Magistrate Judge Kristen Mix of the U.S. District Court for the District of Colorado recently found in favor of an ERISA long-term disability claimant’s right to conduct discovery. This order can be found in Almedia v. Hartford Life and Accident Insurance Company, No. 09-cv-01556-ZLW-KLM, 2010 WL 743520 (D.Colo. March 2, 2010). In reaching the conclusion that discovery is permitted in ERISA governed LTD case, Judge Mix cited to and partially relied upon a decision in prior case handled by this office, Kohut v. Hartford Life and Accident Insurance Company.
Similar to the issues this office had pursued in the past, the Plaintiff in Almedia sought discovery concerning the scope of the conflict between Hartford Insurance and the third party independent medical reviewers and professionals it utilizes to deny claims. Plaintiff also sought information concerning potential improper incentives paid to Hartford employees who rendered claim decisions, information concerning Hartford’s claims manuals, training and claims guidelines and (more…)
The 10th Circuit Court of Appeals recently issued a decision addressing two ERISA issues: (1) what constitutes a “governmental plan;” and (2) the right to trial by jury. These issues were addressed in the case of Shirley Graham v. Hartford Life and Accident Insurance Company, 589 F.3d 1345 (10th Cir. 2009), decided December 29, 2009. This was an appeal out of the Northern District of Oklahoma.
At issue was Ms. Graham’s claim for long-term disability (LTD) income protection benefits. She was a former employee of the United States Postal Service (USPS). Unlike most LTD plans, Ms. Graham was insured under a plan established by the National Rural Letter Carriers Association (NRLCA), recognized by the USPS as the exclusive bargaining representative for rural letter carriers. The NRLCA procured the group long term disability policy from Hartford. USPS was not involved in those negotiations, nor did it sponsor the plan. Given these facts, the Court concluded that although Ms. Graham was considered a governmental employee of the USPS, the actual plan and policy at issue was obtained by an employee organization, and not the governmental employer. As a result, the plan was not a “governmental plan” and therefore not exempted from ERISA. (more…)
Earlier this year, the Law Office of Shawn E. McDermott, LLC received a favorable decision from the United States District Court Judge Christine M. Arguello in an ERISA long term disability case involving two important issues. The case handled by this office is titled Mark Kohut v. Hartford Life and Accident Insurance Company and has now been published by WestLaw at __ F.Supp.2d __, 2008 WL 5246163 (D. Colo.). This disability case was subsequently resolved by agreement of the plaintiff and disability insurance company, Hartford Insurance.
As mentioned in an earlier blog, dated June 5, 2008, the Colorado legislature adopted C.R.S. §10-3-1116 which bans the use of “discretionary clauses” within any insurance policy, including group policies, issued in Colorado. We believe this is the first decision issued (more…)
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On June 27, 2008, the United States Supreme Court denied review in the case of Amschwand v. Spherion Corp., No. 07-841. In this author’s opinion, the Supreme Court should have accepted cert, and should thereafter have overturned the lower court’s decision in the case.
The question presented in Amschwand was whether an action by a plan beneficiary against a plan fiduciary for monetary relief equal to the insurance benefits that the beneficiary would have received absent the fiduciary’s breach of fiduciary duties seeks “equitable relief” within the meaning of ERISA §502(a)(3). To understand the question presented, a review of the facts is necessary. Mr. Amschwand was employed by Spherion Corp. and was a participant in Spherion’s group life plan, which was insured by Aetna Life Insurance Company. In 1999, Amschwand was diagnosed with cancer and took leave from his job. (more…)
On June 19, 2008, the Supreme Court issued its decision in Glenn v. Metropolitan Life Insurance Co., No. 06-923, 2008 WL 2444796. The Court was asked to address the issue of the conflict of interest which exists when the entity that administers an ERISA plan, such as an insurance company, is also the entity which pays the benefits out of its own pocket. The Supreme Court confirmed that a conflict of interest exists in such a situation and the court must consider the conflict or at least be “weighed as a factor” in determining whether the denial of an employee’s claim for benefits was proper. The court in Glenn found that MetLife, as plan administrator, engaged in a dual role of both evaluating and paying benefit claims which creates the kind of conflict of interest previously referred to in the Supreme Court’s decision of Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). Unfortunately, the ERISA statutory scheme failed to contain an express standard of review for the courts to follow in reviewing a beneficiary’s denied claim. Pursuant to Firestone, the court found that a denial of benefits challenged under ERISA § 502(a)(1)(B) must be reviewed under a de novo standard unless the benefit plan expressly provides the plan administrator or fiduciary (often times the insurance company) with discretionary authority to determine eligibility for benefits or to construe the plan’s terms, in which case a deferential (or arbitrary and capricious) standard of review would be appropriate. Ever since the court’s ruling in Firestone in 1989, the district and circuit courts have struggled with the proper application of this arbitrary and capricious standard of review. The hope was that the Supreme Court would clarify the appropriate standard of review in those case where discretionary authority had been granted to a fiduciary and such fiduciary was acting under a conflict of interest. The new Glenn v. MetLife decision clarifies this approach somewhat and, in this author’s opinion, serves to overturn the 10th Circuit’s approach as set forth in Fought v. Unum, 379 F.3d 1997 (10th Cir. 2004). (more…)
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We just learned this morning that Governor Ritter signed into law House Bill 1407 yesterday afternoon which has the ability to dramatically assist beneficiaries/insureds of insurance contracts, including those governed by ERISA. Generally speaking, the bill provides specific rights and remedies to insureds under insurance contracts whose claims have been unreasonably delayed or denied. Specifically, such a finding can result in the recovery of reasonable attorney’s fees and up to two times the actual damages sustained. See C.R.S. §10-3-1116, as now amended.
Additionally, the law bans the use of “discretionary clause” provisions within any insurance policy, including group policies. (more…)
Often times, both potential clients and inexperienced attorneys will contact our office and are surprised to learn that insurance bad faith claims cannot be pursued when a group insurance policy is governed by Employee Retirement Income Security Act of 1971 (visit our ERISA disability and health insurance claims page for a more detailed summary of “ERISA”). A group insurance policy obtained through an employer, such as a long term disability income replacement policy, looks like an ordinary policy but is not treated as such in the eyes of the law. That is because it is a group policy provided to an individual by his or her employer, and is thus governed by ERISA. (more…)
On November 30, 2007, the 10th Circuit Court of Appeals issued the decision in Jewell v. Life Ins. Co. of North America, 2007 WL 4218919. In this case, Mr. Jewell was seeking long term disability benefits through a group policy purchased with LINA (CIGNA) on behalf of the employees of Sprint Telecommunications. Mr. Jewell was suffering from severe headaches, dizziness, panic attacks, and depression. His benefits were denied under the policy’s mental illness limitation. After the lawsuit was transferred to federal court, the attorney for Plaintiff sought to introduce two additional opinions from Plaintiff’s physicians. Whether or not additional evidence can be presented following the insurance company’s determination of a claim is dependent upon the standard of review the court is to apply. If discretionary authority has been granted to the insurance company, the “arbitrary and capricious” standard of review will be applied by the trial court. If discretion has not been granted, the court’s review is “de novo” (of new). The Jewell decision addresses the admissibility of evidence in a de novo proceeding, and, (more…)
Often times, insurance policies contain enforceable provisions that may dramatically differ from one’s expectations, especially if the insured has not reviewed th policy in detail. For instance, many health insurance policies contain “subrogation clauses” which provide the insurer the ability to be reimbursed for medical expenses paid pursuant to the insurance policy if the insured also recovers in a separate legal action against the party responsible for the insured’s injuries. Subrogation clauses can, in some instances, be limited by a common law principal called the “make whole” doctrine. Under the make whole doctrine, the health insurer would not be able to recover medical expenses unless the insured had been “made whole,” in other words, unless the insured had been compensated fully. Across the country, courts are split on the applicability of the make whole doctrine in the ERISA context.
The oft-stated purpose of the subrogation clause is to avoid double recovery to an insured; however, the practical effect is that many people are unable to be fully compensated for their losses. (more…)
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Clients and lawyers alike are often surprised to learn that when ERISA litigation is successful, and a plan administrator’s decision is overturned by a court as arbitrary and capricious, the court “may either remand the case to the plan administrator for a renewed evaluation of the claimant’s case or . . . may order an award of benefits.” Flinders v. Workforce Stabilization Plan, 491 F.3d 1180 (10th Cir. 2007). According to this 10th Circuit Court of Appeals decision, if the plan administrator (often an insurance company) failed to make adequate factual findings or failed to adequately explain the grounds for the decision, then the proper remedy is to remand the case to the administrator (insurance company) for further findings or additional explanation. The judge makes the decision to either remand the case or to issue an award of benefits. If the judge remands the case, the claimant will have technically won the case without having actually obtaining a recovery. In this circumstance, the case/claim is simply remanded back to the insurance company (more…)