I imagine that, for a federal judge, getting reversed is not pleasant, even though it’s part of the job. Well, pity poor Judge Larimer of the Western District of New York, who has now been reversed three times in the same case – twice by the Second Circuit and once by the Supreme Court.
Continue Reading Frommert v. Conkright: The Saga Continues, or “Strike Two for Xerox”
Effect of Requiring “Satisfactory” Proof Is A Popular Issue in the Circuits This Year
Every so often a bit of legal synchronicity seems to occur. Sometimes its personal, like when you have several cases with the same uncommon issue, or multiple cases in the same rarely visited court. In 2013, there appears to be a larger force at work that has caused three circuits to address the question whether a plan that requires proof to be satisfactory to the insurer confers discretion.
It has long been clear that a plan document must give discretionary authority to an insurer in order to require courts to conduct an arbitrary and capricious review. It is also well-established that no “magic words” are required to give discretion. However, the vast majority of plans intending to grant discretion use the magic words anyway, and say that the insurer has “discretionary authority to determine claims and construe the plan” or some variant.
But what happens when a plan does not use the magic words?
Continue Reading Effect of Requiring “Satisfactory” Proof Is A Popular Issue in the Circuits This Year
Court Provides Guidance on Assessing Disability Claims Based on Subjective Evidence
The tough disability claims are often the ones where it is difficult or impossible to prove the medical condition with objective evidence (something that can be observed or measured). This requires the plan fiduciary to decide whether the subjective evidence is adequate. A recent decision, which found the fiduciary got it wrong, provides helpful guidance on how a fiduciary can evaluate subjective evidence without abusing its discretion.
Continue Reading Court Provides Guidance on Assessing Disability Claims Based on Subjective Evidence
Sixth Circuit Explains Why SPD is Still Important After Amara
In 2011, the Supreme Court clearly held that a summary plan description cannot trump the terms of an ERISA plan, overturning the rule in many circuits. Instead, the Amara rule provides that the plan itself governs over a summary of the plan when the two conflict.
This does not mean that an SPD is meaningless. The continued importance of preparing and distributing SPDs is nicely illustrated by Liss v. Fidelity Employer Servs. Co. LLC, 2013 WL 677280 (6th Cir. Feb. 26, 2013).Continue Reading Sixth Circuit Explains Why SPD is Still Important After Amara
Revenue Sharing in 401(k) Plans is OK, According to the Seventh Circuit
Revenue sharing is an arrangement under which a mutual fund in which pension assets are invested pays a portion of its fees to the entity that services the pension plan. In Leimkuehler v. American United Life Ins. Co., 713 F.3d 905 (7th Cir. 2013), the Seventh Circuit held that the arrangement did not violate ERISA fiduciary duties (at least as implemented in the case at hand). The court provided a helpful explanation of what revenue sharing was in general, and how it fits into the context of the management and operation of a 401(k) plan.
Continue Reading Revenue Sharing in 401(k) Plans is OK, According to the Seventh Circuit
Examining the Treating Physician
Often the most common divide between a participant claiming disability benefits and the claim administrator evaluating the claim is the weight to be given the opinion of a treating physician. Time was that a claimant argued that the administrator must defer to the treating physician, like the Social Security Administration does. That argument, at least in its basest form, has been eliminated in ERISA cases. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834, 123 S.Ct. 1965, 1972, 155 L.Ed.2d 1034 (2003) (“courts have no warrant to require administrators automatically to accord special weight to the opinions of a claimant’s physician”).
Often the argument is now made in a more limited fashion, or couched in different language. It might be argued that the administrator should have conducted an independent medical examination (suggesting that the opinion of a doctor who lays hands on the patient necessarily is better). It might be argued that some claims are particularly inhospitable to “paper reviews,” such as claims based on a mental illness or pain. Even where the treating physician argument does not explicitly surface, there is often an undercurrent running through disability claims in which the treating physician is placed on a somewhat higher plane than a physician who is compensated by the claim administrator. There is often the unexpressed notion that treating physicians are unbiased reporters of medical facts, while the motivation of a reviewing physician might not be equally pure.
There are, however, rulings by several courts that allow those who represent administrators to shade some of the glow enveloping treating physicians.
Continue Reading Examining the Treating Physician
Employers Deserve Equity Too: Restitution for Overpayments to Plan
It is not an issue that arises every day, but it is worth exploring an employer’s remedies when it contributes too much into an ERISA plan. A recent decision in the 8th Circuit, Greater St. Louis Const. Laborers Welfare Fund v. Park-Mark, Inc., 700 F.3d 1130 (8th Cir. 2012), provides an opportunity to do so.
Continue Reading Employers Deserve Equity Too: Restitution for Overpayments to Plan
Including Ambiguous Plan Language Verbatim In the SPD Can Effectively Eliminate Discretion to Interpret It — At Least in the Fifth Circuit
In Koehler v. Aetna Health, Inc., 683 F.3d 182 (5th Cir. 2012), the Fifth Circuit criticized a health insurer for having an SPD that mirrored the plan, and held that Cigna v. Amara did not prevent the terms of the SPD from impacting plan interpretation.
The plaintiff, a participant in an HMO, suffered from sleep apnea, for which her physicians recommended treatment by an outside specialist. Aetna denied covered for the treatment, asserting that the plan required pre-authorization for an outside referral. The parties’ dispute centered around a specific provision in the Certificate of Coverage (“COC”), which the court found was ambiguous with respect to the need for pre-authorization for outside services rendered on an ad hoc basis.
The court noted at the outset something that is common in recent-vintage plans: the plan functions as an SPD. As the court explained: “in addition to appearing in the plan, the COC’s text also constitutes the ‘summary plan description’ which ERISA requires plan administrators to provide to participants and beneficiaries. Thus, although a plan summary is a separate document from the plan itself, in this case the summary’s text is simply a verbatim copy of the underlying plan provisions.”
Continue Reading Including Ambiguous Plan Language Verbatim In the SPD Can Effectively Eliminate Discretion to Interpret It — At Least in the Fifth Circuit
Seventh Circuit Holds that Claim Administrator Has Inherent Power to Delegate Discretionary Authority, Unless Plan Prohibits It
In Aschermann v. Aetna Life Ins. Co., — F.3d. –, 2012 WL 3090291 (7th Cir. Jul. 31, 2012), the Seventh Circuit gave a clear ruling that an ERISA claim administrator can delegate its discretionary authority to a substitute, as long as the plan does not expressly prohibit delegation.
The plan at issue was funded by a disability policy issued by Lumbermens Mutual Casualty Company. Lumbermens was withdrawing from the insurance business, and signed an Administrative Services Agreement under which Aetna undertook “all of Lumbermen’s day-to-day duties and discretion.”
The Court held that the question whether Lumbermens effectively delegated discretion to Aetna “can be decomposed into two questions: first, is a written delegation essential; second, is this particular delegation authorized?”Continue Reading Seventh Circuit Holds that Claim Administrator Has Inherent Power to Delegate Discretionary Authority, Unless Plan Prohibits It
Autoerotic Asphyxiation and ERISA
The Second Circuit recently issued a decision on autoerotic asphyxiation (which I will call AEA because typing autoerotic asphyxiation really difficult). The decision doesn’t break any new ground, but it’s as good an excuse as any to write about this never-boring topic.
For those of you that have led a highly sheltered life (or were not fans of INXS or Kung Fu) the idea behind AEA is that, if you restrict oxygen while masturbating, the resulting orgasm is better than it would have been had you been able to breathe. According to Wikipedia: “The carotid arteries (on either side of the neck) carry oxygen-rich blood from the heart to the brain. When these are compressed, as in strangulation or hanging, the sudden loss of oxygen to the brain and the accumulation of carbon dioxide can increase feelings of giddiness, lightheadedness, and pleasure, all of which will heighten masturbatory sensations.” Occasionally, electricity is also used, apparently to similar effect.
Which, of course, brings us to ERISA.Continue Reading Autoerotic Asphyxiation and ERISA