Abuse Of Discretion By MetLife

Why is Abuse Of Discretion important?

Abuse Of Discretion is a term of art in ERISA (long term and short term disability) cases that means that the plan administrator for a long term disability plan or short term disability plan failed to properly weigh all of the evidence when that administrator was deciding whether or not the claim should be approved. In other words, proving Abuse of Discretion on the part of a plan administration is a common reason why many ERISA plaintiffs win their cases.

An Example of Abuse Of Discretion

A great example of Abuse of Discretion comes the case of Chavarria v. Metropolitan Life Insurance Co., No. 13-4712, 2014 U.S. Dist. LEXIS 164898 (E.D. La. Nov. 25, 2014). In that case, Mr. Chavarria worked as a repairman in an automobile repair shop until he was no longer able to work due to an inguinal hernia. Mr. Chavarria did receive short term benefits from MetLife and was even originally approved for long term benefits. Mr. Chavarria’s employer contended that Chavarria only had to lift up to 100 lbs in his previous occupation and Mr. Chavarria stated that he had to lift up to 150 lbs to perform his duties.

Mr. Chavarria applied for Social Security Disability Benefits and was denied those benefits by an Administrative Law Judge who claimed that while Mr. Chavarria could no longer perform the duties at his previous job, he would be able to perform the duties of a different, less physically strenuous occupation. In fact, the Administrative Law Judge determined that Mr. Chavarria could not lift more than 20 lbs, which is far less than than both Mr. Chavarria and his employer contended that he needed to lift in order to perform his prior job duties.

The Plan Administrator from MetLife used the Social Security Disability Benefits denial as a basis to attempt to deny Mr. Chavarria his long term disability benefits. However, the court found that because MetLife failed to look at the basis for the denial and just simply saw the denial, that MetLife was wrong in denying Mr. Chavarria his benefits. Had they looked at the basis for the denial, they would have found that Mr. Chavarria was still incapable of performing the duties of his prior job according to the Administrative Law Judge.

Trying to obtain long term disability benefits or overturn a denial due to Abuse of Discretion of a Plan Administrator is very difficult and we highly advise that you consult with and/or hire an experienced ERISA / long term disability benefits attorney.

3 Key Factors: Long Term Disability Surveillance

It’s time to talk surveillance. When an employee obtains long term disability  benefits, they often wonder whether an investigator has been hired to follow them around the grocery store. This can be both incredibly frustrating and many people tend to feel violated by such tactics, but here are the three key factors you should keep in mind if you’re under surveillance.

  • KEY FACTOR 1: The definition of whether or not someone is disabled is in the policy, and will not change based on surveillance video. Just because someone video taped you picking up a can in the grocery store does not mean that the definition of your particular disability changes.
  • KEY FACTOR 2: Do not panic about surveillance. There is a good chance that the surveillance footage may actually strengthen your plan so long as you follow the third Key Factor below.
  • KEY FACTOR 3: Be honest with your insurance company. The basic rule of thumb is to be completely honest when applying for long term disability benefits.  If you cannot lift more than 50 pounds then make sure that limitation is conveyed to the insurance company. If you can lift more than 50 pounds, you should avoid performing that activity. Many insurance companies rely on the investigator’s report rather than actually watching surveillance footage and this can come back to haunt them in the long run. If you take a look at our ERISA Case Law Page, there is a case called Solnin v. Sun Life & Health Ins. Co., where Ms. Solnin won her case because 17 days of surveillance compiled over 10 years of surveillance of Ms. Solnin only showed proof that she was disabled and was honest about her limitations.

Did you or someone you know receive long term disability benefits and now believe that you or that someone are under surveillance by the insurance company? If you would like to speak with a long term disability attorney, Kotlyarov Law Group is proud to represent our ERISA long term disability clients and help them deal with all aspects of having their disability, including surveillance. You are welcome to contact us by calling (913) 725-0735.

3 Key Factors: ERISA Subrogation and You

The Missouri Bar recently published some excellent CLE materials from a course they offered  named: “ERISA Subrogation and Reimbursement: A Step-by-Step Approach” The PDF of the materials can be found here: http://www.mobar.org/esq/sept2/ERISA%20Subrogation%20Ravis%20Revised.pdf 

The document linked above offers a comprehensive 8 step approach and we encourage all those interested in the topic to read the article.

After reading the materials, here are our 3 Key Factors about ERISA subrogation, which are the three key takeaways from this article.

3 Key Factors: ERISA Subrogation

  1. Be very aware and make sure you get every document related to the plan in question and what expenses the insurance company has paid.
  • You need the full copy of the plan, not a Summary Plan Description (SPD). The SPD documents do not contain the terms of the plan in their entirety and in order to understand what you are liable for, you need to have the full text of the plan.
    • If the plan does not contain terms regarding subrogation, reimbursement and exclusion, those terms cannot be enforced.  Each of those terms refers to a different action and each one must be present in the plan to be enforceable.
  • Getting a hold of what the insurance company has actually paid is important in the event they are trying to seek reimbursement for expenses that have not been paid yet.

2. If the ERISA subrogation language is in the plan, make sure the that the plan exercises it’s subrogation rights, and if the plan contains a reimbursement clause, analyze it to determine if it contains sufficient language to allow for the plan to recover.

  • The author describes “true subrogation” as “the right to step into the shoes of the plaintiff.” Ask the Plan Administrator as to whether or not that right will be taken advantage of by the Plan, because it’s not, there is a legitimate argument to be made that they should lose that right.
  • In order for Reimbursement and Subrogation provisions to be effective, they must clearly identify a priority right over partial recovery from a third party.
    • If this priority right is not made clear within the plan language, the made-whole rule will apply.

3. If the made whole doctrine is overridden by the plan, identify if the plan contains language that specifies funds out of which the plan can make a recovery and if that recovery constitutes and “appropriate equitable remedy” under ERISA § 502(a)(3).

  • The language of the plan must (a) show that the plan is trying to obtain a remedy out of specific funds and (b) that the plan language identifies a specific fund itself. This is a crucial detail because not every plan identifies such a fund.
  • According to the author, the Supreme Court issued a Writ of Certiorari to a case from the Eleventh Circuit titled Montanile v. Board of Trustees. In evaluating the case, the Supreme Court will attempt to evaluate ERISA § 502(a)(3) to determine whether “equitable relief” standard is met within the meaning of the statute by a fiduciary trying to recover an over-payment by the plan, if that fiduciary has not specified a fund, possessed and controlled by the Plaintiff, at the time of the fiduciary asserts its’ recovery claim.

 

 

Major Universities Sued For Wrongful 403(b) Administration

You’ve probably heard of the sterling reputations of institutions such as Yale, NYU (New York University), Columbia, Duke and MIT (Massachusetts Institute of Technology). They are highly revered due to their world-class academic standings and prestigious alumni. However, those institutions and many like them are currently being sued. The cause of action are allegations that they have been improperly administrating their 403(b) plans (retirement plans used by such institutions and other non-profits in place of a traditional 401(k) or IRA).

According to the Bloomberg article by Stephen Mihm, Jerome Schlichter, an ERISA plaintiff’s attorney who has already sued many employers for wrongful 401(k) administration, alleges that the universities have breached their fiduciary duty by failing to use their leverage in order to get the best fund options for their employees, causing their retirement accounts to fall victim to excessive record-keeping and plan administration fees.

For example, the lawsuit against Duke University alleges that the Duke 403(b) retirement plan had over 400 different investment options, which drove up the cost of administrating those plans significantly and well beyond reason. The suit also alleges that having so many options caused “decision paralysis” for plan participants, meaning that the over-abundance of choices made making a decision incredibly difficult and caused poor to no decision making on the part of participants.

The lawsuits further allege that the plan administrators would have served participants better by consolidating investments of similar types into single options, which would lead to lower administrative costs.

Here are some of the case citations for the pending suits.

  • Cassell v. Vanderbilt Univ., M.D. Tenn., No. 3:16-cv-02086;
  • Clark v. Duke Univ., M.D.N.C., No. 1:16-cv-01044;
  • Kelly v. The Johns Hopkins Univ., D. Md., No. 1:16-cv-02835;
  • Sacerdote v. N.Y. Univ., S.D.N.Y., No. 1:16-cv-06284;
  • Sweda v. Univ. of Penn., E.D. Pa., No. 2:16-cv-04329;
  • Tracey v. Mass. Inst. of Tech., D. Mass., No. 1:16-cv-11620;
  • Vellali v. Yale Univ., D. Conn., No. 3:16-cv-01345.

As more updates regarding this latest ERISA litigation trend come in, we will try to post follow-up articles.

Analysis: Pippin v. Rock-Tenn Co. Group Ben. Plan

Magic Words Unnecessary for Benefits

Pippin v. Rock-Tenn Co. Group Ben. Plan, 2016 U.S. Dist. LEXIS 79867 (8th Cir. 2016)

Recently in Fayetteville, AR, the U.S. District Court held that Mr. Charles Pippin was improperly denied short-term disability benefits by his employer, Rock-Tenn Company. Mr. Pippin injured his leg outside of work on February 27, 2014. Thereafter, he sought treatment from his primary physician who ultimately recommended consulting a specialist on the injury and avoiding work until that time. Mr. Pippen visited a specialist on April 10, 2014; at which time, he ordered Mr. Pippen not to work for the following month. During this time, Rock-Tenn denied Mr. Pippen’s claim for short-term disability because the company asserted Mr. Pippen’s doctors had provided “insufficient evidence to establish disability.” Pippin v. Rock-Tenn Co. Group Ben. Plan, 2016 U.S. Dist. LEXIS 79867, 5 (8th Cir. 2016). Rock-Tenn requested more detailed analysis of Mr. Pippen’s injuries than the general doctors’ notes provided. Eventually, Mr. Pippen filed and lost two appeals of Rock-Tenn’s denials of his claims. Rock-Tenn’s denials were supported by the opinions of two different doctors who had reviewed Mr. Pippen’s benefit applications. Those doctors’ opinions focused on Mr. Pippen’s physicians’ omissions of specific medical reasons explaining why Mr. Pippen’s injury disabled him from working.

The court resolved this dispute under the abuse of discretion standard because the ERISA plan at issue allowed for discretionary authority to the plan administrators in determining benefit eligibility. Although courts often give very generous interpretations to the reasonability of plan administrators’ decisions, this court found that the express language of Rock-Tenn’s disability plan called only for the claimant to “provide proof” of the asserted disability. Id. at 20. Even though Rock-Tenn argued the notes provided by Mr. Pippen’s physicians did not meet their desired level of specificity, the court concluded that the orders provided enough information to deem the denial of the benefits to be arbitrary and capricious. The court emphasized that Rock-Tenn’s reviewing physicians’ opinions were flawed in their insistence for additional information from Mr. Pippen’s physician regarding his condition. Furthermore, Rock-Tenn’s doctors failed to indicate why Mr. Pippen’s doctors’ medical opinions should be disregarded so quickly compared to their own. This final point prompted the court to mention that a likely conflict of interest was involved in the denial of Mr. Pippen’s claim by pointing to Rock-Tenn’s exclusive reliance on medical opinions which benefited their interests.

Rock-Tenn had ABUSED it’s Discretionary Authority

In conclusion, the court ruled Rock-Tenn had abused its discretionary authority by denying Mr. Pippen’s claim. Therefore, it ordered that Mr. Pippen be paid the short-term disability payments which had been withheld because the plain language of his ERISA-governed plan did not require any more details concerning his injury than had already been furnished by his doctors. The take-away from this case should to be that there has yet to be an accepted standard established for how specific a doctor’s note must be in order for ERISA short-term disability benefits to be denied.

3 Key Factors: “Each and Every Duty” Requirement

We are starting a series on our blog called “3 Key Factors;” where we will take key concepts of Employee Benefits Law and tell you three key factors regarding those concepts. Please be aware that these will never tell the entire story, especially since every situation is different and may require a different evaluation based on that specific set of facts.

Today’s 3 Key Factors is regarding the “Each and Every Duty” Requirement that is a part of most Disability Insurance policies. In most jurisdictions, this requirement is essentially interpreted to state that you cannot receive your disability insurance benefits until you are UNABLE TO PERFORM EVERY SINGLE JOB DUTY of your job.

3 Key Factors:

  1. Transferable skill analysis comes into play when evaluating the each and every duty rule. This analysis is essentially based on determining whether your skills apply to that position or would be applicable in a different role, which would mean that you are not entirely disabled. We will have a separate article regarding transferable skills in the coming weeks.
  2. Mental capacity and stress are now starting to come into play when the court analyzes this issue. In Granger v. Life Ins. Co. of N. Am., 2016 WL 2851434, the court ruled that CIGNA’s doctors failed to consider the Granger’s ability to multitask, perform under stress and otherwise be mentally capable to meet the demands of a strenuous job.
  3. As previously stated, being able to effectively perform even one single duty of your occupation means you are not eligible to receive disability benefits.

 

You Don’t Have To Figure Disability Insurance Out Alone

Obtaining your disability insurance benefits may be a difficult path and many applicants could greatly benefit from having an experienced ERISA and employee benefits attorney in their corner. At Kotlyarov Law Group, we strive to help people in Kansas City and in Springfield, MO obtain the benefits they need and get peace of mind they deserve. Call today or fill out our contact form to schedule a free consultation.

9 Red Flags Signaling An ERISA Violation

ERISA Violations, What Are Some of the Signs?

The Employee Retirement Income Security Act (ERISA) of 1974 is a stringent set of guidelines which employers and plan administrators must adhere to in order to properly administer retirement plans, long term disability, short term disability and other plans that fall under it’s guidelines. Below are nine signs of potential ERISA violations that may require the help of an attorney.

9 Signs of Potential ERISA Violations

  • Investments in 401(k) plans have suffered major losses due to misrepresentations by the company
  • Company fails to provide original documents and copies of the plan to participants
  • Company fraud causes stock value to plummet and employees’ pension plans are left with little value
  • Traditional pension plans are magically converted into cash balance plans or some other form of plan
  • Long term and older employees see the value of their plans lowering in a significant manner
  • Discrimination based upon age blatantly contained within the plan formula
  • Participants of the plan fall victim to excessive and unreasonable fees charged by the plan service provider while the company and/or it’s fiduciary either cause the fees or turn a blind eye to the problem.
  • A company merger with another company causes a significant shift in the retirement plan
  • Company stock is improperly included as an investment option in it’s plan

If you think that you and/or your loved ones and friends are becoming victims of an ERISA violation, Kotlyarov Law Group may be able to help.

Seeing the ERISA Violation Red Flags? Contact us!

The ERISA and long-term disability team at Kotlyarov Law Group are happy to provide you with a free initial consultation regarding the potential ERISA violation you may be experiencing. We are available by appointment which can be set up by calling (913) 725-0735

Analysis: Geissal v. Moore Med Corp.

Geissal v. Moore Med. Corp. 524 U.S. 74 (1998).

This case resolved whether the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allowed James Geissal, later posthumously represented by his wife, to continue the health insurance policy provided by his employer, Moore Medical Corp. (Moore), notwithstanding the fact that he was also covered by his wife’s policy. Following Moore’s termination of Mr. Geissal from their employ, he elected to continue the health insurance policy offered by Moore. However, shortly thereafter, Moore informed Mr. Geissal that COBRA prevented him from doing so because he already possessed insurance. Moore cited 29 U.S.C. § 1162(2)(D)(i) which allows an employer to cancel such continuation once the individual acquires another insurance policy. The lower courts sided with Moore.

However, the Supreme Court adopted a very literal interpretation of the text of COBRA holding that the additional coverage provided by Mr. Geissal’s wife did not preclude him from electing to continue the policy provided by Moore. The Court’s reasoning was centered on the statute containing the express language: “first becomes.” § 1162(2)(D). They determined that this wording does not include nor was ever intended to include coverage an individual may have had prior to his or her election to invoke COBRA’s coverage continuation.

In conclusion, COBRA does not prevent an individual from having more than one insurance policy at a given time. A person desiring to be covered in such a way merely needs to be sure that he or she already has his or her additional policy in place prior to electing to continue coverage under COBRA’s terms.

Even Negligible Plans Implicate ERISA

Analysis of Emmenegger v. Bull Moose Tube Co.

Since, the last case we reviewed was Fort Halifax Packing Co. v. Coyne, why don’t we look at a case from the east side of the Show-Me State that dealt with similar issues regarding severance payments involving ERISA implications?
Bull Moose Tube Co. (Bull Moose) is a Missouri-based company headquartered in Chesterfield, MO with a production facility in Gerald, MO and several other out-of-state locations. They specialize in the manufacture of industrial steel tubing and pipe. Unfortunately for Bull Moose, three of its former top executives; Charles Emmenegger, Robert Ritzie, and James Riley; filed suit in 1997 claiming that it had violated ERISA standards by failing to honor their stock and severance plans.

The first item reviewed in this action was a “phantom stock plan” given to the plaintiffs as part of their employment with Bull Moose. Emmenegger v. Bull Moose Tube Co. 197 R.3d 929, 930 (1999). By its express wording, this plan was meant to incentivize performance on the part of the plaintiffs by rewarding them with stock that would likely increase in value if redeemed under particular circumstances. The Eighth Circuit Court of Appeals disagreed with the District Court by holding that this plan did not constitute a pension plan in terms of ERISA. The determinate factor behind making this decision was that the plan’s participants could choose to cash in the stocks at a given time not necessarily dictated by one’s retirement from the company.
The second item reviewed was the severance plan Bull Moose utilized in this case. The respondent argued that like the Fort Halifax decision, its severance agreement did not constitute a “plan” in terms of ERISA. However, both the District Court and Court of Appeals disagreed because unlike Fort Halifax, Bull Moose’s severance policy did not involve a non-systematic, one-time, lump sum payment. The policy encompassed a discretionary determination as to the “reason for the employee’s termination and evaluat[ing] the quality of that person’s service.” Id. at 935. It is this requirement of individual discretion the Court reasoned constituted the necessary “plan” to implicate ERISA.
In conclusion, the Court of Appeals affirmed the decision of the District Court that the severance plan was governed by ERISA because Bull Moose was required to engage in ongoing determinations of severance eligibility. On the other hand, the phantom stock plan was deemed to be a bonus program not covered by ERISA because it was meant to act as an incentive for performance not necessarily a part of one’s retirement package.