Fifth Circuit Joins Sister Circuits by Overruling Default Deferential Standard of Review

In Ariana M. v. Humana Health Plan of Tex., 2018 U.S. App. LEXIS 5227, *5, 2018 WL 1096980 (March 1, 2018) (“Ariana M. II”), a majority of judges of the U.S. Court of Appeals for the Fifth Circuit, in an en banc decision, recently overturned its quarter century old holding in Pierre v. Connecticut General Life Insurance Company, 932 F.2d 1552 (5th Cir. 1991), which held that the factual determinations of ERISA benefit plan claim administrators are entitled to deference, regardless of whether the plan includes a grant of discretionary authority. Under Pierre, the Fifth Circuit has long held that such factual determinations can only be overturned if they are found to be arbitrary and capricious. In overturning its holding in Pierre, the Fifth Circuit joined nine sister circuits in ruling that all aspects of ERISA benefit denials will be reviewed de novo unless the governing plan delegates discretionary authority to the claim administrator. Continue Reading

New DOL Disability Regulations Now Effective

Significant changes to the Department of Labor’s (“DOL”) rules regulating disability claims procedures are now in force.  These new rules apply to claims filed on or after April 1, 2018.

ERISA directs the Secretary of Labor to establish and maintain rules which ensure that plan fiduciaries and insurance providers fully and fairly review claims for ERISA-governed benefits.  The DOL’s rules regulating claims procedures are set forth at 29 C.F.R. §  2560.503-1, which contains detailed direction as to the claims handling process for both group health plans and disability plans.  Historically, 29 C.F.R. §  2560.503-1 imposed similar obligations on group health plans and disability plans.  That changed in 2010, however, with the implementation of the Affordable Care Act, under which claims procedures for group health plans were significantly modified, while procedures for disability plans remained untouched. Continue Reading

The Fate of the Department of Labor Fiduciary Rule Could Be Uncertain

On May 22, 2017, Department of Labor (DOL) Secretary Alexander Acosta announced in an op-ed in the Wall Street Journal that the DOL would not issue another delay of the “fiduciary rule,” and that it was set to generally become effective on June 9, 2017. As we now know, certain provisions of the fiduciary rule went into effect on that date, with others being delayed until July 1, 2019. However, the fiduciary rule remains under attack in the courts. Two notable appellate court decisions were issued within days of one another, and both were decided by three judge panels. One case upheld narrow provisions of the fiduciary rule, and the other effectively completely invalidated the rule. Shortly after the second decision, the Department of Labor announced that it would not enforce the fiduciary rule “pending further review.” Continue Reading

A stock plan is not necessarily an ERISA plan

In the world of ERISA litigation, one of the safest bets is usually that, if an employer establishes something that it calls a “plan,” and the plan allows a significant number of its employees to obtain money after retirement, ERISA is going to govern. Sure, there are situations where the employer is exempt from ERISA (it may be a governmental entity or affiliated with a church), but those exceptions are generally easy to spot.

However, Pasternack v. Shrader, 863 F.3d 162 (2d Cir. 2017), is a reminder of the risks of drawing such automatic conclusions, because sometimes a plan is just a plan. Pasternack essentially held that, when the primary purpose of a stock ownership plan was something other than deferring income or providing retirement income, ERISA may not govern.  Though the Court asserted that the distinction between a pension plan and one that offered present benefits was “crisp and unambiguous,” one might be forgiven for harboring doubt that the line is as well-defined as the Court believed. Continue Reading

No Fooling: U.S. Department of Labor Confirms That The Disability Claims Regulations Will Go Into Effect on April 1, 2018 Without Further Delay or Modification

In a recent news release, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor confirmed that its final rule amending the disability claims procedure requirements applicable to ERISA-covered employee benefit plans (the “Final Rule”) will go into effect on April 1, 2018.

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EBSA Formally Extends Applicability Date of Disability Claims Regulations to April 1, 2018; Time to Comment on the Regulations Ends Soon

In today’s Federal Register, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor has published its notice delaying, by 90 days, the applicable date of its final rule amending the disability claims procedure requirements applicable to ERISA-covered employee benefit plans (the “Final Rule”). The new claims procedures had initially been set to become applicable on January 1, 2018.  That date has now been delayed to April 1, 2018.

The new claims procedures of the Final Rule apply to all ERISA plans that provide disability benefits, which include not only short-term and long-term disability plans but also other types of ERISA plans with disability provisions, such as many retirement plans. The purpose of the delay is to provide EBSA with time to consider the Final Rule’s impact on the group disability insurance market, in light of President Trump’s Executive Order 13777 directing federal agencies to evaluate regulations (with input from affected entities) with an eye toward reducing regulatory burden and expense. Continue Reading

Second Circuit Clarifies New York Anti-Subrogation Law Prohibits Offsets For Settlements; Declares Plan’s Choice-of-Law Provisions May Not Govern Offset And Subrogation Rights

The U.S. Court of Appeals for the Second Circuit has ruled that New York’s anti-subrogation statute, N.Y. Gen. Oblig. Law § 5-335(a), applies both to “offsets” for prospective benefit payments and to reimbursements for prior benefit disbursements.  In so holding, the Second Circuit ruled that a Plan’s choice-of-law provisions may not be dispositive of which jurisdiction’s anti-subrogation statute will apply to govern disbursement and/or recovery of that Plan’s assets.

The case, Arnone v. Aetna Life Ins. Co., 860 F.3d 97 (2d Cir. 2017), arose after the plaintiff-appellant, Salvatore Arnone, a New York resident, was injured while working in New York at the site of a customer of his employer.   Arnone filed for, and received, disability benefits through an ERISA-governed plan (“Plan”) insured and administered by Aetna.  Arnone also commenced a personal injury action in New York state court against his employer’s customer.  Arnone eventually settled the personal injury suit for a lump-sum payment. Continue Reading

Department of Labor Proposes to Delay Implementation of Disability Claim Regulations

On October 6, 2017, the Department of Labor signed a proposed Rule “to delay for ninety (90) days – through April 1, 2018 – the applicability of the Final Rule amending the claims procedure requirements applicable to ERISA-covered employee benefit plans that provide disability benefits.”

Specifically, the DOL proposes:

Section 2560.503-1 is amended by removing “on or after January 1, 2018” and adding in its place “after April 1, 2018” in paragraph (p)(3) and by removing the date “December 31, 2017” and adding in its place “April 1, 2018” in paragraph (p)(4).

The proposed rule is scheduled to be officially published on October 12, 2017. There will be a 15-day period for comments on the proposal to extend the applicability date. There will also be a 60-day period to submit “comments providing data and otherwise germane to the examination of the merits of rescinding, modifying, or retaining the rule[.]” Continue Reading

ERISA § 502(c)(1) Claim for Statutory Penalties is Barred by One-Year Statute of Limitations, Second Circuit Holds

Deciding an issue of first impression, the U.S. Court of Appeals for the Second Circuit recently held that a plaintiff’s claim under ERISA § 502(c)(1) was barred by Connecticut’s one-year statute of limitations for an action seeking to collect a statutorily-imposed civil penalty. Brown v. Rawlings Fin. Servs. LLC, (2d. Cir., 8/22/17) (Jacobs, Leval, Raggi, Js.).

Plaintiff, a plan participant, had filed suit against Rawlings, Aetna, and the William W. Backus Hospital claiming that they had failed to timely respond to her request for documents concerning her healthcare benefit plan. The defendants moved to dismiss her complaint on the ground that the suit was not timely filed, and the District Court granted the motion. Plaintiff thereafter appealed to the Second Circuit, arguing that the District Court had applied the incorrect limitations period. Continue Reading

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