Plan Interpretation

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The Supreme Court heard arguments yesterday in this case, which involved the question whether a contractual limitations period in an ERISA benefit plan could begin to run before administrative remedies were exhausted.
Continue Reading Heimeshoff v. Hartford – Oral Argument in the Supreme Court

In petitioning for certiorari, Heimeshoff asked the Supreme Court to consider three questions:

1.         When should a statute of limitations accrue for judicial review of an ERISA disability adverse benefit determination?

2.         What notice regarding time limits for judicial review of an adverse benefit determination should an ERISA plan or its fiduciary give the claimant with a disability claim?

3.         When an ERISA plan or its fiduciary fails to give proper notice of the time limits for filing a judicial action to review denial of disability benefits, what is the remedy?

The Supreme Court granted certiorari, but only as to the first issue, as to which there was a conflict among the Circuits.

There are several axioms and rules underlying this case that are not in dispute.
Continue Reading Heimeshoff v. Hartford – Supreme Court Briefing

At the District Court, Heimeshoff also argued that the limitation period in the plan should be equitably tolled because, she claimed the applicable ERISA regulation required Hartford to disclose the limitation period in its denial letter, and it failed to do so. Hartford argued that it was irrelevant whether the regulation required disclosure because Heimeshoff and her attorney knew what the plan said, and their knowledge precluded them from seeking equitable tolling. Hartford also argued that the regulation did not require disclosure.
Continue Reading Hartford v. Heimeshoff – ERISA Regulations and Equitable Tolling

Hartford moved to dismiss the action because it was filed after the expiration of the policy’s contractual limitation period. The plain language of the Policy gave her until December 8, 2005 to submit proof of loss: she alleged that her disability began on June 6, 2005; the ninety-day Elimination Period would ordinarily end on September 6, 2005, but her Elimination Period lasted two days longer because Wal-Mart made salary continuation payments to her until September 8, 2005; the start of the period for which Hartford would owe payment (if Heimeshoff had proven disability) was September 9, 2005; proof of loss was due ninety days later, or December 8, 2005. The deadline for taking legal action was therefore three years after that, or December 8, 2008.
Continue Reading Heimeshoff v. Hartford – Motion to Dismiss

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

Life insurance plans, accidental death and dismemberment plans, and disability plans often exclude coverage for losses that occur while the participant is intoxicated, or where the loss is intentionally self-inflicted. Though these exclusions are often very clear, they are often the subject of contentious disputes over what, exactly, they mean, or were intended to mean, or should be interpreted as meaning.

A example of this can be found in Rau v. Hartford Life & Acc. Ins. Co., 2013 WL 1985305 (D. Conn. May 13, 2013). In Rau, Katie Rau went out one night and got monumentally intoxicated (0.3% blood alcohol level). While being driven home by a friend, she pulled herself from the passenger seat into the open window of the pickup truck, with only her legs inside. After exclaiming “look what I can do,” she fell backwards out of the pickup, hit her head on the pavement, and died.
Continue Reading “Injured While Intoxicated” Means What It Says

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

In Lipker v. AK Steel Corp., 2012 WL 5346325 (6th Cir. Oct. 31, 2012), the plaintiff applied for surviving spouse benefits under the pension benefits plan administered by her husband’s former employer. The administrator approved her claim, but she disputed the amount of the benefit. The discrepancy between her expectation and the actual award hinged on “the interpretation of plan language that both parties argue is unambiguous, yet each party interprets differently.” Though the district court had held in favor of the plaintiff’s interpretation, the Sixth Circuit reversed,  finding that the administrator’s proposed interpretation of the plan language to be truer to its plain meaning when read with reference to the law it expressly refers to.
Continue Reading Social Security Statute Aids Interpretation of Ambiguous Plan Offset Provision