In Burrell v. Prudential Ins. Co. of America, — F.3d –, 2016 WL 1426092 (5th Cir. Apr. 11, 2016), plaintiff argued that the plan did not give discretionary authority to Prudential, because the plan merely defined “Claim Fiduciary” as the person or entity “designated in the Plan (including the Summary Plan Description, Insurance
Plan Manager Was Not a Fiduciary For Purposes of Subrogation Claim Standing
In Humana Health Plan, Inc. v. Nguyen, 785 F.3d 1023 (5th Cir. 2015), Humana entered into a Plan Management Agreement (“PMA”) with the API Enterprises Employee Benefits Plan. The PMA stated that API had the right to make all discretionary decisions about the plan’s administration and management. The PMA authorized Humana to provide “subrogation/recovery services” to the plan.
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Insurer Reasonably Denied AD&D Claim Following “Suicide By Cop”
In Rice v. ReliaStar Life Ins. Co., 770 F.3d 1122 (5th Cir. 2014), the police responded to a 911 call about the decedent, Rice, sitting in his car, in his garage, with a gun to his head, threatening suicide. After various failed efforts by the police to get him to surrender, he walked toward the police, refused to drop his gun, said “I want to commit suicide,” and was shot and killed.
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Court Provides Narrow Interpretation for Mental Illness Limitation
In George v. Reliance Standard Life Ins. Co., 776 F.3d 349 (5th Cir. 2015), a case of first impression, a divided Fifth Circuit panel decided when a disability is “caused by or contributed to by” a mental illness. The plaintiff was a helicopter pilot who was disabled due to pain suffered at the site of a leg that had been amputated before he started the job in question. He also suffered from depression and PTSD. The insurer determined that he could perform sedentary work, but that his mental illnesses would prevent him from working. Thus, the insurer concluded that the mental illness “’contributed to’ his overall impairment status,” resulting in the application of the mental illness limitation in the policy.
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Claim of ERISA Exemption Does Not Impact Subject Matter Jurisdiction
In Smith v. Regional Transit Auth., 756 F.3d 340 (5th Cir. 2014), the Fifth Circuit rejected its prior precedent, and held that the governmental plan exemption (and presumably other, similar exemptions) does not impact subject matter jurisdiction.
The court noted that the “Supreme Court has repeatedly instructed that we must avoid conflating the…
Fifth and Sixth Circuits Consider Coordination-of-Benefits Remedies For ERISA Plans
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.
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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? …
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Fifth Circuit Ends “Texas Shell Game,” Holding that Plan Has an Equitable Remedy for Reimbursement
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.
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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
Statute of Limitations Can Start Running Before Claim Accrues
ERISA claim practitioners generally have the concept of exhaustion of administrative remedies engrained in our thought process. They know well that claimants are required to exhaust their administrative remedies before they can sue over a benefit determination. Given the focus on this exhaustion requirement, it may surprise some to know that, in many circuits, the statute of limitations clock can begin to run well before administrative remedies are exhausted.
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