Articles Posted in ERISA

O’Ryan Law Firm, on behalf of Plaintiff Shane C., recently filed a federal lawsuit against The Prudential Insurance Company of America (“Prudential”). The Plaintiff was employed as Senior Vice President Regional Manager with Custard Insurance Adjusters, Inc. which made him eligible for disability benefits under the Custard Insurance Adjusters, Inc. Long Term Disability Plan (the “Plan”).  As a Regional Manager, Shane was required to travel to 9 different offices throughout the Midwest to oversee and supervise these 9 offices.

In Shane C. v. The Prudential Insurance Company of America and Custard Insurance Adjuster, Inc. Long Term Disability Plan, the Plaintiff filed a lawsuit under ERISA to gain the long-term disability benefits he was entitled to under the terms of the Prudential policy.

Facts of the Case Against Prudential

At the O’Ryan Law Firm, we represent numerous clients who have become disabled and their disability claim was denied by their insurance company. We then represent the clients in the appeal process to appeal the denial of their disability benefits.  Lately, many of the insurance companies have be issuing late determination decisions on the appeals that we submit to those companies.  By law, an insurance company is required to issue a decision within 45 days of the date of receipt of the appeal unless an extension is warranted due to “special circumstances” but even then, a decision on the appeal must be rendered within 90 days at the latest.

The Supreme Court in Firestone Tire & Rubber v. Bruch, 489 U.S. 101, 115 (1989) held that de novo adjudication of employee benefit claims is the norm. Because the de novo standard of review is the default standard in an ERISA employee benefits case, the plan administrator or insurance company bears the burden of showing that the more deferential standard should apply. Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir.2002)Marguez-Massas v. Squibb Mfg., Inc., 344 F.Supp.2d 315, 320 (D.P.R. 2004); McDonald v. Timberland Co. Group LTD Coverage Program, 2002 WL 122382, at *3 (D.N.H. Jan.23, 2002). Accordingly, once in litigation, a disability insurance company bears the burden of proving that their decision is entitled to deferential review by the Court.

The regulations governing ERISA disability claims require insurance companies to issue a decision on a claimant’s appeal within 45 days of the date that the insurance company received the appeal unless “special circumstances” warrant an extension of time for an additional 45 days; however, in “no event” shall the extension of time exceed 45 days. 29 C.F.R. §2560.503-1(i)(1), (i)(3), (i)(4).

O’Ryan Law Firm, on behalf of Plaintiff Laura McKenzie, recently filed a federal lawsuit against Life Insurance Company of North America (“LINA”), which is a subsidiary of Cigna Corporation. The Plaintiff was employed as a Registered Nurse with Allied Physicians, which made her eligible for disability benefits under the Allied Physicians, Inc. Long Term Disability Plan (the “Plan”).

In Laura McKenzie v. Life Insurance Company of North America and Allied Physicians, Inc. Long Term Disability Plan, the Plaintiff filed a lawsuit to gain the long-term disability benefits she was entitled to under the terms of the Plan.

Facts of the Case Against LINA

Plaintiff was employed by Allied Physicians, Inc. as a Registered Nurse until she became disabled in 2009 due to the disabling effects of cervical and lumbar spondylosis and other serious medical conditions. Plaintiff filed an application for long term disability benefits and was paid disability benefits by the Allied Physicians, Inc. Long Term Disability Plan from October 2014 to October 2016. LINA issued the disability policy that provided disability coverage to the employees of Allied Physicians.
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O’Ryan Law Firm, on behalf of Plaintiff, Jilian F., recently filed a federal lawsuit against Metropolitan Life Insurance Company (“MetLife”) in an attempt to reinstate the Plaintiff’s disability benefits claim. The Plaintiff was employed as a Marketing Communication Specialist with Landis + Gyr, which made her eligible for disability benefits under the Cellnet + Hunt Employee’s Welfare Benefit Plan (the “Plan”). In Jilian F. v. Metropolitan Life Insurance Company and Cellnet + Hunt Employee’s Welfare Benefit Plan, the Plaintiff filed a lawsuit to gain the long-term disability benefits she was entitled to under the terms of the MetLife policy.

Facts of the Case Against MetLife

Plaintiff was employed by Landis + Gyr until she became disabled in 2011 due to the disabling effects of Thoracic Outlet Syndrome, cervical degenerative disc disease and cervical radiculopathy, severe neck pain, fibromyalgia, carpal tunnel syndrome, and paresthesia.

Plaintiff filed an application for long term disability benefits and was paid disability benefits by MetLife from August 2013 to September 17, 2014.

MetLife Terminates Long-Term Disability Benefits

On September 17, 2014, MetLife wrongfully terminated the Plaintiff’s long-term disability benefits. Plaintiff, represented by the O’Ryan Law Firm, then filed an administrative appeal with MetLife challenging the termination of her disability benefits. With this appeal, the Plaintiff included significant medical evidence to prove that she continued to meet the definition of Disabled under the MetLife policy. However, MetLife refused to overturn their decision to terminate the benefits. As a result, the Plaintiff was forced to file a lawsuit under ERISA in federal court against MetLife to obtain the benefits due her under the MetLife policy.
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Many of our clients suffer from depression as a result of their disabling physical conditions or they may have other disabling psychiatric conditions such as bipolar disorder. It is important to be aware that most disability policies cut-off disability benefits after 24 months of benefits if the disabling medical condition is considered a psychiatric condition otherwise known as a “mental impairment.” Each policy contains different language on this issue. For instance, the Prudential policy provides

What Disabilities Have a Limited Pay period Under Your Plan?

Disabilities which, as determined by Prudential, are due in whole or part to Mental illness also have a limited pay period during your lifetime.

The limited pay period for self-reported symptoms and mental illness combined is 24 months during your lifetime.

Mental illness means a psychiatric or psychological condition regardless of cause. Mental illness includes but is not limited to schizophrenia, depression, manic depressive or bipolar illness, anxiety, somatization, substance related disorders and/or adjustment disorders or other conditions. These conditions are usually treated by a mental health provider…using psychotherapy or psychotropic drugs.

In the case of Deal v. Prudential:

 Deal saw a host of medical professionals for both physical and psychological conditions out of a knee injury and associated pain.
 Diagnosed with Moderate Major Depressive Order  Two psychologists reports indicating Deal’s disability caused, at least in part, by mental disorders  The Court concluded–“Prudential has not shown that the mental disorder benefit limitation applies.”
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Many Indiana employees receive group disability insurance coverage through Aetna. Headquartered in Hartford, Connecticut, Aetna is a large disability insurance company that is currently in the Fortune 100. O’Ryan Law Firm has successfully represented many clients whose disability insurance benefits have been unfairly denied or terminated by Aetna.

Short Term Disability Benefits

Aetna’s short term disability coverage pays benefits after a short elimination period (often a week long). Short term disability benefits usually last three to six months. During Aetna’s investigation of the short term disability claim, it is common for Aetna to gather medical records, gather information about the claimant’s job, require statements from treating providers about the claimant’s ability to work and expected duration of disability, and have internal medical consultants review all medical evidence. If the individual is approved for short term disability benefits through the maximum duration of the policy, then they may apply for long term disability benefits.

Long Term Disability Benefits

After an elimination period that is typically the length of the short term disability period, the claimant may apply to Aetna for long term disability benefits. When a claimant receives long term disability insurance through a private employer, their claim is usually governed by the Employee Retirement Income Security Act (“ERISA”).

In addition to information already gathered during the short term disability claim, Aetna will request updated medical records and statements from treating providers, may perform a vocational analysis, and may have internal medical consultants or external medical consultants review the medical evidence. It is very common for long term disability policies to require that the claimant prove disability from their own occupation for the first 24 months of long term disability benefits and then require that the claimant prove disability from any occupation after 24 months of long term disability benefits.

During the long term disability claim, it is more common for Aetna to utilize claim review tactics such as referring the claimant for an Independent Medical Examination (“IME”), contracting private investigators to perform surveillance of the claimant, contracting peer reviewing physicians to review evidence and call the claimant’s doctors, and perform a Transferable Skills Analysis to see if the claimant can return to work in a different job. If a claimant is approved for long term disability benefits, it is likely that Aetna will urge the claimant to apply for Social Security disability benefits. Aetna may even refer the claimant to one of its vendors to represent them in their Social Security disability claim.
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The Prudential Friendly Society was founded by insurance agent John Fairfield Dryden in a basement office in downtown Newark, N.J., in 1875. It was the first company in the U.S. to make life insurance available to the working class. In business for 137 years, it boast 48,000 employees worldwide.

At the O’Ryan Law Firm, we receive numerous calls a year from individuals who have become disabled, have disability coverage through Prudential, their doctor has reported to Prudential that they cannot work and Prudential denies the claim. One of Prudential’s favorite reasons for denying claims is what they call a lack of “objective medical evidence.” Many conditions, such as fibromyalgia or migraine headaches, result in symptoms, such as pain and fatigue, which are hard to prove objectively. There are no lab tests or diagnostic testing that are able to establish the severity of chronic pain or fatigue. Yet Prudential in these types of claims will insist on objective medical evidence to prove the disability thus making it nearly impossible to get the claim approved.

The courts have made clear in numerous cases that an insurer’s refusal to honor a claim for lack of scientific data such as lab tests and x-rays is an abuse of discretion where no such data exists in medicine for the conditions at issue and where licensed physicians have provided professional opinions that the conditions are genuine and credibly disabling the claimant. See Holmstrom v. Metropolitan Life Insurance Company, 615 F.3d 758, 769-772 (7th Cir. 2010); Leger v. Tribune Company Long Term Disability Benefit Plan, 557, F.3d 823, 834-835 (7th Cir. 2009); Hawkins v. First Union Corporation Long-Term Disability Plan, 326 F.3d 914, 919 (7th Cir. 2003).

In Holmstrom, the claimant suffered from Complex Regional Pain Syndrome (“CPRS”), a condition recognized by the medical community but for which there is no specific diagnostic test. 615 F.3d 758, 768. In that case, the plan acknowledged “Holmstrom’s claims of intractable pain, significant physical limitations, and cognitive deficiency as identified by [claimant and her treating physician],” but found “that the lack of objective findings to support ongoing total disability prevented [the plan] from determining whether [claimant’s] disability was genuine.” Id. at 764. In finding the Holmstrom plan’s denial arbitrary and capricious, the court stated that the plan “gave undue weight to the absence of objective measurements for [claimant’s] impairments,” reasoning that:

Subjectively painful conditions like CPRS and fibromyalgia pose difficult problems for private disability insurance plan administrators and the Social Security Administration, who understandably seek to make decisions based on the most objective evidence available. But we have rejected as arbitrary an administrator’s requirement that a claimant prove her condition with objective data where no definitive objective tests exist for the condition or its severity.
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Most long term disability benefit plans or policies require claimants to apply for Social Security Disability benefits in addition to applying for long term disability benefits. The reason being that the insurance is able to offset any SSDI award against any monthly long term disability amount that is owed to the claimant under the policy. The SSDI monthly benefit is a dollar-for-dollar offset against what your insurance company pays you in terms of a monthly long term disability benefit payment. For example, if you are receiving $2,000 a month in long term disability and you are subsequently awarded an SSDI benefit of $1,000 then your long term disability benefit payment is reduced to $1,000 according to the terms of the disability policy. Because this offset is so valuable to the insurance companies, they will be persistent in their demands that you pursue your claim for SSDI benefits.

Unfortunately, we see many individuals who are receiving long term disability benefits, are then awarded SSDI and subsequently their insurance company terminates the long term disability benefit claim. This happens despite the fact that the insurer may have hired a company, such as Allsup or the Advocator Group, to represent the claimant in the SSDI process. It seems unfair that the insurance company can represent to the Social Security Administration that you are totally disabled but then terminate your benefits claiming you are no longer disabled for purposes of the disability policy.

When we have clients in this position, we first of all point out to the insurance company that the definition of disabled for purposes of SSDI is more stringent than the definition of Disabled under the terms of the policy. The SSA defines “disability” as the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. 42 U.S.C. §423(d)(1)(A).

Oftentimes, the insurance company will ignore the SSDI findings of total disability or fail to analyze or distinguish the SSA’s fully favorable decision in any of its denial letters. The courts have held that it is improper for the insurer to ignore the SSA’s decision of total disability given the fact that it is important proof that the claimant meets the definition of Disabled under the policy. “This definition is a stringent one, and an administrator’s failure to address a claimant’s SSA disability finding is thus especially questionable when the ERISA plan’s disability definition is less exacting.” Holzmeyer v. Walgreen Income Protection Plan for Pharmacists and Registered Nurses, 2014 WL 4388625, *18 (S.D. Ind. Sept. 4, 2014).
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Sedgwick Claims Management Services (“CMS”) is a third party claims administrator hired by insurance companies and employee benefit plans to manage disability claims. If your employee benefit plan uses Sedgwick CMS as a claims administrator, then Sedgwick CMS is responsible for deciding whether your disability claim is approved or denied. As well as processing and adjudicating disability claims, Sedgwick holds itself out as providing the following services:

The company specializes in workers’ compensation; disability, FMLA, and other employee absence; managed care; general, automobile, and professional liability; warranty and credit card claims services; fraud and investigation; structured settlements; and Medicare compliance solutions (website last visited August 16, 2014).

Sedgwick CMS is headquartered in Memphis, Tennessee and is one of the largest third party administrators in the nation. Many Indiana employers hire Sedgwick CMS to serve as their claims administrator for employee benefits. Employee benefit plans that currently use or previously used Sedgwick CMS include Eli Lilly & Company, AT&T, Comcast, Walgreens, Franciscan Alliance Inc., SPX Corporation, Ascension Health, Hewlett-Packard, PepsiCo Inc., International Paper, UnitedHealth Group, and many others. If employees of these companies apply for short term or long term disability benefits, Sedgwick CMS is responsible for processing the claims and deciding whether benefits should be paid. As a third party administrator, Sedgwick CMS does not actually pay the disability benefits. Rather, the employee benefit plan or insurance company pays disability benefits if Sedgwick CMS approves the claim. Often, the employee benefit plan has little involvement in the disability claims process, if any.

Like disability insurance companies, Sedgwick initially reviews a disability claim by obtaining medical records, requiring the claimant’s treating physician to complete questionnaires, and having in-house staff (nurses, doctors, vocational analysts, claims analysts) review the claimant’s file. If the claim is denied and the claimant appeals, then Sedgwick’s review of the appeal will likely include the use of contracted record reviewing physicians. If the claim is approved, Sedgwick may call or write to the claimant frequently in efforts to obtain more information. Sedgwick may also require the claimant to undergo an “Independent Medical Examination” or “Functional Capacity Evaluation.”
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The Employee Retirement and Income Security Act (“ERISA”) mandates that insurance companies and claims administrators provide claimants with the specific reasons for the denial or termination of employee benefits and the reasons for the denial must be in writing. See Militello v. Cent. States, Se. and Sw. Areas Pension Fund, 360 F.3d 681, 688 (7th Cir. 2004), cert. denied, 543 U.S. 869 (2004). The Department of Labor has promulgated regulations under ERISA which require certain information to be contained in a denial or termination of benefits letter. Specifically, 29 C.F.R. §2560.503(g) states:

Manner and content of notification of benefit determination.

(1)….The notification shall set forth, in a manner of calculated to be understood by the claimant –

(I) Reference to the specific plan provisions on which the determination is based;

(II) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary;

These requirements ensure that when a claimant appeals a denial to the plan administrator, he or she will be able to address the determinative issues and have a fair chance to present his case. Halpin v. W.W. Granger, 962 F.2d 685 (7th Cir. 1992). Describing the additional information needed, as required by this section, enables a claimant to gain a better understanding of the inadequacy of his claim and to gain a meaningful review by knowing with what to supplement the record. Wolfe v. J.C. Penney Co., 710 F.2d 388 (7th Cir. 1983).
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