We have previously written about the serious problems which result when insurance companies hire doctors to perform “paper reviews” of insurance claims without ever meeting or examining the patient, and then use those paper reviews to justify termination of benefits. In an ERISA context, this is particularly difficult because claimants are denied in most cases the opportunity to confront those professional reviewers or to cross examine them to show they are financially biased or otherwise not competent to speak to the issues about which they have given an opinion. Even so, insurance companies in increasing numbers rely on these unnamed, unknown medical sources to justify termination of benefits. On December 14, 2014, 60 Minutes broadcast a piece which speaks in part directly to this issue and points out the fundamental unfairness, indeed the dangers which can result when insurance companies make claim determinations and deprive people of benefits to which they are entitled and which they desperately need.
With all of the specialized, technical ”legalese” an ERISA attorney must know to do a proper job for a client, you wouldn’t think that knowledge of cooking and laundry would play a part. But, you would be wrong.
In Hannon v. Unum Life Insurance, 2013 W L 6821263 (S.D.Ind.), Unum tried to stop LTD benefits after paying them to an ERISA beneficiary for 10 years. One of Unum’s excuses for claiming the beneficiary was no longer entitled to benefits was that she could perform certain household chores and , therefore, was not disabled.
Battling insurance companies to get sick and injured people what is due them is a time-consuming and tiring occupation. Insurance companies fight ERISA claims like the devil. They assume that each claimant is a malingerer trying to get money without working for it. Nothing could be further from the truth.
The vast majority of people want to work. They wouldn’t know what to do with themselves if they didn’t have a job to go to. So, rather than stress the relatively few who are malingerers, insurers should consider each case as if the claimant would rather work than sit at home.
In Ms. Hannon’s matter, Unum began paying benefits to Ms. Hannon, a registered nurse, in March, 2001, when she became unable to perform her duties because of chronic pain. She was diagnosed with a rare disease that affects a person’s connective tissues, joints and blood vessel walls.
All of her seven doctors had found her disabled and unable to work for more than 4 hours at a time at a sedentary job. A theater company was able to give Ms. Hannom a flexible schedule to accommodate her disability, so she took a part-time job with it as a seamstress. When Unum discovered that claimant had a part-time job it sent an investigator to find out more.
When Unum learned that Ms. Hannon performed household chores in addition to working at the theater, Unum halted her LTD payments.
Unum said that the fact that she could do housework in addition to working at a part time job made it evident that she could perform 8 hours a day of sedentary labor, so LTD payments were terminated.
The Court disagreed stating that equating the ability to do casual household work to the requirements of performing the duties of full time employment was in error. Not only is household work different, but the ability to take breaks when needed is not part of an ordinary job description, sedentary or not.
The Court noted that Ms. Hannon’s daughter helped her mother with the housework and that claimant, at home, could take breaks whenever she felt it was necessary to rest because of pain.
In agreeing with Ms. Hannon that Unum cherry-picked her doctors’ reports, ignoring their clear finding that she could do no more than 4 hours a day in a sedentary job, the Court clearly distinguished the difference in the rigors of doing housework in your own home and working for a third party employer at a place of business.
That difference seems obvious to all but an ERISA insurer.
One of the things that some attorneys overlook when settling a third party claim in an ERISA matter is the effect of the insurance company subrogation lien on the proceeds of the settlement. ERISA gives a plan administrator the power to have a lien on the proceeds of any such settlement. Courts have a history of zealously protecting that lien for plan administrators.
The idea is to reimburse the plan for funds already paid to or for the benefit of a claimant by the plan from funds a claimant may receive from a third party tortfeasor whose action caused the illness or injury which prevented the claimant from working in the first place. It is a basic concept of ERISA law and subrogation is authorized by insurance policies where benefits are triggered by the actions of a third party.
When the facts of a case support avoidance of a subrogation lien (a very rare event) the reasons for the avoidance claim must be carefully and completely substantiated to prevail. The issues in a lien avoidance argument usually involve highly technical and sometimes arcane legal arguments encompassing old equity jurisprudence.
A Georgia lawyer tried to skirt the subrogation lien on the proceeds of an ERISA settlement by baldly claiming the settlement was solely to compensate the client for “post-accident tortious conduct” and therefore was not covered by the subrogation lien, even though the settlement language indicated otherwise.
In Central States, et al v. Lewis, et al, 2014 WL (7th Cir.), Circuit Judge Posner takes the claimant’s lawyer to task for trying to “game” the system and do the insurance company out of $180,000 in lien benefits with a statement unsupported by the facts of the case.
There are Supreme Court cases which decree that if the claimant did not actually receive the tortfeasor settlement monies, then there is no settlement asset for the insurance subrogation lien to attach to. See Great West Life v. Knudson, 122 S. Ct. 708 (2002). In those rare cases, claimant is not required to turn over settlement funds to the insurer.
In some cases, the lien is not applied because no funds remain from the settlement when the ERISA case finally concludes.
In the Central States case, the settlement seemed clearly for the tort which the settlement funds covered. Because of the circumstances in this case, Judge Posner concluded that the refusal to pay over the $180,000 pursuant to an order of the District Court was just that – a refusal without foundation.
In sending this case back to the District Court, Judge Posner suggested strongly that the District Judge should send copies of the judge’s opinion and a transcript to the Georgia Bar Association and the U.S. Department of Justice for action by them.
He also asked the Judge to consider ordering the lawyer and the client to jail until they paid the $180,000 into a trust fund. This is something appellate judges don’t do unless you really twist their knickers.
When you write a blog, you write into a void. You think you have something to say that people want to read. But, do they really?
This is our 200th blog post. We should mark it in some way. How?
Maybe by trying to express why we blog?
Why do we write?
Because most people and many lawyers are not familiar with ERISA and disability insurance law. These people and these lawyers’ clients are usually in deep trouble when they come up against ERISA. They and their family’s future depend on the outcome.
What is our goal in blogging?
To make attorneys and clients aware that ERISA is a serious business which requires total attention to detail in prosecuting a claim. A single overlooked item is enough to sink an ERISA claim for good.
Why is ERISA such a bear?
Who likes to go into a fight to the finish in which the referee holds your opponent’s coat?
ERISA puts the right to determine the validity of a claim in the hands of the plan administrator, which is often the insurance company which will have to pay the claim if approved. Not only that, but Firestone v. Bruch, 489 U.S. 101(1989) demands that courts give deference to a plan administrator’s ruling. To overturn such a ruling a claimant must show the ruling was “arbitrary and capricious”, a very tough legal hill to climb.
We want to do what we can to give ordinary people and attorneys who have never handled an ERISA case a fighting chance to overcome the odds and establish their right to benefits when a disability strikes. Insurance companies and their lawyers fight disability claims a thousand times a day. Employees and their attorneys get only one chance to receive benefits in a difficult and convoluted legal environment.
What We Have Learned
We started practicing disability law almost 35 years ago. We learned early on that the employee, whom ERISA was supposedly designed to help, starts each case as the underdog. We learned that meticulous and accurate attention to detail is a prime requirement of the practice. We learned that alertly digging through policy language is a must. We learned that knowledge of the effects of injury and disease are required. We learned that establishing the link between a disability and consequent work restrictions and limitations are absolutely essential.
Insurance companies have the funds and the personnel required to fight ERISA claims. Employees, disabled and unable to earn, have little to fight with. What they need most is knowledgeable help with ERISA claims. We have always represented the insured, never the insurance company. We like it that way.
Fighting insurance companies is an acquired taste. We’ll never tire of it.
The Second Circuit Court of Appeals has clarified the issue of when an ERISA claimant is entitled to attorney fees from a plan administrator:
When you win, you are entitled to recover fees.
This ruling came in an opinion in which the Court reversed a lower court which had denied legal fees and costs to a claimant because the judge couldn’t find that the insurance company had acted in “bad faith”.
After 9 years of legal strife, John Donachie finally recovered ERISA disability benefits to which he was entitled because of the serious side effects of a heart valve replacement, Donachie v. Liberty Life Assurance Company of Boston, et al., 2014 W L 928971, CA 2 (N.Y.).
The matter was decided on a summary judgment motion made by Liberty which was converted by the District Court into a judgment for the claimant because the court found the denial of benefits by Liberty to be arbitrary and capricious. Thus the benefits issue was finally resolved.
But, the District Court denied claimant’s motion for legal fees and costs because the Court found that defendant had not acted in “bad faith”. Thus the claimant would receive nothing toward his considerable legal fees and costs despite the wrongful refusal of Liberty to pay him benefits all those years.
The Court of Appeals held that the District Court ruling on fees in this case was contrary to the intent of ERISA, 29 U.S.C. 1132(g)(1), which gives the District Court the discretion to award reasonable attorney fees and costs. Although this discretion is not unlimited, fees and costs are to be awarded when the beneficiary has obtained some degree of success on the merits. Certainly in Mr. Donachie’s case where he was awarded benefits by the Court on the insurance company’s motion for judgment, he had obtained “some degree of success on the merits”.
The Court cited a line of cases which stand for the proposition that ERISA’s attorney fee provisions must be liberally construed to protect the statutory purpose of ERISA.
The Court was clear saying that some degree of success on the merits is the sole factor a court must consider in exercising its discretion on awarding fees to claimants.
Many people have lawyers in their family. Maybe your brother-in-law? But, if you have an ERISA disability claim, it is not for your lawyer brother-in-law to handle just because he’s related to you. Many lawyers know little more about ERISA than do the people they undertake to represent.
What such representation may lead to was made clear in Riley v. Metropolitan Life Insurance Company,WL 814742 C.A.1 (2014), recently decided in Massachusetts.
Mr. Riley worked for Metlife in a managerial position when he was stricken by chronic pain in his back, neck and some joints. He applied for and received STD, but was denied LTD.
The following year, he was able to resume working, but in a non-managerial position. He earned substantially less than he had previously. About a year later, Mr. Riley’s pain returned and he stopped working again. This time he received both STD and LTD. But, his LTD benefit left him only $50/month of his MetLife benefit after it took its offset for a Social Security benefit he was receiving.
He tried to argue that his ERISA benefit should have been based upon his managerial salary of $80,000 when he was first stricken not his substantially lower salary after he returned to work. If this had been the case, Mr. Riley would have received a monthly benefit of about $1400 from Metlife, not $50.
It seems obvious that his then legal counsel was unaware, as so many attorneys are, that ERISA is a law unto itself. His attorneys started suit in State court in February, 2007, alleging violation of a Massachusetts statute! They did not realize that ERISA, a Federal statute, preempts state law. Jurisdiction lies only in Federal District Courts. So, his case was dismissed.
In 2011, at Mr. Riley’s urging, his then attorneys filed again, but in the Federal District Court. Their filing did not conform to the rules of that Federal District (each has their own) and the pleading was not served properly. Again the suit was dismissed on motion in January, 2012.
By March, 2012, claimant Riley had retained counsel knowledgeable in ERISA who filed a proper complaint, except for one thing – it was filed after the 6-year statute of limitations had run and was dismissed for that reason.
This is a prime example of what can happen when a lawyer representing an ERISA claimant has no idea of what ERISA is all about and doesn’t invest the time and effort to learn even the basics.
There is no way of knowing if Mr. Riley’s claim could have been successful because he never had his day in court. His original attorney didn’t seem to know enough ERISA fundamentals to get him there.
If Mr. Riley’s second round of pain was caused by the condition that caused his first round, he stood a reasonable chance of establishing that his actual date of disability was the earlier STD claim and therefore his benefit should have been based on his first salary and not his lesser second one.
We live in a world of specialization, and ERISA lawyers are specialists in the arcane world that is ERISA. Because the stakes can be so high, it is critical to get advice and guidance from someone who knows the ropes so that you don’t learn about ERISA the hard way.
If you want a prime example of why we hammer at you to read your policy before you accept it, take a look at Nunn, et al. v. Massachusetts Casualty Insurance Company, 2014 WL 684980 (2nd Cir. 2014). Although the plaintiffs, both NBA basketball referees, didn’t read their policies, the court gave them a shot at prevailing because they didn’t get the coverage they were clearly led to believe they were getting.
This opportunity was given them because of the peculiar circumstances under which they had bought their policies. The ordinary insurance policy sales pitch is nothing like the one in this case. Without this peculiar situation, Mr. Nunn and Mr. Vaden would have been out of luck.
The usual insurance policy sale is a confidential matter with the salesman and the prospect dealing one on one. There are typically no witnesses to the sales pitch. In Nunn, the salesman made his pitch at a union meeting of NBA many basketball referees at which he clearly stated several times that the supplemental policy he was selling changed the “own occupation” limit on benefits from “10 years” to “age 65”. This meant that so long as the policyholder was unable to perform the duties of an NBA referee (commonly called “own occupation” coverage) within the time frame, benefits would continue..
The actual policy delivered to the insureds clearly stated that after 60 months of “own occupation” benefits payments, benefits would continue only if the insured were unable to perform the material duties of any gainful occupation for which he is suited (commonly called “any occupation” coverage). Since both plaintiffs were then employed, the insurance company refused further benefits.
It took an experienced disability insurance attorney to even recognize that the almost infallible rule about the policy language being the law of the case had a chink in its armor.
Because of the irrefutable statements of the salesperson (a lot of people heard him) that benefit payments would continue until age 65, the Court held that under Pennsylvania law, Nunn and Vader had “reasonable expectations” that payments would continue and ordered further proceedings.
Would the salesperson’s pitch have been irrefutable if the pitch had been made one on one? If there was the slightest doubt raised about this issue, Nunn and Vader wouldn’t have stood a chance. The policy language would be the law of the case and the plaintiffs would have been tossed out of court.
Protect yourself. Read and understand your policy before you buy it.
Don’t give your insurance company a chance to “bad-bounce” your benefits.
One thing that has really galled us through our years practicing ERISA law is the way many courts seemed to assume that disabled ERISA claimants have a propensity to fake disabilities while ignoring the clear motivation for ERISA insurance companies to do the same.
A recent decision, Eisner v. The Prudential, 2014 WL 244365 N.D.Cal, opened the fallacy of this judicial tendency to the light of day, when it said:
“…Claimants have an incentive to claim symptoms of a disease they do not have in order to obtain undeserved disability benefits. But the claimants are not the only ones with an incentive to cheat. The plan with a conflict of interest also has a financial interest to cheat. Failing to pay out money owed based on a false statement of reasons for denying is cheating, every bit as much as making a false claim.”
Thankfully, this tendency has been moderating in the last few years, particularly since Metropolitan Life Insurance Co. v. Glenn, 128 S. Ct. 2343 (2008). Glenn allowed claimant’s ERISA attorneys to dig a little deeper into the motives and methods insurance companies use to deny claims.
The endemic chicanery uncovered by claimant attorneys under the authority of Glenn,
has led many courts to question the bona fides of insurance company ERISA claim denials. These courts now require substantive proof before upholding an insurance company denial of benefits.
As a result of Glenn, courts learn more and more that just because an entity is big and in business, it should not be assumed that it is honorable and conducting itself in a manner in which its judgment should be more trustworthy than an individual party.
Employees are suspect because if they can successfully fake a disability under ERISA they can get 60% of their salary without having to work. But, insurance companies also have this “something for nothing” motivation to deny valid claims. They get “something for nothing” when they wrongfully collect premiums but deny claims and pocket benefits which rightfully belong to insureds.
While employees act individually when cheating, insurance companies organize their efforts. They have been known to tie how much they pay an employee to the number of claims the employee denies, use doctors who depend for their living solely on the insurer to “independently” examine claimants, and to demand claimants provide medical proof that is impossible to provide, according to medical authorities.
This organized conduct on the part of insurance companies is the reason we object to courts giving companies a “pass” while scrutinizing employee claims with a magnifying glass. Now, with Glenn, the truth is becoming apparent and courts are taking a good, hard look at the bases for insurance denials.
Thank you Glenn.
When forced to file an ERISA disability claim, ego can become one of your biggest problems.
It’s not even your ego that gets in the way. It may be the ego of your lawyer or doctor or both. The two professions frequently look down their noses, one at the other, and you may suffer because of it.
ERISA disability insurance cases require the utmost cooperation between the medical and legal professions. Time limits on supplying information are strictly enforced. The connection between the injury or illness and the patient’s ability to perform his or her occupation must be firmly established. All of this must be accomplished without live testimony and strictly within the framework set out by the client’s employer’s administrative plan and the terms of its insurance policy.
There is no room in this equation for “one-upsmanship” between professionals. The strict rules of ERISA demand that the claimant’s professionals act in a cooperative manner to present the best case for you.
Nothing in ERISA is taken for granted. Not only must the medical basis of the disability be clearly established, but how the disability causes the client’s inability to perform an occupation must also be made plain. Every part of the proof required by the plan and the policy terms must be presented clearly in the original claim documents. There are few “do-overs” in ERISA.
The lawyer and the doctor are the final “word” in your case. Unfortunately, neither profession is accustomed to checking with or answering to the other, and neither particularly trusts the other. But, ERISA claims absolutely require such cooperation to give you any chance to succeed.
ERISA is different from any other area of law, even Social Security, with which most people associate ERISA. Attorneys who have spent a large part of their career reading ERISA plans and insurance policies, should be best able to know what is important to include in your claim submission and to “captain” your claim “ship”.
Likewise, physicians are best qualified to make physical and mental findings in medical reports which are essential to any disability claim.
When an ERISA attorney suggests to your doctor that certain details regarding limitations or restrictions be included in the Attending Physician Statement (APS), it is not a reflection on the physician’s ability. It is a suggestion, based on the lawyer’s prior experience, that the document be clarified because it is required by the terms of your ERISA plan or insurance policy.
If your attorney can help your doctor write an honest, truthful report that better fits the requirements of ERISA, the lawyer should do so. Neither professional should take umbrage at such a request.
Each professional should treat the other with respect for their professional standing and their time and defer to the other’s area of expertise. ERISA lawyers may not be doctors, but they tend to know a lot more about ERISA requirements than doctors do. Each professional should keep in mind that their primary obligation is to your needs as a ERISA disability claimant. There is no room for professional prejudices.
Each professional must listen to the suggestions of the other in presenting their area of expertise and must act accordingly when appropriate to do so.
When you are sick or injured, out of work and facing a bleak future, you deserve nothing less.
When is it time to give up the ghost when you are suffering severe pain or serious restrictions on your ability to do your job? The time is when you are suffering severe pain or those restrictions.
A recent opinion in an SSDI case reinforced this conclusion, Garcia v. Colvin, 2103 U.S.App.LEXIS 25452 (7th Cir., 12/20/13)
Although Garcia’s claim was covered by Social Security, it was denied because he had worked despite his disability until he could do it no more. This is an unusual result in SSDI because SSDI judges have no pecuniary interest in the outcome of a claim. For more on this.
Disability insurance companies which pay benefits out of their own pockets have an ingrained reluctance to believe anyone who is entitled to benefits is actually entitled to them. Playing the “hero” and fighting day by day through pain to do your job may get you kudos in the everyday world. It will only get you denial in the disability insurance world.
Although courts recognize that ordinary people fight their way through adversity, when disabled, for a variety of reasons, disability insurance companies do not, especially when such recognition would mean they would have to pay benefits to an insured. There is no upside with disability insurers for a claimant working when totally disabled. Actually, the exact opposite is true.
We have written about this before. www.quiatondisability.com/2012/10/articles/disability-claims/insurance-noses-and-faces/
Disability insurance companies will use the fact that you worked against you. They take the position that you can’t be disabled if you work. They refuse to consider the human factor, i.e., that many people will undergo the most severe pain and stress on their health to provide for their loved ones, no matter the risk.
Such people will face the most serious consequences to keep the wolf from the family’s door. Do insurance companies think they are entitled to the same devotion from claimants? And, if they do, do they think this devotion should go on forever?
Although the claimant who can take it no more and applies for benefits has saved the insurer a good deal of money by continuing to work in the past, he or she gets no Brownie points for it. The opposite is true. The insurance company will continually throw up the fact that the claimant continued to work through the disability, no matter the reason, in an effort to deny benefits under a policy.
Being a “hero” may very well scuttle your and your family’s right to desperately needed disability benefits.
There are still plenty of people who don’t believe mental health victims require the same level of treatment as do physical illness victims. Among those in the first row of these skeptics are many insurance companies. After all, if insurance companies can fashion anything that looks like an excuse not to pay benefits, they will do it and use it.
A recent settlement reported between Cigna Corporation and the Attorney-General of New York State made this clear. New York has a law which requires insurance companies to provide mental health benefits on a par with other medical benefits.
A 14-year-old girl found that Cigna ignored that law when she asked for payment of nutritional counseling fees she incurred for treatment of anorexia nervosa, an eating disorder in which the patient slowly wastes away to nothing because she has a mental disorder causing her to refuse to eat sufficient food to maintain anything like a normal weight.
Cigna denied payment for all but three of her treatments because its policy contained a 3-visit-per-year limit on behavioral health treatments. There was no such limit in the policy on visits for similar nutritional counseling for ailments outside the boundary of behavioral health, such as heart attacks or diabetes.
Cigna could offer no particular reason for why the policy limited behavioral health visits to 3 per year. In the case from which the settlement evolved, the treating doctor was of the opinion that nutritional counseling would be a key factor in her recovery. In addition, the American Psychiatric Association Guidelines calls nutritional counseling a useful part of the treatment of eating disorders such as anorexia.
Yet, Cigna stood by its 3-visits-a-year limit. As a result of its investigation in this case, New York found that Cigna had enforced its 3-visit limit in about 50 cases, forcing those policyholders to pay more than $30,000 in fees which were to be reimbursed. As part of the settlement, Cigna has agreed to review those claims and pay them.
Why doesn’t the public, including insurance companies, take mental disorders as seriously as physical disorders? For those who are stricken, the anguish, mental torment and heartbreak is very real. The economic cost of trying for a cure is the same or may be even greater than for an illness whicht can be seen on an X-ray.
Why do these types of illnesses generally get second-class status from insurers?
The day after the 2014 Super Bowl is the perfect day for illustrating the difficulty of obtaining disability benefits under ERISA no matter what kind of work you do. This “difficulty” principle is best demonstrated in the words of a well-respected ERISA attorney who normally works in the corner of employers and insurance companies.
Attorney Stephen D. Rosenberg writes the Boston ERISA & Insurance Litigation Blog. His posts generally favor the employer side of ERISA issues, so he knows what it takes for a claimant to obtain ERISA benefits.
In his January 30 blog, Mr. Rosenberg reported on the case of Dwight Harrison who played in the NFL for the Raiders, the Bills, the Colts and the Denver Broncos during a 10-year NFL career. For those who don’t know, the NFL’s disability benefits and pension plans are covered by ERISA.
Mr. Harrison had been receiving NFL disability payments for many years when he applied for a disability benefit increase. What he wound up with was the League not only denying him, but:
• He lost the disability benefit he had been receiving.
• He lost separate pension payments he had been receiving.
• He lost prior disability and pension benefits of $236,626 he had received.
• He lost $99,112.50 in NFL legal fees he was ordered to pay.
How did this happen? Basically, Mr. Rosenberg says, because Mr. Harrison had attorneys who had little or no experience in litigating ERISA cases. If you have a lawyer who has been around the ERISA block a few times, your chances of success in litigating an ERISA claim with an employer or insurance company, even one as tough as the NFL, improve substantially.
The Rosenberg blog clearly states that the amount of experience a lawyer has in handling ERISA matters makes a “huge difference” to the outcome of ERISA cases. This is particularly so, Mr. Rosenberg says, when there is a “well-lawyered” adversary as is usually the case when an insurance company is involved.
Mr. Rosenberg states flatly that a claimant’s ERISA case cannot be properly litigated by “…anyone who doesn’t have substantial experience and expertise in this area of the law.”
One of the things we like best about being an ERISA attorney is that when a prospective client asks if he or she needs to retain an experienced lawyer to handle an ERISA matter we can answer “yes” with a clear conscience.
In a 4th and goal situation, a veteran quarterback is most likely to score.
Courts should require any doctor finding or denying a psychological or psychiatric disability to actually examine the claimant in person. This really should be the rule for any medical disability claim, but such a personal hands-on examination should be absolutely required when the disability claim has a psychological or psychiatric basis.
In ERISA cases, to save money and to make it easier for their doctors to file biased medical reports, insurance companies have increasingly taken to offering reports in which their doctor has never even seen the claimant, let alone personally examined him or her. The insurance company physicians merely review the reports of the insured’s treating doctors and try to punch as many holes as possible in the doctors’ claims of disability.
We suspect that M.D.s are similar to lawyers when it comes to evaluating a client, a patient or a case. Face-to-face impressions are important to determining whether a client or patient is telling the truth.
Facial expressions, gestures, vocal volume and cadence, eye blinks, tics, face blushes, hesitations in responding and general demeanor are all evaluated subconsciously by a doctor or lawyer, as a package, in coming to decision about the veracity of the person they are talking with. Years of experience in making such face-to-face evaluations and then checking them against what actually happens, makes these evaluations most valuable in diagnosis.
Reading a report of someone else’s impressions gives no clue as to how trustworthy the patient’s description of his or her condition was. This is a problem even when the disability is based on physical abilities:
• Can you raise your arm higher than here?
• Can you climb a ladder?
• Can you sit for more than 10 minutes?
Only the examiner, personally seeing the effort to try to accomplish the objective, can have a valid opinion. Reviewing a report on paper gives no valid insight.
When a disability is psychiatric, clues are even more nuanced. An examiner has to see the response as well as hear it. The examiner has to observe body language as well as other subconscious conduct, to arrive at a valid evaluation. Only then can the expert form a reliable opinion (still not a certainty) as to whether the claimant is telling the truth.
Interpreting body language is a must in psychiatric diagnosis. Using “paper reviews” instead of actual clinical examinations, leads to only one conclusion:
Insurance companies don’t really want to know!
The Employee’s Retirement Income Security Act was enacted by Congress purportedly to make it simpler for employees to obtain disability and retirement benefits. So, why does the U.S. Supreme Court keep making it harder for average citizens to get the benefits they’ve worked for and to which they are entitled?
The latest dagger to the heart of ERISA claimants was sharpened by the Court in Heimeshoff v. Hartford Life, 134 S. Ct. 604 (2013), where the Court gave employers and insurance companies a new way in which to harass employees and make benefits claims more difficult for the average claimant.
To understand the Heimeshoff downside, one must know that trying to establish a disability claim can take years, most of them spent on the employer’s “court”. Employers make the rules for how such claims can be made when they write an administrative plan and then support that plan with an insurance policy.
Time limits are set by the plan terms formulated by the employer who gets an additional assist from the insurer who has years and years of experience fighting claims. If there is a way to make successful claim prosecution more difficult, you can bet that is the path the employer and insurance company will choose.
A statute of limitations limits the time period within which a lawsuit may be filed. Ordinarily, it does not begin run until the claim’s cause of action has accrued. This makes the statute’s effect universal. Each claimant is subject to the same rules.
In Heimeshoff, it was different. The plan itself limited the time within which a claim had to be filed to 3 years from the date upon which proof of loss had to be filed .
However, as anyone in the ERISA area is aware, the time limit in the law on when a denial of claim must be issued has not been rigorously enforced. It can take far more than 90 days for a final denial of a claim to be issued. Only when such a final denial issues has the claimant exhausted his administrative remedies so that a lawsuit may be filed.
A statute of limitations usually runs from the date upon which a cause of action arises. For example:
• The date of an accident.
• The date of a contract.
• The date of an alleged breach of duty.
• The date of a purchase.
Under Heimeshoff, the statute of limitations could very well run before the right to file a suit on the claim accrues! The time limit within which you could file a suit could expire before a final denial is communicated by a plan administrator, leaving a claimant with no time in which to file a suit.
The Supreme Court felt it had covered this eventuality by citing equitable doctrines which would permit relief from such a result. But, the ERISA plaintiffs’ bar, remember U.S. Airways v. McCutchen, 133 S. Ct. 1537 (2013) and other such cases where the Supreme Court found no difficulty in ignoring a well-settled equitable rule, resulting in a harsh result for the claimant.
If the Court can ignore established equitable principles in one type of case, why not in another? How much can plaintiffs rely on equitable principles to prevent injustice in cases where the insurance company controls the pace of proceedings until final denial?
A fixed period of time for filing an action on an ERISA claim should be the rule. That time should not begin to run until either there is a final denial of an administrative appeal or until the time to file such an administrative appeal expires. A defendant’s artful ability to delay a final denial of claim should not be able to restrict those rights .
The Heimeshoff decision puts real teeth into the maxim:
“Justice delayed is justice denied.”
Insurance companies almost always try to close the barn door after the horse is long gone. They seem to have a habit of waking up late when they contest a policy’s terms. But, that doesn't stop them from denying benefits.
A good example of this “sleepy” conduct was illustrated in Patterson v. Reliance Standard, 2013 WL 6328832, C.D. Cal.) , when Reliance was called upon to pay a life insurance death benefit. For four years the insured paid the required premiums and they were accepted by Reliance without demur.
Only when the insured had the temerity to die did Reliance shift into high gear, take a hard look at the policy and find that she had failed to provide a health form required before the policy could be issued. Reliance refused to pay the death benefit.
However, as in most cases, there was an incontestability clause in her policy which clearly stated that Reliance could not contest the policy after it had been in force for two years. So, a Federal District Court held that the clause prohibited the denial of benefit and found for the policyholder.
This case highlights a longstanding ploy of insurance companies: Take the premiums and worry about the details later (“later” meaning at the time you are called on to pay benefits). Up until that time, the money is going all one way – to the insurer. Only when the insured has to be paid does the insurance company get serious about the details.
An insurance policy is a solemn obligation to pay and should be treated as such. If an insurer is serious about the information it requires of an insured, it should verify that information at the time the policy is issued, not when a benefit is claimed. If the company knows that the policy becomes incontestable after a certain period of time it should protect itself by checking the necessary facts before that time period expires.
The reason insurers don’t thoroughly check policy applications is that it costs them money to do so. Why waste money checking when they can let the matter slide and collect premiums all the while. Insurers think they can always look into the details of the claim when a benefit becomes due.
This is most unfair to policyholders who may pay premiums for years believing they have coverage, only to have the company strongly contest at the time benefits are triggered. If the insurance company wins, the insured has no coverage even after paying premiums for years, believing there was coverage.
Insurance companies save a lot of money by ignoring the details on applications until a claim is made. This type of “post-claim underwriting” should not be permitted. The time for the insurers to do its “due diligence” is before it agrees to issue a policy, not after premiums have been collected for years.
By the time a claim is made, the best witness to the validity of the application (the insured) may be dead or disabled. That’s why insurers should not be able to raise application issues more than 2 years after a policy goes into effect.
If companies contest and lose, they generally have to pay only the same benefits the policy called for, so why not contest?
If an insurance company chooses not to spend the money or the time verifying the details of an application within a reasonable time, then so be it.
“Incontestable” should mean incontestable. Insureds must be able to rely 100% on its meaning.