The Friday Five: Five Current ERISA Litigation Highlights – April 2019
This month’s Friday Five covers cases relating to the court’s power to award "any occupation" benefits absent an original determination by the insurer, the relevance of post-benefit decision evidence, the weight accorded to treating medical providers who act as advocates, and prejudgment interest under ERISA.
The Saul Ewing Arnstein & Lehr Employee Benefits/ERISA Litigation Team
- After a decade of litigation, the Third Circuit affirms summary judgment and refuses to award the prospective any occupation benefits. After almost a decade of litigation and multiple remands to the insurer, the Third Circuit determined that the District of New Jersey appropriately granted summary judgment for the insurer. Notably, despite opposite arguments from the insured, the Third Circuit found that the insured was not entitled to any benefits past the 24-month own occupation period until after the claim was evaluated first by the insurer, and agreed that the district court was “powerless” to grant such prospective benefits. Kelly v. The Penn Mutual Life Ins. Co., and Reliance Standard Life Ins. Co., No. 18-1162, 2019 WL 990244 (3d Cir. Feb. 28, 2019).
- Will post-benefit termination changes in medical status impact an entitlement to LTD benefits? The insured’s LTD benefits were terminated at the conclusion of the own occupation period. On summary judgment, she postured that, among other issues, the insurer’s selected location of an IME was improper, and a hip replacement three years after benefits were terminated rendered the insurer’s decision arbitrary and capricious. The Western District of Pennsylvania disagreed, and reminded that its review was confined only to evidence before the claims administrator at the time of the decision, not later changes in the insured’s health. The court granted summary judgment for the insurer. Litvinuk-Roach v. Reliance Standard Life Ins. Co., No. 18-276, 2019 WL 1129435 (W.D. Pa. Mar. 12, 2019).
- Should a claimant be granted leave to amend a complaint to include post-benefit termination occurrences? Similar to the district court in Litvinuk-Roach, the Southern District of Georgia determined that leave for a plaintiff to amend her complaint to add updates to her medical condition well after the insurer’s benefits decision was futile. The plaintiff asked for leave to add a favorable Social Security Disability Benefits decision and other post-termination occurrences, but the court determined that "such facts are irrelevant because they were not available for [insurer’s] consideration when it made its denial decision." Lord v. Am. Gen. Life Ins. Co. of Del., No. 17-167, 2019 WL 12244725 (S.D. Ga. Mar. 18, 2019).
- Can an insurer discount the opinion of an insured’s treating physician when the physician acts as an advocate, not as an objective medical provider? The insured filed litigation after the insurer terminated her LTD benefits, and alleged that the insurer erred because, among other reasons, it discounted the opinion of her treating physician. The Southern District of Indiana disagreed, and found that the physician’s opinions were not credible for a host of defects. Among them, the court determined that the physician was acting "more as an advocate," than as an impartial provider, and his conclusions were directly contradicted by other medical evidence. The court specifically mentioned the provider’s messages with colleagues where he lamented over the plaintiff’s condition, noting “darn it” in response to her issues, and further highlighted the physician’s understanding "through the grapevine" that the plaintiff’s job was in jeopardy. The court granted summary judgment in favor of the insurer. Miller v. The Hartford Life and Acc. Ins. Co., No. 16-166, 2019 WL 1330433 (S.D. Ind. Mar. 25, 2019).
- Prejudgment interest not a guarantee under ERISA. A beneficiary of a $750,000 life insurance policy won on her counterclaim for the full death benefit, and also was awarded more than $550,000 in fees. The district court, however, denied her claim for prejudgment interest, reasoning that the judgment dollars would come from a trust set up by a number of employers to provide group benefits to employees. The trust was entangled in a case brought by the DOL, which resulted in an almost $40 million verdict against the fiduciaries of the trust, and revealed at least a $19 million shortfall in the trust. The district court determined that it would be inequitable to award interest on top of the already sizeable judgment to the detriment of other individuals with an interest in the assets of the trust. The Third Circuit affirmed and found that the “unusual circumstances” of the case permitted a denial of prejudgment interest, despite precedent that such interest was the norm. Regional Employers Assurance v. Castellano, No. 17-3753, 2019 WL 1178742 (3d Cir. Mar. 13, 2019).