision supported by substantial evidence in the record.
The Supreme Court decided to hear the case because courts across the country were split on whether or not the ERISA law required the courts to apply the “treating physician rule” initially developed in Social Security disability determinations. In its ruling, the Supreme Court recognized that physicians hired by insurance companies may have “incentives” to make a finding of not disabled. Yet, the Supreme Court determined that neither the ERISA law, nor the regulations drafted by the Department of Labor, mentioned the “treating physician rule” and courts are not in a position to investigate the relationship between the treating physician and the patient or whether “incentives” exist for non-treating physicians in each case. The Supreme Court determined, in a blow to claimants, that no special weight need be given a claimant’s treating physician.
TAKEAWAY TIP: Although a claimant’s treating physician is not given preferential treatment by the Court, he/she remains one of the most important ingredients for a claimant’s disability case.
In Dahlin v. Metropolitan Life Ins. Co., 255 F.Supp.2d 987 (N.D.
Iowa 2003), the Court was asked to construe the insurance company’s
interpretation of the insurance Plan language “regular occupation.”
The Court agreed that given the discretion
allowed to MetLife in the plan documents, MetLife’s interpretation
of unable to perform the essential duties of one’s “regular occupation”
at a particular employer, meant unable to perform the essential
duties of that occupation at any other employer was reasonable.
TAKEAWAY TIP: A claimant, the physician, and the attorney should take care not to cast the occupation as one in which the claimant is unable to perform at a specific employer.
However, all hope is definitely not lost. There is good news as well. In a recent Eighth Circuit Court of Appeals case, the benefits claimant earned a major victory. In Seman v. FMC Corporation Retirement Plan for Hourly Employees, 334 F.3d 728 (8th Cir. 2003), a near 30-year employee’s physician noticed decreased lung capacity. The employee was treated by a pulmonary specialist who imposed permanent work restrictions and the company determined the employee could no longer work in his current position. The employee applied for and received Social Security, Veterans Administration and Worker’s Compensation disability benefits due to his lung condition. However, FMC acting in its capacity as plan administrator denied benefits under the company disability policy concluding the employee had not demonstrated “total disability.” The employee appealed and submitted medical documentation supporting total disability. The company took no action on the appeal.
The employee resorted to the Courts. He argued that he was entitled to a de novo review, a review anew rather than a review giving discretion to the plan administrator, by the Court of his application since no action was taken by the plan administrator on his appeal. The Court of Appeals agreed and sent the case back to the District Court to conduct a review the decision to deny benefits. The Court of Appeals reasoned that where a review panel fails to act on a properly filed appeal and that inaction “raises serious doubts about the administrator’s decision, a de novo review is warranted. Id. at 733.
TAKEAWAY TIP: It is not wise for an insurer to merely fail to act on a claimants appeal. Such conduct may subject the insurer’s initial decision to greater scrutiny once in the court system.
Judge Richard Kyle of the District of Minnesota found for the claimant in Sexton v. Deloitte & Touche, LTD, 2003 U.S. Dist. LEXIS 5185 (D. Minn. March 27, 2003). Sexton, an actuary for Deloitte & Touche, was diagnosed with Multiple Sclerosis in 1999 and she was soon unable to work even a part-time schedule. Sexton was denied LTD benefits despite the opinions of her treating physicians that she was unable to work and evidence submitted through various other documents. The insurer submitted the claim to a psychologist consultant and psychiatrist for review.
The Court held that the information provided by the employee demonstrated that “due to an injury or sickness” she was unable to perform each of the material duties of her job. Because the insurer had only a psychologist and psychiatrist review the file, and not someone with MS expertise, Sexton’s evidence was essentially unrebutted and the insurer’s decision to deny her benefits was arbitrary and capricious.
TAKEAWAY TIP: Claimant’s should pay special attention to the medical personnel reviewing the medical file. Unqualified personnel are open to a challenge.
Good news also came from the case of Keogan v. Towers, Perrin, Forster & Crosby, Inc., 2003 U.S. Dist. LEXIS 7999 (May 9, 2003). The claimant in Keogan brought a lawsuit for the restoration of long-term disability benefits and for imposition of a penalty due to his employer’s failure to provide plan documents he had requested. ERISA requires a plan administrator, upon the written request of any participant or beneficiary, to provide a copy of certain plan documents. If those documents are not provided within thirty days a court has discretion to award the participant damages of up to $100 per day for each day of violation.
The Court determined the maximum penalty was warranted for Towers’ inexcusable failure to provide the documents for 694 days and awarded a $64,900 fine to the claimant. The Court upheld Towers’ determination that the claimant was not entitled to further benefits because he did not meet the “continuing care” requirement under the Plan.
TAKEAWAY TIP: An administrator’s inaction is the potential subject of a fine under ERISA. Pay attention to what has been requested, what has been delivered, and what has not.
Disability benefits cases, governed by the complex and entangling ERISA law, will continue to receive yearly examination by Courts. The year 2003 has been no exception. With the attorneys at Mansfield, Tanick & Cohen, P.A. fighting hard for disability claimants, hopefully the new motto may become: “Even Reluctant Insurers Soon Agree” to provide disability benefits.