The Friday Five: Five Current ERISA Litigation Highlights – December 2019
This month’s Friday Five explores cases where the courts directly examined the type of information that a claims administrator can, and should, rely on when reaching ERISA benefits determinations
The Saul Ewing Arnstein & Lehr Employee Benefits/ERISA Litigation Team
- An administrator is not required to consider a social security decision issued after its final administrative decision. In Ortiz, the plaintiff received LTD benefits due to fibromyalgia and degenerative joint disease during the own occupation period. Under the any occupation standard, Hartford denied the claim. After Hartford reached its any occupation decision, the plaintiff received a favorable decision for social security disability benefits. Hartford declined to re-evaluate the claim and the plaintiff sued. In her lawsuit, she claimed that the defendant Hartford “could not have made a fair, reasoned and unbiased decision without taking into account ... the social security decision.”
The district court disagreed on two bases. First, the court reasoned that when (as was the case here) the administrator’s decision occurs prior to the social security disability decision, the administrator “cannot take the latter information into account.” Second, the court also noted that although an administrator’s decision “must be reasonable and cannot ignore medical evidence favoring the beneficiary … the administrator need not defer to a social security decision.” Rather, it is “possible that in using the same body of evidence the administrator and the social security judge could reach divergent conclusions.” This is because “[s]ocial security and ERISA operate on two separate planes, with divergent legal standards” and “employers have ‘leeway to design disability and other welfare plans as they see fit.’” Ortiz v. The Hartford, No. 1:18-cv-00636-RB-KK, 2019 WL 5697784 (D. New Mexico Nov. 4, 2019).
- Denial under a pre-existing condition exclusion may not require a specifically timed diagnosis. In Ferrizzi, the plaintiff-appellant contended that the district court erred in granting Reliance a summary judgment. Specifically, the plaintiff claimed that Reliance did not reasonably prove that his substance abuse/drug dependency was a pre-existing condition under the terms of the policy. By way of quick background, the plaintiff claimed long-term disability benefits within one year of his effective date of insurance. In that situation, per the policy terms, Reliance conducts a pre-existing condition investigation to determine whether the claimed disability was excluded from coverage under the policy’s pre-existing condition language. Here, the plaintiff insisted that the pre-existing condition exclusion did not apply because he was not diagnosed or treated for substance abuse/drug dependency during the lookback period.
The circuit court disagreed, citing the policy’s definition of a “pre-existing condition,” which did not require a specific diagnosis or a specific timed diagnosis of a condition for the exclusion to apply. Instead, under the policy, if the plaintiff received “treatment, consultation, care or services, including diagnostic procedures, or took prescribed drugs or medicines” for “any sickness or injury” that caused, contributed to, or resulted in his “total disability” from substance abuse/drug dependence, then the policy excludes coverage.
Applying that definition, the court noted that the plaintiff received “medical treatment” for substance abuse/drug dependency on at least one occasion during the lookback period. Namely, on December 10, 2014 a provider declined to provide drugs when the plaintiff presented with “drug seeking behavior.” Interestingly, in citing this treatment record, the circuit court noted that, “[t]he treatment notes from this one visit alone are sufficient to exclude coverage under the language of Reliance’s policy.” The court did go on to explain that the December record was not the only evidence supporting Reliance’s decision, citing among other things, multiple attempts to obtain prescriptions for benzodiazepines from three different doctors on at least three different occasions. But in the end, these treatment records, which undoubtedly fell short of a clear diagnosis, provided sufficient evidence of substance abuse to support the pre-existing condition denial. Ferrizzi v. Reliance Standard Life Insurance Co., No. 18-11803, 2019 WL 5813992 (11th Cir. Nov. 7, 2019).
- Failure to satisfy a waiting period is a proper basis for denial. In Benson, the plaintiff-appellant challenged the district court’s grant of summary judgment in favor of Hartford Life and Accident Insurance Company. In affirming the decision below, the circuit court focused on the terms of the policy, which made clear that a plaintiff is only entitled to a long-term disability benefit if he can prove that he was disabled throughout the entire elimination period. In other words, a plaintiff cannot prevail merely by proving that he was disabled at some point during the elimination period. He must prove that he was disabled throughout the entire elimination period. Reviewing the record de novo, the circuit court determined that the plaintiff failed to prove that he was disabled throughout the elimination period.
The court based its decision on three bases. First, the circuit court reviewed the plaintiff’s initial applications for short-term and long-term disability benefits and found it significant that the alleged disabling condition, polymyalgia rheumatica (PMR) was never identified as a disabling condition in his initial applications for either benefit. Second, the circuit court reviewed the contemporaneous treatment notes from the plaintiff’s physicians and concluded that none of the treatment notes made during the elimination period indicated any disability attributable to PMR. Third, the court determined that the medical records supported the view that the plaintiff could perform his job duties for periods of time within the elimination period. On these bases, the court affirmed the district court’s decision. Benson v. Hartford Life & Accident Ins. Co., No. 18-14835, 2019 WL 6245753 (11th Cir. Nov. 22, 2019).
- ERISA does not impose a “heightened burden of explanation” on administrators when they reject a treating physician’s opinion. In Goodman, the plaintiff argued that Reliance’s decision (at the any occupation stage) was arbitrary and capricious because it gave more weight to the conclusions of an independent medical reviewer than to the plaintiff’s treating physicians. But the court rejected this position, noting that “the job of weighing valid, conflicting professional medical opinions is not the job of the courts; that job has been given to the administrators of ERISA plans.” In addition to the well-settled view that a plan administrator is not required to accord special deference to the opinions of treating physicians, this court added that ERISA does not “impose a heightened burden of explanation on administrators when they reject a treating physician’s opinion.” As a result, the court found that the decision of Reliance was supported by substantial evidence and was not arbitrary and capricious. Interestingly, in this decision, the court also highlighted that while the opinions of a treating physician may suggest certain physical limitations for employment, an administrator may take into account documentation from those physicians which contradict those limitations. Goodman v. Reliance Standard Life Ins. Co., No. 6:18-CV-00623, 2019 WL 5791753, at *4 (W.D. La. Nov. 5, 2019).
- An administrator may be able to rely on changes in economic conditions and labor markets when assessing an any occupation claim. In Meiman, the plaintiff filed suit against Aetna Life Insurance after Aetna terminated the long-term disability benefits it had been paying her for over ten years. Important to this summary, it is undisputed that Aetna had a past practice of identifying jobs using a transferable skills analysis, but then continuing to pay benefits if a labor market survey revealed no viable labor market for the jobs identified. Indeed, on at least two occasions, Aetna concluded that the plaintiff could perform sedentary or light work and yet continued to pay benefits due to a dearth of available jobs that met the Plan’s wage requirements. It is also undisputed in terminating the plaintiff’s claim Aetna relied solely on a 2016 transferable skills analysis, which identified illustrative jobs.
The plaintiff argued that it was unreasonable for Aetna to rely on past practice and to rely solely on its 2016 transferable skills analysis. The court rejected this argument because “there is no requirement, under the Plan or Sixth Circuit law, that Aetna perform a labor market survey.” It goes on to note that “the only legal or contractual requirement in this instance is that Aetna have evidence that identifies representative jobs that meet the Plan's adjusted wage requirement,” and the 2016 transferable skills analysis (according to the court) met this requirement. Meiman v. Aetna Life Ins. Co., No. 2:18-CV-75 (WOB-CJS), 2019 WL 5782099 (E.D. Ky. Nov. 5, 2019).
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