Below is an excerpt of an article that has been published in the April edition of The Voice, a signature newsletter of the Defense Research Institute (DRI).

It has been over a year since the first COVID-19 cases were diagnosed, and the pandemic started to evolve. This article discusses new trends in COVID-19-related disability claims that emerged in 2020 through early 2021 as a result of the pandemic. Read the full article.

Though there are many legal complexities that can arise in a typical ERISA lawsuit, one thing that is typically not in dispute is whether there is an ERISA Plan at issue. Pension plans, 401(k) plans, health plans, and group insurance plans are all easy to spot, categorize and confirm as ERISA plans. There are outliers, to be sure, like when the plan is established or maintained by a possibly exempt employer (like a religious organization, community college,  or Native American tribe). Or when the plan allows employees to purchase individual insurance policies at a discount. Or when the dispute involves a severance plan, as is demonstrated by Atkins v. CB&I, L.L.C., No. 20-30004, 2021 WL 1085807 (5th Cir. Mar. 22, 2021).

In Atkins, the defendant construction company established a Project Completion Incentive Plan (“PCIP”) that would pay eligible employees a bonus of 5% of their earnings while they worked on a particular construction project, if they stayed on the project until their work was completed. The plaintiffs, who acknowledged that they were not eligible for bonuses because they quit before their work on the project ended, sued in Louisiana state court, arguing that the PCIP involved a wage forfeiture that was illegal under Louisiana law. The employer removed the case to federal court on the grounds of ERISA complete preemption, and the district court agreed that ERISA governed. As the Fifth Circuit noted, “[t]hat jurisdictional determination also resolved the merits” because, if ERISA governs, “then everyone agrees the Plaintiffs do not have a claim” because ERISA preempts Louisiana law, and because the plaintiffs “are not eligible for the bonus under the terms of the plan.”

The Fifth Circuit held that the PCIP was not an ERISA plan. Continue Reading When is a Severance Plan NOT an ERISA Plan

In Connecticut General Life Ins. Co. v. BioHealth Labs., Inc., No. 20-2312-CV,  — F.3d –, 2021 WL 476111 (2d Cir. Feb. 10, 2021), Cigna, as administrator of employee health plans, sued six  out-of-network lab companies for various fraudulent billing schemes, including fee forgiveness (not charging the patient for co-insurance, co-pays, etc.), unnecessary testing, and unbundling (separately billing for services that should be combined at a lower rate). In all, Cigna sought to recover $17 million in fraudulent or improper charges.

Cigna had completed its investigation that uncovered the alleged fraud in 2015, and began to deny payment of claims submitted by the labs. Two of the labs sued Cigna in Florida, but that action was dismissed and closed in 2017 for failure to exhaust administrative remedies. Cigna then sued the labs in Connecticut District Court in 2019, asserting “a variety of Connecticut state-law and federal claims,” all of which, according to Cigna, would have been compulsory counterclaims in the Florida action, had it not been dismissed. The district court dismissed the Connecticut complaint on the ground that all claims were time-barred under Connecticut’s three-year statute of limitations for tort claims.

The Second Circuit affirmed in part and reversed in part. Continue Reading Second Circuit Addresses Limitations Periods Governing Fraudulent Billing Claims Against Non-Participating Providers

On February 26, 2021, the Employee Benefits Security Administration (EBSA) released Notice 2021-01 (2021 Relief Notice) providing guidance to employers, claim administrators and fiduciaries of ERISA plans on the duration of the COVID-19-related relief set forth in a 2020 Notice that suspended, among other things, certain ERISA (Employee Retirement Income Security Act) claim-related deadlines (referred to herein as ERISA Relief).

Under the 2020 Notice, the ERISA Relief continues until sixty (60) days after the announced end of the COVID-19 National Emergency or such other date announced by the relevant Agency or Agencies in a future notification (the Outbreak Period). However, ERISA and the Internal Revenue Code provide that a deadline tolling period cannot exceed one year. One year measured from the start of the Outbreak Period on March 1, 2020 was February 28, 2021. With the COVID-19 crisis and National Emergency continuing past that date, there were many questions regarding when the Outbreak Period will expire and how the one-year statutory tolling limitation should be applied.

Up until February 26th, the Departments of Labor and Treasury had been silent on the application of this one-year limit. Now, however, the 2021 Relief Notice indicates that the one-year limit applies on an individual basis, and its application to individuals will depend on whether the event that triggers their deadline to file a claim, appeal, or take other action (Event) either: (i) occurred prior to March 1, 2020, with the deadline falling after March 1, 2020; (ii) occurred sometime between March 1, 2020 and February 28, 2021; or (iii) occurs on or after March 1, 2021. Read the full legal update.

“When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many different things.”

“The question is,” said Humpty Dumpty, “which is to be master — that’s all.”

Lewis Carroll, Through the Looking Glass.

Disputes over the meaning of a word or phrase in an insured benefit plan almost always end up with the litigants feeling like they have gone through the looking glass to a place where the words you thought you understood all your life suddenly mean something entirely different.

The most recent example of this phenomenon is Carlile v. Reliance Std. Life Ins. Co., — F.3d –, 2021 WL 671582 (10th Cir, Feb. 22, 2021), where the dispute revolved around whether Mr. Carlile was an “active, Full-time Employee” when he became disabled.

Mr. Carlile had worked for the disability plan sponsor for about four years when he was given notice in March 2016, that he was being laid off as part of a reduction in force effective June 20, 2016. Accompanying the notice was a lump-sum payment of his wages for the notice period, and the confirmation that he no longer needed to come into work. Apparently, though, he continued to visit the office “at his convenience” until he was diagnosed with prostate cancer on May 31, 2016. Apparently his “last day of work” (whatever that means) was June 7, 2016. He filed a claim for LTD benefits, which Reliance Standard denied, finding that Mr. Carlile’s participation in the disability plan had terminated before June 7, because he was no longer an “active, Full-time Employee.”

Follow us through the looking glass as we watch the Tenth Circuit explore: why the meaning of “active, Full-time Employee” is not influenced at all by the plan’s definitions of “Actively at Work” or “Active Work;” why the court’s own prior decision defining “actively at work full time” in a similar context supported Reliance only “at first glance”; and why determining how much an employee worked during his “regular work week” apparently does not require proof of how much the employee ever really worked at all. At the end of the journey, it turns out that “active” really means nothing, because an “active, Full-time Employee” is exactly the same as a “Full-time Employee.” Continue Reading Tenth Circuit Decides That An “Active, Full-time Employee” Is Entirely Different Than an Employee Who is “Actively at Work”

Katherine M. Katchen

We are please to welcome Katherine M. Katchen as counsel in Robinson+Cole’s Managed Care + Employee Benefits Litigation Group. Kate has more than 20 years of litigation experience representing clients in complex commercial litigation matters, particularly in the area of managed care and insurance. She will be resident in the firm’s Philadelphia office.

Ms. Katchen’s practice is primarily focused on health insurers, managed care companies, and insurers and third-party administrators in state and federal actions around the country. Her litigation experience includes a broad range of litigation, including the defense of allegations of RICO conspiracy; ERISA violations; bad faith; contract and quasicontract; tortious interference; and breach of state prompt pay laws. She has litigated these and other issues in many jurisdictions throughout the United States, including Pennsylvania, New Jersey, Florida, Illinois, California and Maryland. Prior to entering private practice, Ms. Katchen was an Attorney Advisor to the U.S. Department of Labor from 1997 to 1999. Read more in the press release.

Plaintiffs seeking recovery of group disability benefits under ERISA-governed plans routinely argue that claim fiduciaries failed to adequately consider and/or account for decisions by the Social Security Administration (SSA) to award Social Security Disability Insurance (SSDI) benefits. As a result, federal courts are regularly tasked with evaluating the substance and sufficiency of discussions of SSDI awards (that are made a part of the administrative record) in adverse benefit determination letters. Continue Reading Third Circuit Clarifies Sufficiency Of Discussions Of Social Security Disability Insurance Awards In Adverse Disability Benefit Determinations Under Pre-2018 ERISA Claims Procedure Regulation

In 2010, Chief Justice John Roberts observed that that ERISA is “an enormously complex and detailed statute.” Conkright v. Frommert, 559 U.S. 506, 509 (2010).

Some things don’t change. A recent decision out of the District Court of New Jersey exemplifies how even the most seemingly mundane procedural act — removal — implicates legal nuances with which courts continue to grapple. Continue Reading D.N.J. Rejects Plaintiff’s Fee Request In Connection With State Court Remand Of Action Removed Under ERISA, Scaling Back Earlier Charge That Defendant’s Removal Was Nonsensical

Below is an excerpt of an article that has been published in the ERISA Report, the semi-annual newsletter issued by the Defense Research Institute (DRI) Life, Health and Disability/ERISA Committee.

What happens when COBRA meets COVID-19? While it may sound like the premise of a horror movie along the lines of “Snakes on a Plane” or “Sharknado,” extensions of COBRA notice deadlines due to the pandemic have the potential to be a fright fest for group health plan administrators and third-party administrators (TPAs). Read the full article.

In Rutledge v. Pharmaceutical Care Mgt. Assoc., — U.S. –, 2020 WL 7250098 (Dec. 10, 2020), the Supreme Court held that ERISA’s broad express preemption will not reach a state law that focuses on the price of prescription drug benefits that a plan chooses to provide.

The particular question in Rutledge was whether ERISA preempted an Arkansas law regulating the price at which pharmacy benefit managers (PBMs) reimburse pharmacies for the cost of drugs covered by ERISA prescription drug plans. The Court described PBMs as

a little-known but important part of the process by which many Americans get their prescription drugs. Generally speaking, PBMs serve as intermediaries between prescription-drug plans and the pharmacies that beneficiaries use. When a beneficiary of a prescription-drug plan goes to a pharmacy to fill a prescription, the pharmacy checks with a PBM to determine that person’s coverage and copayment information. After the beneficiary leaves with his or her prescription, the PBM reimburses the pharmacy for the prescription, less the amount of the beneficiary’s copayment. The prescription-drug plan, in turn, reimburses the PBM.

Continue Reading Supreme Court Rules that ERISA Does Not Preempt State Law Regulating PBM Reimbursements