In Butler v. United Healthcare of Tennessee, Inc., — F.3d –, 2014 WL 4116478 (6th Cir. Aug. 22, 2014), the court addressed what appeared to be a relatively straightforward health care benefit question, complicated by what the court described as a severely recalcitrant claim administrator.
Continue Reading Three Strikes and You’re Out: Health Plan’s Decision Was Arbitrary and Capricious Be-cause It Repeatedly Refused To Abide By Remand Orders

In Bd. of Trustees of the Nat. Elevator Indus. Health Benefit Plan v. McLaughlin,  — F.3d –, 2014 WL 4852096 (3d Cir. Oct. 1, 2014), plaintiff argued that his medical plan could not enforce an equitable lien by agreement to recover medical expenses paid because the New Jersey Collateral Source Statute (the “NJCSS”) precluded

Providing for “coordination of benefits” means including a provision in an insurance policy that address what should happen if more than one insurer covers the same claim. Virtually every primary insurance policy will say that, if other insurance exists, the other policy will pay first. Of course, when there are two policies providing coverage, each one typically says the other pays first. Coordination-of-benefits disputes involving deciding whether the provisions conflict, and, if so, how to resolve the conflict. Ordinarily, when policies have conflicting coordination-of-benefits provisions, courts rule that the provisions cancel each other out, and both policies share liability pro rata.
Continue Reading Fifth and Sixth Circuits Consider Coordination-of-Benefits Remedies For ERISA Plans

In a post from last year, I reported on how the Fifth Circuit had issued a decision In ACS Recovery Servs., Inc. v. Griffin, 676 F.3d 512, 514 (5th Cir. 2012), in which it held that an ERISA plan beneficiary and his lawyer had created a perfect settlement structure in which no one ever had enough possession or control over the substantial settlement proceeds to support an equitable remedy.

The Fifth Circuit decided that the shell game issue was “enbancworthy” and, in a May 7, 2013 decision, reversed the panel’s decision.
Continue Reading Fifth Circuit Ends “Texas Shell Game,” Holding that Plan Has an Equitable Remedy for Reimbursement

One of the great things about writing this blog is learning something new. I sometimes fall into the trap of determining the law on a particular issue in the circuit in which I practice most (the Second), and assume that other circuits are the same. Sometimes, though, it turns out that one circuit is not in step with the others, and one case can throw a monkey wrench into my world view.

The case that drew back the curtain for me on vesting of welfare benefits (an exciting topic, I know!), is Price v. Bd. of Trustees of Indiana Laborer’s Pension Fund, — F.3d –,  2013 WL 561354 (6th Cir. Feb. 15, 2013) (“Price II”). Price II held that an ERISA fiduciary could enforce a plan amendment shortening the length of time disability benefits would be payable against a participant who was on claim at the time of the amendment.

At first read, the decision seemed bizarre, because I knew (or thought I knew) that welfare benefits like disability benefits could not be changed for a participant who was “on claim.” As the Second Circuit held: “as a matter of law[,] …absent explicit language to the contrary, a plan document providing for disability benefits promises that these benefits vest with respect to an employee no later than the time that the employee becomes disabled.” Feifer v. Prudential Ins. Co. of Am., 306 F.3d 1202, 1212 (2d Cir. 2002). This rule means that you look to the plan language when the disability allegedly began, and subsequent amendments are irrelevant.

Though on re-reading Feifer, it was clear that the court recognized that other circuits approached this issue differently, that kind of caveat was not something that stuck with me. Then along came Price II and caused me to revisit the issue.
Continue Reading Vesting of Employee Welfare Benefits – Who Knew It Was So Complicated?

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

An ERISA Plan Administrator’s subrogation rights are not the easiest thing in the world to determine. I’m not talking about the situation where the plan is making current payments to the beneficiary and wants to offset some prior liability or overpayment. That’s easy.

What is complicated is when the plan has made a full payment, and then seeks to recover some of that payment from the beneficiary. This usually happens when the beneficiary receives a settlement or judgment for the accident that resulted in the payment of plan benefits.

The Supreme Court has ruled, for reasons obscured by the dense mists of ancient equity, that a plan administrator can recover from a beneficiary who has “possession” of a pot of money that was obtained by reason of the injury that gave rise to the plan benefit. But a plan administrator cannot recover from a beneficiary who does not have “possession.

This led to the recent case of ACS Recovery Services, Inc. v. Griffin, 2012 WL 1071216 (5th Cir. Apr. 2, 2012), in the plan futilely picked shell after shell, only to find no money under any of them.

Continue Reading The Texas Shell Game – A Subrogation Story