RUSH PRUDENTIAL HMO, INC. v. MORAN [00-1021]
 

(Rush) "It is, in fact, the Plan Administrator" (footnote 3)

As lower federal courts have erroneously interpreted ERISA preemption for decades, Supreme Court clarifies ERISA preemption for the first time, at the same time, Supreme Court clarifies and interprets ERISA as to how to identify and determine the plan administrator status, as most lower courts have erroneously interpreted ERISA for decades to consider the plan sponsor as the plan administrator when the plan administrator has granted the discretion to another party and has never exercised such discretionary authority.

ERISAClaim.com Comment: (click here for details)

MD Edgar Borrero v. United Healthcare of New York

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

http://www.ca11.uscourts.gov/opinions/ops/200815264.pdf

“Consistent with Connecticut State Dental, at least some of the claims pursued by the Appellants implicate legal duties dependent on the interpretation of an ERISA plan. These claims—about wrongfully denied benefits based on determinations of medical necessity—relate directly to the coverage afforded by the ERISA plans. Many of the other allegations in the complaint, for practices like downcoding and bundling, are based on independent provider-insurer contracts and do not implicate ERISA. But, because at least some of the allegations are dependent on ERISA, those claims are completely preempted and federal question jurisdiction exists. Because Appellants’ claims are completely preempted by ERISA, a federal court has subject matter jurisdiction over Appellants’ suit.”

SUPREME COURT OF THE UNITED STATES
Syllabus
KENNEDY, EXECUTRIX OF THE ESTATE OF KENNEDY,
DECEASED v. PLAN ADMINISTRATOR FOR DUPONT
SAVINGS AND INVESTMENT PLAN ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FIFTH CIRCUIT
No. 07–636. Argued October 7, 2008—Decided January 26, 2009

 

""2. Although Liv’s waiver was not nullified by §1056’s express terms, the plan administrator did its ERISA duty by paying the SIP benefits to Liv in conformity with the plan documents. ERISA pro-vides no exception to the plan administrator’s duty to act in accor-dance with plan documents. Thus, the Estate’s claim stands or falls by “the terms of the plan,” 29 U. S. C. §1132(a)(1)(B), a straight for-ward rule that lets employers “ ‘establish a uniform administrative scheme, [with] a set of standard procedures to guide processing ofclaims and disbursement of benefits,’ ” Egelhoff v. Egelhoff, 532 U. S. 141, 148. By giving a plan participant a clear set of instructions for making his own instructions clear, ERISA forecloses any justification for enquiries into expressions of intent, in favor of the virtues of adhering to an uncomplicated rule. Less certain rules could force plan administrators to examine numerous external documents purporting to be waivers and draw them into litigation like this over those waivers’ meaning and enforceability......."

ERISAclaim.com Comments (02/4/2009)

    In this case, a unanimous U.S. Supreme court ruled that ERISA plan administrator must follow ERISA and Plan documents with no exceptions to decide whom and how much benefits to pay, disregard of state laws and other private non-ERISA agreements.

    Although the case background was based on a divorce dispute, the ERISA law is good for healthcare claims as well, 100% same for all claims under ERISA. This unanimous U.S. Supreme court ruling clarifies that ERISA plan must make payments to healthcare providers and accept appeals from healthcare providers if properly authorized under ERISA disregard of any state laws, Insurance Co. or TPA Policies  or managed care  PPO/HMO contracts.

This 2009 U.S. Supreme court unanimous answered our current questions if ERISA pre-empts and invalidates all PPO's and state laws!

This is the latest 2009 U.S. Supreme Court unanimous ruling on ERISA, and plan administration, with respect to ERISA, SPD and Sate laws or PPO's (divorce agreement), that ERISA plan administrator need only look at ERISA, SPD and ERISA plan documents, such as patient designation of authorized representive under ERISA, to make benefits decisions, and need to care less about what other private agreement, PPO or divorce agreement, or state laws, divorce decrees in this case, because that is what Congress intended in ERISA laws since 1974, or if that is not fair or right to certain people, they can fight out of my house (ERISA Plan) and sort out their problems in state court.

This is the latest, highest and unanimous ruling from U.S. Supreme court.

The main stream is only look at this case under and within divorce picture, but the ERISA legal principle from this case is for both pension and welfare - healthcare claims.
 

This ERISA assignment rule is also explained in DOL ERISA FAQ B3:

"B-3: When a claimant has properly authorized a representative to act on his or her behalf, is the plan required to provide benefit determinations and other notifications to the authorized representative, the claimant, or both?

 

Nothing in the regulation precludes a plan from communicating with both the claimant and the claimant’s authorized representative. However, it is the view of the department that, for purposes of the claims procedure rules, when a claimant clearly designates an authorized representative to act and receive notices on his or her behalf with respect to a claim, the plan should, in the absence of a contrary direction from the claimant, direct all information and notifications to which the claimant is otherwise entitled to the representative authorized to act on the claimant’s behalf with respect to that aspect of the claim (e.g., initial determination, request for documents, appeal, etc.). In this regard, it is important that both claimants and plans understand and make clear the extent to which an authorized representative will be acting on behalf of the claimant."

Hahnemann Univ Hosp v. All Shore Inc

3rd Cir., 01/29/2008

1. Silent / Passive PPO's, No good!

2. No Attorney’s fees during the pre-litigation administrative process under ERISA

 

"Upon receiving Hahnemann’s claim for benefits, BCI sought to determine whether a preferred provider organization (“PPO”) option applied to the claim. As a third-party claims administrator, BCI entered into contracts with various PPOs which allowed a health benefit plan access to the PPOs’ price discounts, even though there might not have been an agreement between the health benefit plan and the PPO itself. These are called passive PPOs. Upon analyzing Hahnemann’s claim for benefits, BCI determined that a 10 % discount might apply to Hahnemann’s claim based upon a PPO established by MultiPlan, Inc. (“MultiPlan”).

 

Hahnemann did not receive a check for the amount it requested, or even an amount applying a 10 % discount. Instead,the managing general underwriter concluded that a 40 % discount was applicable to Hahnemann’s charges through a different PPO. Specifically, the underwriter determined that the National Preferred Provider Network (“NPPN”) PPO applied. Thus, Hahnemann only received 60 % (or approximately $150,000) of the charges it originally submitted. Hahnemann received this payment in September 1999."

 

IV. CONCLUSION

 

In conclusion, we affirm the grant of summary judgment in favor of Hahnemann. However, because the District Court improperly included the amount of time spent by Hahnemann’s counsel during the pre-litigation administrative process, we vacate and remand the award of attorney’s fees for further proceedings  consistent with this opinion. The award of travel and expense costs is also vacated and remanded for further proceedings because the District Court awarded travel and related expenses to Hahnemann for its counsel located outside of the forum, even though there was no finding that forum counsel would have been unwilling or unable to represent Hahnemann. Finally, because the District Court separately awarded Court costs, as well as and travel and expense costs in its judgment, and the Appellants did not object on appeal to any part of the award of Court costs, we will not disturb the District Court’s award of Court costs.

 

Northeast Hospital Authority v Aetna Health Inc

S.D.Tex., October 17, 2007

PPO or ERISA???

Even for true PPO, Aetna asserted ERISA defense

"As in Pascack Valley Hospital and Anesthesia Care Associates, the crux of the parties’ dispute in this case arises from the terms of a contract-the Hospital Agreement-that is independent of the ERISA patients’ plans; the ERISA patients are not parties to the Hospital Agreement; and parties dispute the level, rate, or amount of payment, not the right to payment. Northeast does not challenge Aetna’s benefits determinations under the patients’ ERISA plans. Nor does Northeast challenge the scope of the plans’ coverage"

 

"Courts applying Davila have found that no there is no ERISA preemption when a health-care provider sues an insurance company to assert contract claims that exist independently of ERISA. The Third Circuit, for example, found no preemption in Pascack Valley Hospital, Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir.2004)."

SMS Fresno Community Hospital and Medical Center v. John Souza

EASTERN DISTRICT OF CALIFORNIA

July 3, 2007

ERISA Pre-emption v. State Laws

"The Ninth Circuit has explained that common law claims do not “relate to” an ERISA plan when the “adjudication of the claim required no interpretation of the plan, no distribution of benefits, and no dispute regarding any benefits previously paid. ....In contrast, where a claim requires interpretation of an ERISA plan or law, ERISA preemption exists.”

 

"Here, then, UMC can only escape ERISA preemption if it can either identify a separate contract between the parties, or allege a specific misrepresentation that would not require interpreting Teamster’s ERISA plan and would not affect the relationships between ERISA participants."

 

ERISA v. PPO

 

"Section 6.14 of the Blue Cross Contract provides as follows:

 

BLUE CROSS agrees to verify to HOSPITAL a person's BLUE CROSS  membership and to identify for HOSPITAL, based upon information provided by HOSPITAL, waivered conditions, current balance of lifetime maximum and any dollar limits applicable under the relevant Benefit Agreement. . . . A guarantee of eligibility is not a guarantee of payment. If HOSPITAL is notified that the member is eligible, HOSPITAL is entitled to payments for services rendered, covered under, and subject to the exclusions and limitations of the relevant Benefit Agreement."

 

This specific reference requires an examination and interpretation of the underlying Teamsters’ Plan and therefore distinguishes this case from those cited by UMC that found state law causes of action not preempted."

What to do

"The Court is also cognizant of UMC’s concern that, by denying payment based on an enrollee’s failure to follow procedures under their health plan, the risk of non-payment will be transferred to the hospital. Yet this argument assumes that UMC will be left with no recourse. To the contrary, UMC can step into the shoes of the patient/enrollees and sue under an assignment of benefits. Such a suit would, without question, be preempted by ERISA, and for this reason, UMC argues that it would be an enormous business burden to require it to seek payment in this way. This Court, though, is bound by the laws enacted by Congress and while it can interpret these laws, it cannot displace them.

For the reasons stated above, the Court finds that UMC’s First, Second and Third Causes of Action are preempted by ERISA."

ABATIE V ALTA HEALTH & LIFE

9th Cir. 08/15/2006

"In addition, this case requires us to consider how a court is to review an ERISA plan administrator’s decision when the procedure that produced the decision did not follow all statutory requirements. For the reasons that we will develop, we conclude that when a decision by an administrator utterly fails to follow applicable procedures, the administrator is not, in fact, exercising discretionary powers under the plan, and its decision should be subject to de novo review. Lesser irregularities, like the one in this case, do not remove the decision from abuse of discretion review, but rather should be factored into the calculus of whether the administrator abused its discretion.

 

.....We have held that an insurer that acts as both the plan administrator and the funding source for benefits operates under what may be termed a structural conflict of interest......."

ERISAclaim.com Comment:

For a healthcare provider  in appealing of denied medical benefits claims, he/she must be able to prove through the appeal that  "an administrator utterly fails to follow applicable procedures" in initial denial and subsequent appeal or reviews, among other things in a successful appeal practice. This is more important than arguing emotionally on medical merits of the claims, which most providers have been doing.

La. Health Serv. & Indem. Co. v. Rapides Healthcare Sys

FIFTH CIRCUIT REJECTS BCBS ERISA PREEMPTION CHALLENGE TO STATE ASSIGNMENT OF BENEFITS LAW REGARDLESS OF PPO PARTICIPATION BY PROVIDERS

Semien, Kathleen v. Life Insur Co

7th Cir., 02/06/2006

Page 12:

"The reports by the physicians LINA hired to review Semien’s claim demonstrate a thorough consideration of the available information. These physicians found Semien capable of activities that would disqualify her from longterm disability coverage. Although Semien’s treating physicians reached different conclusions as to her abilities, under an arbitrary and capricious review, neither this Court, nor the district court, will attempt to make a determination between competing expert opinions. Instead, an “insurer’s decision prevails if it has rational support in the record.” Leipzig v. AIG Ins. Co., 362 F.3d 406, 409 (7th Cir. 2004). 

The two physician reports prepared for LINA, coupled with the Transferable Skills Analysis prepared based upon those reports, provide a sufficient basis and rational support for the conclusion that Semien was ineligible for long-term disability benefits. While the conclusions in the medical reports submitted by Semien are also rational, “[r]aising debatable points does not entitle [the claimant] to a reversal under the arbitrary-and-capricious standard.” Sisto v. Ameritech Sickness and Accident Disability Benefit Plan, 429 F.3d 698, 701 (7th Cir. 2005). 

No evidence in the record demonstrates bias by the physicians LINA consulted. Nor has any evidence been presented to convince this Court that the appraisals by LINA’s physicians were so inherently flawed as to be rendered arbitrary and capricious. The confines of the ERISA statute and the constraints of judicial resources do not permit this Court, nor the district courts, to engage in the complex weighing of expert testimony when a plan administrator has been granted discretionary authority. Where an insurance plan gives discretionary authority to a plan administrator, ERISA provides a limited Article III review. Engaging in the type of in-depth review Semien advocates not only runs contrary to statutory intent, but..."

ERISAclaim.com Comment:

This court analysis of ERISA review standards indicates how claimant should appeal denials, not only on medical merits but also proof of "demonstrated bias" and "so inherently flawed" medical reviews.

 

The following case, although unpublished opinion, made the same ruling on this issue of trial discovery or appeal disclosure:

 

Donnell v. Metropolitan Life

4th Cir. 02/08/06
 

PRIMAX RECOVERIES v. GUNTER

[6th Cir.,  01/12/2006]

ERISA, Overpayment

Dunlap, Donald E. v. Nestle Incorpo

Opinion

12/12/2005, 7th Cir.

Krodel v. Bayer Corporation

(10/12/2005, D. Mass.)

Page 17 of 20

"Here, the Court holds only that where 1) a participant applies for coverage of a benefit which 2) is apparently covered under the language of an SPD and 3) the plan administrator thereafter re-interprets it in a more restrictive fashion and denies coverage 4) in contravention of the conclusions of all of the medical experts involved, that decision is arbitrary and capricious. The decision of the Plan Administrator will be reversed."

Krodel v. Bayer Corporation

(11/19/2004, D. Mass.)

Bayer’s Denial of Dr. Krodel’s Claim

 

"1. Bayer violated ERISA by failing to "afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim." 29 U.S.C. §1133(2); 29 C.F.R. § 2560.503-1(h)(1). Under that provision, a plan administrator is required to provide a review that "does not afford deference to the initial adverse benefit determination".29 C.F.R. § 2560.503-1(h)(3)(ii)."

 

"2. Bayer also violated 29 C.F.R. § 2560.503-1(h)(3)(iii) which provides that:

In deciding an appeal of any adverse benefit determination that is based in whole or in part on a medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is . . . medically necessary or appropriate, the appropriate named fiduciary shall consult with a health care professional who has appropriate training and experience in the field of medicine involved the medical judgment. Id. § 2560.503-1(h)(3)(iii) (emphasis added).

As far as the record shows, Defendants failed to seek any medical advice in making their determination with respect to Dr. Krodel’s claim. Thus, a clear violation of the regulation occurred.

 

"3. Upon notifying Dr. Krodel of the denial of his claim, Bayer violated 29 C.F.R. § 2560.503-1(g)(1)(v)(A) which provides that, if a specific internal rule is relied on in making a determination, that rule must be provided or a statement made that it will be made available to the claimant free of charge. Id. § 2560.503-1(g)(1)(v)(A)."

 

"4. Bayer also violated 29 C.F.R. § 2560.503-1(g)(1)(v)(B), which states that:

If the adverse benefit determination is based on a medical necessity . . . either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant’s medical circumstances, or a statement that such explanation will be provided free of charge upon request [will be provided to the claimant]. Id. § 2560.503-1(g)(1)(v)(B).

 

"5. Finally, Bayer violated its own internal rule by failing to inform Dr. Krodel that he might qualify for a different prosthesis."

 

"Second, Plaintiff contends that he is entitled to statutory penalties of approximately $40,000 (i.e. up to $100 per day for 400 days) based upon Defendants’ alleged failure to provide information to Dr. Krodel as required by ERISA. See 29 U.S.C. §1132(c). Specifically, Dr. Krodel alleges that the non-provision of the SOP constituted such a failure. His argument has merit because the SOP contained the underlying basis for his exclusion from coverage."

Buffonge v. Prudential Ins. Co.
1st Cr. 10-14-2005

"We have not previously addressed the issue raised in this ERISA appeal, which comes to us from the district court's entry of summary judgment concluding that a claims administrator's denial of long-term disability benefits was not arbitrary and capricious. The plaintiff appeals and asserts that his ERISA rights were violated because the administrator relied on material mischaracterizations of the medical record.......

 

We conclude that the process used was materially tainted, and the taint was sufficiently prejudicial, so as to render the process arbitrary. We remand to the district court to remand to the claims administrator for a new review of Buffonge's claim. We emphasize that we do not reach the issue of whether Buffonge was disabled."

McDonald, James v. Household Int'l

Seventh Circuit Court of Appeals

09/29/2005

Opinion

Oral Argument

Oral Argument

"‘make-whole’ relief"?

"It will be up to the McDonalds on remand to decide whether they wish to proceed with their case or to abandon it. In that connection, they may wish to take note of Justice Ginsburg’s comment in her concurring opinion in Davila, in which she drew attention to the Government’s suggestion that ERISA “as currently written and interpreted, may allo[w] at least some forms of ‘make-whole’ relief against a breaching fiduciary in light of the general availability of such relief in equity at the time of the divided bench.” Id. at 2504 (internal quotations omitted). (We note that in Davila, as here, the respondents had declined the opportunity to amend their state-law complaints to add ERISA claims, id. at 2502-03 n.7, but it appears that no one argued to the Court that this step was unnecessary, and it thus had no occasion to reach the point we have discussed in this opinion.)"

Kalish v. Liberty Mutual

6th. Cir. 2005/08/18

JAMES M. MCGOWAN, SR.  v. NJR SERVICE CORPORATION; NEW JERSEY NATURAL GAS COMPANY

ERISAclaim.com Comment: "ERISA’s Requirement that Plans Be Administered in Accordance with the Plan Documents" also regulates healthcare benefits disputes in managed care plans, such as PPO, HMO and POS or P4P networks, if "causes of action, brought to remedy only the denial of benefits under ERISA-regulated benefit plans".

Schneider, Janet M. v. Sentry Group

7th Cir. 09/07/2005

Oral Argument

Opinion

"The notice that Sentry afforded Ms. Schneider was indefensible as a matter of statute, regulation and case law."

 

Excerpt: "The notice that Sentry afforded Ms. Schneider was indefensible as a matter of statute, regulation and case law. In the first place, the April 23 letter failed to meet the requirement, contained both in § 1133(1) and in section 2560.503-1(g)(I), that the notification set forth the specific reasons for the termination of benefits. ....

 

Furthermore, even a cursory reading of the April 23 letter reveals that it did not identify the specific plan provision on which the denial was based, as required by section 2560.503-1(g)(ii). On the first two requirements set forth in section 2560.503-1(g), then, Sentry’s notice did not permit Ms. Schneider “a sufficiently clear understanding of the administrator’s position to permit effective review.” Halpin, 962 F.2d at 690.
We also must consider the requirements in section 2560.503-1(g)(iii) and (iv), which mandate that the notice contain “[a] description of any additional material or information necessary for the claimant to perfect the claim” and “[a] description of the plan’s review procedures and the time limits applicable to such procedures. .....

 

In short, the April 23 letter did not fulfill the purpose of the statute, which was to “afford the beneficiary an explanation of the denial of benefits that is adequate to ensure meaningful review of that denial.” Id. at 689-90. In light of the foregoing analysis, we must conclude that Sentry’s April 23 letter failed to comply substantially with the requirements of section 2560.503-1(g). Because we have determined that Sentry failed to provide Ms. Schneider with an explanation that is adequate to ensure a meaningful
review of the termination of her benefits, we conclude that Ms. Schneider is entitled to summary judgment on her claim that Sentry violated ERISA, 29 U.S.C. § 1133.³"

COMMUNITY MEDICAL CENTER, (Estelle Hopkins, Richard Sharkey) v. LOCAL 464A UFCW WELFARE REIMBURSEMENT PLAN

PPO Prompt Pay or ERISA?

Jamie N. Estes v. Federal Express
Opinion
U.S. Court of Appeals
Case No. 04-2582
Eastern District of Missouri
[PUBLISHED] [Riley, Author, with Wollman and Hansen, Circuit Judges]

"Jamie N. Estes (Estes) originally filed her lawsuit in the Circuit Court for the City of St. Louis, Missouri. After the defendants removed the lawsuit to federal court, the defendants filed a motion to dismiss Estes’s state law claims, contending the claims are preempted under the Employee Retirement Income Security Act ERISA), 29 U.S.C. §§ 1001-1461, and also requesting a court order directing Estes to file an amended complaint under ERISA. Estes opposed the motion, arguing her state law claims are not preempted because (1) she has established a prima facie case...... . District court did not err in finding defendant's claims were preempted by ERISA."

Ruttenberg, Andrew v. US Life Insur

Seventh Circuit Court of Appeals

Oral Argument (AUDIO FILE)

"Andrew Ruttenberg filed a claim for total disability benefits with his insurer, United States Life Insurance Company in the City of New York (“U.S. Life” or the “Company”). After protracted consultations with a number of physicians and  consultants produced no ruling on the claim, Mr. Ruttenberg filed suit. Originally, he alleged claims under Illinois law. The parties agreed to a stay in the proceedings while U.S. Life considered Mr. Ruttenberg’s claim. When U.S. Life denied the claim, the parties returned to the district court. The district court then determined that Mr. Ruttenberg’s claim was preempted by the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. It therefore dismissed the action with leave to file a claim under that statute.

 

After Mr. Ruttenberg filed an ERISA claim, the parties conducted discovery, and, eventually, each filed motions for summary judgment. The district court granted U.S. Life’s motion; it concluded that Mr. Ruttenberg did not qualify for coverage under the plan because he could not be considered a full-time employee under its terms.

 

Mr. Ruttenberg now appeals both the grant of summary judgment and the district court’s previous ERISA preemption determination; U.S. Life cross-appeals certain rulings made by the district court in the course of this litigation. For the reasons set forth in the following opinion, we reverse the judgment of the district court and remand this case for

proceedings consistent with this opinion."

 Prudential Ins. Co. v. HMO Partners

06/29/05 Opinion
U.S. Court of Appeals
Eastern District of Arkansas

 

"[PUBLISHED] [Gruender, Author, with Riley and J. Gibson, Circuit Judges] Civil case - ERISA. See this Court's opinion in Prudential Insurance Co. of American National Park Medical Center, Inc. 154 F.3d 812 (8th Cir. 1998) (Prudential I). District court had authority to entertain and rule on defendants' Rule 60(b)(5) motion; argument that Arkansas repealed the Arkansas Patient Protection Act of 1995 when it passed the Freedom of Choice Among Health Benefit Plans Act of 1999 rejected; under Kentucky Ass'n of Health Plans v. Miller, 538 U.S. 329 (2003), the district court did not err in dissolving the Prudential I injunction with regard to plans other than self-funded plans, as ERISA does not preempt the Patient Protection Act with respect to ERISA plans which are not self-funded; however, the court erred in determining the Prudential I injunction should be dissolved with respect to self-funded ERISA plans; following Aetna Health Inc. v. Davila, 124 S. Ct. 2488 (2004), the court holds ERISA completely preempts the civil penalties provisions of the Arkansas Patient Protection Act as applied to suits that could have been brought under ERISA Section 502."

 

 

ERISAclaim.com Comments:

 

1. ERISA does not preempt Arkansas "Any Willing Provider Law" except for self-funded ERISA plans;

2. ERISA completely preempts any state laws if they regulate benefits claim or money from ERISA plans;

3. If you want to join PPO or HMO, state law controls, if you want money from ERISA plans, ERISA controls.

Analysis: Eighth Circuit Opinion Issued in the Arkansas' AWP Battle (Attorney B. Janell Grenier on Benefitsblog)

PAUL D. GORMAN v. CARPENTERS' & MILLWRIGHTS' HEALTH BENEFIT TRUST FUND

[10th Cir. , 06/08]

ERISA Subrogation, SPD, Common Fund Doctrine & "Equitable Relief"

ND, IL, 06/08/2005

"B. Failure to Provide a Summary Plan Description

Heroux further alleges that Humana failed to supply her with a summary plan description as required by ERISA in §§ 1021(a), 1022, and 1024(b).6 This claim is brought pursuant to § 1132(c), which establishes a civil action for an administrator’s refusal to supply requested information that an employee welfare plan’s administrator is required to furnish to a participant or beneficiary under ERISA. 29 U.S.C. § 1132(c).

.....

Prior to the June 2000 amendment, the Policy identified Humana as its Administrator.Section 1024(b) mandates that the administrator furnish to each participant a summary plan description within 90 days after he or she becomes a participant. 29 U.S.C. §1024(b). Heroux started working for Duval in 1998 and was a plan participant. The June 2000 amendment to the Policy does not remove the initial duty owed to Heroux by Humana as Administrator prior to 2000. Accordingly, whether or not Humana’s June 2000 amendment to the Policy renders Duval the new plan administrator by default, Humana was the administrator prior to that amendment, and, as such, owed a duty to Heroux to provide her with a summary plan description. Thus, defendant’s motion to dismiss plaintiff’s claim against Humana for failure to provide a plan summary document under §§ 1021(a), 1022, and 1024(b) must be denied."

Employer Must Reimburse Medicare for Over Payments under MSP

Telecare Corp. v. Leavitt

(Fed. Cir. 2005)

"This case involves a dispute between Telecare Corp. (“Telecare”) and the government as to Telecare’s liability under the Medicare Secondary Payer statute, Social Security Act § 1862, codified at 42 U.S.C. § 1395y. The United States District Court for the Northern District of California held that Telecare was liable as a secondary payer. We affirm.

 

......

 

Therefore, we hold that the statute allows the United States to initiate an action against any employer that “sponsors or contributes to a group health plan,” where the group health plan “make[s] payment with respect to the same item or service (or any portion thereof) under a primary plan.” Such a construction gives reasonable meaning and effect to all the words in the statute, and is to be preferred over Telecare’s proposed interpretation, which would render parts of the statute inoperative. Telecare sponsors and contributes to the group health plan, and under the plain language of the statute it cannot prevail."

Benefit Concepts v. Macera

- 06/06/2005

The United States District Court
for the
Eastern District of Pennsylvania

---------

CLEGHORN V BLUE SHIELD OF CALIFORNIA

9th Cir., 05/23/2005

OPINION

CANBY, Circuit Judge:

"We are presented once again with a question concerning the degree to which the federal Employee Retirement Income Security Act (ERISA) preempts state law. Douglas D. Cleghorn is a participant in his employers ERISA health plan offered by Blue Shield of California (doing business as Care-America) (Blue Shield). On one occasion he sought and received emergency medical services and Blue Shield denied reimbursement. Cleghorn sued Blue Shield in California state court, asserting state-law causes of action and alleging that Blue Shield had violated an emergency care provision in section 1371.4(c) of the California Health and Safety Code. Blue Shield removed the case to federal court and the district court held that Cleghorns claims were preempted by ERISA. When Cleghorn declined to amend his complaint to allege an ERISA claim, the district court dismissed his complaint for failure to state a claim. We affirm the judgment of the district court."
 

Statement of Sharon J. Arkin, Partner, Robinson, Calcagnie & Robinson [PDF] [HTM]

 

April 24, 2001

 

Statement of

Sharon J. Arkin, Partner, Robinson, Calcagnie & Robinson,

Newport Beach, California,

on behalf of Association of Trial Lawyers of America

 

Testimony Before the Subcommittee on Health

of the House Committee on Ways and Means

Hearing on Patient Protections in Managed Care

 

"H. Conclusion.

The ERISA "experiment" of total tort immunity is a dismal failure. People have suffered and died as a direct result. It is time to call a halt to this unwarranted and unprecedented immunity and to restore balance to the system.

Something must be done about ERISA's remedy limitations. And the need is not just the "superficial" one of fulfilling the fundamental principle of equity that "for every wrong there is a remedy." The need runs much deeper. As noted by Judge Young:

 

"A further cost of this near absolute immunity is its pernicious effect on our democratic system. Whenever Congress extinguishes a right which heretofore has been vindicated in the courts through citizen juries, there is a cost. It is not a monetary cost. It is a cost paid in rarer coin --the treasure of democracy self." (Andrews-Clarke, at p. 63, fn. 73.)

 

Comment from ERISAclaim.com:

ERISA For GM from the U.S. Court of Appeals for the Sixth Circuit:
 

Hill, et al v. Blue Cross of MI,

05/13/2005

OPINION

_________________

"KAREN NELSON MOORE, Circuit Judge. Plaintiffs-Appellants John L. Hill, Francine Barnes, Franchot Barnes, Francesca Barnes, and Glory Celestine (“Plaintiffs”) filed the instant putative class action against Defendant-Appellee Blue Cross and Blue Shield of Michigan (“BCBSM”), the third-party administrator for Plaintiffs’ employer-sponsored health insurance program (“the Program”). Plaintiffs allege that BCBSM’s handling of their claims for emergencymedical-treatment expenses resulted in the wrongful denial of benefits and constituted a breach of BCBSM’s fiduciary duties to Program members under the Employee Retirement Income Security Act of 1974 (“ERISA”). The district court granted BCBSM’s motion to dismiss Plaintiffs’ suit without prejudice on the ground that Plaintiffs failed to exhaust administrative remedies available under the Program prior to filing suit. Plaintiffs now appeal, alleging, inter alia, that exhaustion is not required for claims for breach of fiduciary duty, that exhaustion of administrative-review procedures would be futile, and that Plaintiff Hill has in fact exhausted his administrative remedies. For the reasons set forth below, we AFFIRM IN PART and REVERSE IN PART the district court’s order granting BCBSM’s motion to dismiss Plaintiffs’ complaint."

 

"b. Futility Exception to Exhaustion

 

    We also conclude that dismissal of Plaintiffs’ §§ 1104 and 1105 fiduciary-duty claims for failure to exhaust administrative remedies is improper because, in this case, exhausting administrative remedies would amount to an exercise in futility. We have recognized a general exception to the exhaustion requirement for ERISA claims when the remedy obtainable through administrative remedies would be inadequate or the denial of the beneficiary’s claim is so certain as to make exhaustion futile. See id. at 419. As we explained in Fallick:

The standard for adjudging the futility of resorting to the administrative remedies provided by a plan is whether a clear and positive indication of futility can be made.A plaintiff must show that it is certain that his claim will be denied on appeal, not merely that he doubts that an appeal will result in a different decision.

 

Id. (internal quotation marks and citations omitted).

 

    In their complaint, Plaintiffs allege that exhaustion of administrative remedies would be futile because: (1) BCBSM’s interests are aligned with GM, not the Program’s beneficiaries, and (2) BCBSM has refused to modify its claims-handling process, notwithstanding its long-standing knowledge that the current procedures violate Program provisions. As stated in the complaint:

Futility is particularly clear since Plaintiffs have sufficiently alleged breaches of fiduciary duty by BCBSM, and the existence of an inherent conflict of interest between BCBSM’s obligation as a fiduciary for ERISA plan participants, and BCBSM’s internal business motives. In fact, despite BCBSM’s direct knowledge that its practices have violated, and continue to violate, the express terms of the ERISA plans, BCBSM has refused to change its practice with respect to a large portion of its administrative services contracts. History has shown that BCBSM will only change its practice pursuant to threat of legal judgment......"

 

Comment from Jin Zhou, ERISAclaim.com: This case ruling indicates the entire GM health plan claim ERISA practice needs to be re-visited or revamped, as ERISA failure is the root cause of GM healthcare cost crisis and junk bond status, yet this GM ERISA bunker is least likely checked by GM for GM healthcare crisis and possible chapter 11. (Please e-mail  Jin Zhou at ERISAclaim.com for details of this Dx and more Rx)

"A number of Tenth Circuit cases have held, however, that under certain circumstances, a § 1132(c) penalty may be based on requests which were not made directly to the plan administrator. In McKinsey v. Sentry Insurance, 986 F.2d 401, 404 (10th Cir. 1993), the court rejected the proposition that penalties can be assessed against a “de facto” plan administrator, but stated that “if in practice, company personnel other than the plan administrator routinely assume responsibility for answering requests from plan participants and beneficiaries . . . the actions of the other employees may be imputed to the plan administrator.” In Boone v. Leavenworth Anesthesia, Inc., 20 F.3d 1108, 1110 (10th Cir. 1994), the court assessed a penalty against a plan administrator even though the request for plan documents was directed to the plan administrator’s counsel....."

Nichols v. The Prudential Insurance Company of America

(2nd Cir. 04/21/2005)

ERISA "Prompt Pay" or "Prompt Lawsuit"

Plan's failing to meet the deadlines in appeal decision making, claimant’s administrative appeal is deemed denied, and her administrative remedies are therefore exhausted, and plan lost deferential reviews standard

 

"The question of whether Nichols exhausted administrative remedies is in turn dependent on whether Prudential complied with the regulatory deadlines of 29 C.F.R. § 2560.503-1(h). This regulation requires that a plan administrator’s decision reviewing a denial of benefits must ordinarily be made within 60 days of the request for such review, but may be made within 120 days for special circumstances. 29 C.F.R. § 2560.503-1(h)(1)(i). Notice of any such extension must be given in writing before the commencement of the extension. 29 C.F.R. § 2560.503-1(h)(2). If no decision is rendered by the deadline, the claim for benefits is deemed denied on review. 29 C.F.R. § 2560.503-1(h)(4). Thus, if Prudential failed to meet the deadlines, Nichols’s administrative appeal is deemed denied, and her administrative remedies are therefore exhausted."

 

 

"In light of this reasoning, we conclude that we may give deferential review only to actual exercises of discretion. A “deemed denied” claim is not denied by any exercise of discretion, but by operation of law on the 60th (or 120th) day after the appeal is requested. We therefore hold that a “deemed denied” claim is entitled to de novo review, and place ourselves in harmony with Jebian, Gilbertson, and Gritzer."

2nd Circuit Orders Judge to Review Benefit Denial
Mark Hamblett
New York Law Journal
04-26-2005

ORNDORF v. PAUL REVERE LIFE INS

[1st Cir. 04/15/2005]

"LYNCH, Circuit Judge. This case requires us to address what is meant by de novo judicial review under ERISA of a denial of benefits when the ERISA plan does not preserve discretion in the plan administrator. That raises concomitant questions of whether the claimant is entitled to trial in the district court and what, if any, evidence may be admitted that is not in the administrative record before the ERISA administrative decision maker. Our conclusion is that given the nature of the claimant's challenge here -- that he did in fact establish his eligibility to benefits before the ERISA decision maker -- the claimant was not entitled to trial or to admit desired new evidence outside the administrative record or to discovery. Having defined the standards, we apply them to the facts, and uphold the denial of benefits."

 

ERISAclaim.com Comments: This illustrates the importance of ERISA appeals at administrative level by the claimant, not only the plan mandated level 1 and level 2 appeals, but also the voluntary level of appeal, before litigation is commenced.

 

LaMantia v. Voluntary Plan Administrators, Inc. HEWLETT-PACKARD COMPANY No. 03-15706
EMPLOYEE BENEFITS ORGANIZATION,

9th Cir, March 23, 2005

Kotler v. PacifiCare of California

Non-ERISA Case

CA SECOND APPELLATE DISTRICT, 2/10/05

Health Plan Lawsuit Watch (aishealth.com)

Gayle v. UPS

4th Cir. 03/09/2005

Attorney negligence in failing to timely file an appeal does not justify equitable tolling sufficient to excuse the lack of compliance with a ERISA-governed employee welfare benefit plan when a clear notice is given on timely limitation to appeal.

 

"OPINION
WILKINSON, Circuit Judge:

Lisa Gayle retained a law firm to represent her as she sought to preserve her disability benefits. For nearly seven months, the firm did nothing to press her claim. By the time it rediscovered her case, Gayle’s opportunity to appeal the denial of her disability benefits claim had expired. Under the terms of her ERISA-governed employee welfare benefit plan, Gayle could not pursue her claim in federal court until she had exhausted the internal appeals process. But the plan declined to consider her appeal since it was almost two months late. In this case, we consider whether attorney negligence justifies equitable tolling sufficient to excuse the lack of compliance with the plan’s appeal procedure. We conclude that it does not."

MINADEO v. ICI PAINTS

(6th Cir. 02/18/2005)

A Plan Administrator Must Either Provide the Documents Or Tell Why

"What Bartling says is that a plan administrator may require written authorization from a plan participant before satisfying a non-participant’s request for benefits information. Not inconsistent with that rule, we hold that a plan administrator is not entitled to ignore a request for pension benefits information made by an attorney on behalf of a participant, as Glidden did in this case for almost four months. Instead, plan administrator must either provide the requested information directly to the plan beneficiary (we note this option would have made a great deal of sense in the present case, as Murphy herself had first repeatedly requested the information by telephone before enlisting the aid of an attorney), or must act as the defendant in Bartling did, and inform the attorney that the information will be released upon the receipt of authorization signed by the plan participant. A plan administrator who fails to take either of these steps within the thirty day period imposed by 29 U.S.C. § 1132(c) is subject to the fines authorized by that same provision, at the discretion of the district court."

Roberts v. Independence Blue Cross

Pre-certification under ERISA Plans?

Medical Necessity Or Summary Plan Description (SPD) Controls?

K Mings v Wal-Mart

Pre-certification under ERISA Plans?

"On February 25, 2002, Plaintiff Andrea C. Mings underwent gastric bypass surgery. At the time, Mings was a participant in her employer’s employee welfare benefit plan. Prior to Mings’ surgery, her physician called Mings’ insurance carrier and received pre-certification for the procedure. Thereafter, Defendant Wal-Mart Stores, Inc. Associates Health and Welfare Plan (the “Plan”) denied coverage for the procedure claiming that it was not covered under the Plan’s terms and conditions. As a result of this denial, Mings filed her original complaint in the Marion Superior Court claiming that the Plan violated Indiana statutory law. ......"

Phelps v. C.T. Enterprises

(4th Cir. 01/12/2005)

Mullally v Boise Cascade Corp

(Northern District of Illinois, 01/10/2005)

"As to the first factor, the Seventh Circuit has held that "medical science confirms that pain can be severe and disabling even in the absence of `objective' medical findings, that is, test results that demonstrate a physical condition that normally causes pain of the severity claimed by the [plaintiff]" Carradine v. Barnitart, 360 F3d 751, 753 (7th Cir. 2004) (Carradine). Thus, while objective medical evidence must support a finding of an underlying impairment, subjective evidence can be used to demonstrate that the pain associated with that condition is disabling. Carradine, 360 F3d 753; see a/so Hawkins v. First Union Disability Plan, 326 F3d 914, 919 (7th Cit. 2003) (Hawkins)."

"CONCLUSION
For the foregoing reasons, Plaintiffs Motion for Summary Judgment is granted; and Defendant's Motion for Summary Judgment is denied."

VELTRI v. BUILDING SERVICE 32B-J PENSION FUND

(2nd Cir. 12/27/2004)

RenCare Ltd vs. Humana Health Pln TX

(5th Cir. 12/30/2004)

"RenCare appeals the district court’s dismissal of RenCare’s claims for failure to exhaust administrative remedies and the district court’s partial denial of RenCare’s motion to remand its claims to state court. Because RenCare’s claims against Humana are not inextricably intertwined with a claim for Medicare benefits and because there are, in fact, no administrative appeal procedures for RenCare to pursue, we reverse both the district court’s dismissal of RenCare’s claims and the district court’s partial denial of RenCare’s motion to remand its claims to state court."

 

"III. CONCLUSION

Because there are no administrative remedies for RenCare to exhaust and because RenCare’s claims do not arise under the Medicare Act, we REVERSE the district court’s dismissal of RenCare’s claims and its partial denial of RenCare’s motion to remand its claims to state court."

 

Medicare Act Did Not Preempt Provider's State Law Claims Against HMO: Fifth Circuit (Spencer Benefits Reports)

Excerpt: "The Medicare Act did not preempt a health care provider's state law claims against an HMO seeking reimbursement for kidney dialysis services provided to Medicare beneficiaries. This was the ruling of the Fifth Circuit U.S. Court of Appeals in RenCare, Ltd. v. Humana Health Plan of Texas, Inc. (No. 04-50087)."

Chao v Crouse
    Cause No. 1:03-cv-1585-TAB-DFH 

11/22/04

Court Rules Indiana Marketing Firm and Executives Must Restore Losses to Health Plan

(DOL Media Release, 01/05/2005)

Pair accused in insurance scam ordered to pay (dailysouthtown.com)

"A Daily Southtown investigation found that Zanfei lived a comfortable life for years as thousands of TRG plan members struggled to pay medical bills that TRG defaulted on because it was out of money. An audit said unpaid claims could total $17.5 million."

PPO Fee Splitting

Vince Street Clinic v. Healthlink, Inc. No. 4-03-0876, (The Illinois Appellate Court, 4^th District,)

"This case presents the question whether a company that creates a list of health-care providers that it makes available for a charge to members of health plans may enter into an agreement under which the health-care providers themselves would pay to be included on the list. We conclude the agreement improperly requires physicians to pay a fee for the referral of patients."

JOSEPH B. GORINI v. AMP, Incorporated,
or its Successor In Interest
TYCO ELECTRONICS, INC. Tyco Electronics, Inc.

3rd Cir. 12/08/2004

"RENDELL, Circuit Judge.

 

Tyco Electronics Corporation (“Tyco”) appeals from the final order of the District Court granting Joseph Gorini $78,934.10 in attorney’s fees and $5,909.88 in costs.¹ Tyco contends the District Court erred in awarding Gorini attorney’s fees for duplicative work performed by multiple attorneys and for time spent on claims that ultimately were not successful. Tyco also asserts that the District Court erred in awarding costs for unauthorized items and items Gorini failed to demonstrate were necessary. We affirm because we conclude that the District Court did not abuse its discretion in determining as reasonable an award of attorney’s fees and costs."

 

"......Altogether, Gorini was awarded $162,743.25 in damages – $1,784.77 of which was deemed to constitute back pay, $178.48 deemed wages or vacation pay, and the remainder penalties for the ERISA violations awarded on summary judgment. Tyco was awarded $19,355 as reimbursement for duplicate severance pay. We affirmed the judgment of the District Court, see Gorini v. AMP Inc., 94 Fed. Appx. 913 (3d Cir. 2004), and later denied a petition for rehearing en banc."

================================================

Gorini v. AMP Incorporated(pdf)

 2004 U.S. App. LEXIS 7460 (3d Cir. 2004)

 

$160,000 Statutory Penalty for Failure to Provide SPD and Plan Document, Even No Benefits Available

Excerpt: "When considering whether to impose such penalties, the court can consider (1) bad faith or intentional conduct of the plan administrator, (2) length of delay, (3) number of requests made, (4) documents withheld, and (5) prejudice to the participant. Romero v. Smith Kline Beecham, 309 F.3d 113, 120 (3d Cir. 2002) (citations omitted). Here, the district court found that Tyco’s failure evinced a pattern of “conscious choices to decline to disclose” and “recalcitrance”4 in providing documents Gorini was entitled to under ERISA. JA 30-31. Although the court did not literally use the words “bad faith,” given the analysis of Tyco’s conduct, it is difficult to reach any conclusion other than that Tyco did act in bad faith."

================================================

Failure to Provide Plan Documents Resulted in Statutory Penalties of $160,000 (Employee Benefits Institute of America Inc. (EBIA))

 

Excerpt: "Although the trial court determined that the employee was not entitled to severance benefits, it assessed a penalty against the employer in the amount of $160,780 for the employer's failure to provide the requested documents. The employer appealed the penalty assessment, arguing that ... the employee was not a plan participant and consequently was not entitled to penalties under ERISA Section 502(c) ..."
 

=============================================

Nixon Peabody's August 2004 Benefits Briefs: Legal Developments for Employee Benefits (PDF) (Nixon Peabody LLP)

 

6 pages. Articles include: Getting burned by ignoring people with 'colorable' claims to plan participation; Court holds that ERISA forbids a plan from recouping excess benefit payments in court; Anti-cutback rule KOs suspension of benefits amendment.

Kress v. Food Employers Labor Relations Assn

4th Cir, 12/10/2004

OPINION

 

"WILKINSON, Circuit Judge:

Paul Kress, a participant in his employer’s welfare benefit plan, was injured by a third party in an automobile accident away from work. Under such circumstances, the plan will advance participants accident-related expenses. The Summary Plan Description emphasizes that such payments are in the nature of a "service" to the plan’s members, because "[r]ecovery from a third party can take a long time."

In order to receive the advance, participants and their attorneys must execute a subrogation agreement to reimburse the plan "before all others" from any third-party recovery. Kress’s attorney refused to sign the agreement. After the 180 day time limit expired, the claim for the advance was denied. Kress brought suit, alleging that denying benefits because of the attorney’s refusal to sign was wrongful under ERISA, 29 U.S.C. § 1001 et seq. The district court granted summary judgment to the plan. Because the SPD was clear and in no way violated ERISA, we affirm."

Callery v. U.S. Life Insurance Co. In the City of New York

(10th Cir.  12/10/2004)

FOR THE DISTRICT OF UTAH

(D.C. No. 02-CV-524-C)

------------------------------------------------------------------------------
Brian S. King, Salt Lake City, Utah, for Plaintiff - Appellant.

W. Mark Gavre, Parsons, Behle & Latimer, Salt Lake City, Utah, for Defendants - Appellees.

Karen L. Handorf, Deputy Associate Solicitor, (and Elizabeth Hopkins, Counsel for Appellate and Special Litigation Plans Benefits Security Division, with her on the brief, Howard M. Radzely, Acting Solicitor of Labor, Timothy D. Hauser, Associate Solicitor, and Adrienne K. Dwyer, Trial Attorney, Plan Benefits Security Division, on the brief), Office of the Solicitor, Plans Benefits Security Division, Washington, D.C., for Amicus Curiae.

Mary Ellen Signorille, (and Melvin R. Radowitz, on the brief), AARP Foundation, Washington, D.C., for Amicus Curiae AARP.

 

"Though the issue is close, we must adhere to the Supreme Court's rather emphatic guidance and therefore conclude that in a suit by a beneficiary against a fiduciary, the beneficiary may not be awarded compensatory damages as "appropriate equitable relief" under § 502(a)(3) of ERISA."

 

Chao v. Crouse

(11/22/2004, S.D. Ind. 2004)

MEWA Sponsor and Individual Corporate Officers Liable for Plan Losses and Outstanding Claims and Breach of Fiduciary Duty

Krodel v. Bayer Corporation

(11/19/2004, D. Mass.)

Bayer’s Denial of Dr. Krodel’s Claim

 

"1. Bayer violated ERISA by failing to "afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim." 29 U.S.C. §1133(2); 29 C.F.R. § 2560.503-1(h)(1). Under that provision, a plan administrator is required to provide a review that "does not afford deference to the initial adverse benefit determination".29 C.F.R. § 2560.503-1(h)(3)(ii)."

 

"2. Bayer also violated 29 C.F.R. § 2560.503-1(h)(3)(iii) which provides that:

In deciding an appeal of any adverse benefit determination that is based in whole or in part on a medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is . . . medically necessary or appropriate, the appropriate named fiduciary shall consult with a health care professional who has appropriate training and experience in the field of medicine involved the medical judgment. Id. § 2560.503-1(h)(3)(iii) (emphasis added).

As far as the record shows, Defendants failed to seek any medical advice in making their determination with respect to Dr. Krodel’s claim. Thus, a clear violation of the regulation occurred.

 

"3. Upon notifying Dr. Krodel of the denial of his claim, Bayer violated 29 C.F.R. § 2560.503-1(g)(1)(v)(A) which provides that, if a specific internal rule is relied on in making a determination, that rule must be provided or a statement made that it will be made available to the claimant free of charge. Id. § 2560.503-1(g)(1)(v)(A)."

 

"4. Bayer also violated 29 C.F.R. § 2560.503-1(g)(1)(v)(B), which states that:

If the adverse benefit determination is based on a medical necessity . . . either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant’s medical circumstances, or a statement that such explanation will be provided free of charge upon request [will be provided to the claimant]. Id. § 2560.503-1(g)(1)(v)(B).

 

"5. Finally, Bayer violated its own internal rule by failing to inform Dr. Krodel that he might qualify for a different prosthesis."

 

"Second, Plaintiff contends that he is entitled to statutory penalties of approximately $40,000 (i.e. up to $100 per day for 400 days) based upon Defendants’ alleged failure to provide information to Dr. Krodel as required by ERISA. See 29 U.S.C. §1132(c). Specifically, Dr. Krodel alleges that the non-provision of the SOP constituted such a failure. His argument has merit because the SOP contained the underlying basis for his exclusion from coverage."

Stup v. UNUM Life Insurance

(4th Cir. 12/01/2004

Lopez vs. Premium Auto

5th Cir. 11/02/2004

 

"Plaintiff ...appeals the limitations based summary judgment in favor of defendant-appellee Premium Auto Acceptance Corporation (Premium) on her claims under the Employee Retirement Income Security Act (ERISA) of 1974, 29 U.S.C. § 1001 et seq., and the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986. We affirm.

......It remains for us to determine to what a claim under section 1166 is most closely analogous. The only published decision within the Fifth Circuit to address this issue concluded that section 1166 was subject to a two-year statute of limitations."

McCoy v. Meridian Auto Sys

(6th Cir. 11/19/2004)

Federal Appeals Court Issues Injunction Prohibiting Employer From Ending Retiree Health Care Benefits

_________________
OPINION
_________________

"SUTTON, Circuit Judge. Meridian Automotive Systems and Meridian Automotive Systems-Composite Operations (collectively “Meridian”) challenge the district court’s preliminary injunction restraining Meridian from terminating the medical benefits of retirees of an automotive-parts plant in Centralia, Illinois, as well as the benefits of their spouses (collectively “retirees”). Because no one disputes the potential for serious irreparable harm in the absence of a preliminary injunction and because we agree that the retirees have established a likelihood of success on the merits of their claim, we affirm."

LOCHER v. UNUM LIFE INSURANCE COMPANY

(2nd Cir. 11/12/2004)

"STRAUB, Circuit Judge:

Defendant-Appellant, UNUM Life Insurance Company of America, appeals from a judgment of the United States District Court for the Southern District of New York (Laura Taylor Swain, Judge) entered November 14, 2003, finding, after a three-day bench trial, that Plaintiff-Appellee Marianne Locher was entitled to disability benefits under a long-term disability plan provided by her employer through an insurance policy issued by Defendant-Appellant, and awarding benefits and attorneys’ fees and costs. Defendant-Appellant argues that the District Court erred in considering evidence outside the administrative record, finding Plaintiff-Appellee eligible for disability benefits, awarding benefits through the date of judgment, and awarding attorneys’ fees. We affirm the judgment of the District Court and write to clarify the standard to be applied by district courts in determining whether to consider evidence outside the administrative record upon a de novo review of factual issues bearing on an administrator’s denial of ERISA benefits."

Hawaiian Court Reverses Lower Court Ruling on ERISA Preemption of State Law on External Review

(The Supreme Court of the State of Hawaii)

Excerpt: "The Hawaiian Supreme Court ruled November 18, 2004, that a state law that gives Hawaii's insurance commissioner authority to conduct external reviews of health insurance plan decisions is 'impliedly' preempted by the Employee Retirement Income Security Act (ERISA)."

INSURANCE COMMISSIONER JOHN GARAMENDI SUES BROKER AND 4 MAJOR INSURERS OVER SECRET COMMISSIONS AND KICKBACK SCHEMES THAT NETTED “MILLIONS OF DOLLARS”

The Complaint and a copy of the settlement agreement can be accessed by clicking the links.

UnumProvident Settles Lawsuits for $127 Million: Will Reassess Claims of Those Denied Benefits
(The Chattanoogan.com)

Depenbrock v. Cigna Corp

"ROSENN, Circuit Judge.

 

This case is a by-product of corporate America’s recent effort to curb costs by, inter alia, scaling back the benefits provided under pension plans. John Depenbrock (“Depenbrock”) claims that his employer, CIGNA Corporation (“CIGNA”), violated the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq., by denying him benefits without the required notice and lawful amendment to the pension plan. Depenbrock also alleges that CIGNA violated ERISA by failing to provide him an opportunity to review pertinent documents relating to his denial of benefits claim, and by breaching the fiduciary duty owed as plan administrator.

 

The District Court granted CIGNA’s motion for summary judgment and denied Depenbrock’s cross motions. We reverse the summary judgment in favor of CIGNA and remand with directions to enter summary judgment for Depenbrock."

ERISA Plaintiff Awarded $240,000 in Legal Fees (law.com)

"A federal judge has awarded more than $240,000 in attorney fees to a pair of lawyers whose $800,000 victory for their sole client in a pension benefits dispute with CIGNA Corp. directly led to increased benefits for another 178 workers."

Leonard J. Klay v. All Defendants

11th Cir. 11-05-2004

(All Physicians v. All Insurance Co.
& Managed Care in National Class Action Lawsuit)

Another Major Victory for Physicians

Gaither v. Aetna Life Insurance Co.

10th Cir. ,11/03/2004

"In the summer of 1999, Donald B. Gaither was suspended from employment because his employer determined that his medical condition--his use of narcotic painkillers--made him unable to perform his job. At the same time, his employer's ERISA plan administrator denied him disability benefits because his medical condition did not make him unable to perform his job. The plan administrator defends on the essential ground that it did not know, and was under no obligation to find out, why Mr. Gaither lost his job."

 

"The Plan Administrator (or such other party to whom duties of administration have been delegated, including without limitation, an Administrative Services Provider) shall perform its duties of administration as it determines in its sole discretion . . . . In particular, the interpretation of all Plan provisions, and the determination of whether an Employee is entitled to any benefit pursuant to the terms of the Plan, shall be exercised by the Plan Administrator (or other party referred to above) in its sole discretion."

 

"Aetna's position seems to be that as a plan fiduciary, it plays a role like that of a judge in a purely adversarial proceeding, where the parties bear almost all of the responsibility for compiling the record, and the judge bears little or no responsibility to seek clarification when the evidence suggests the possibility of a legitimate claim. The authority just cited suggests that Aetna has the wrong model. Indeed, one purpose of ERISA was "to provide a nonadversarial method of claims settlement." Sandoval, 967 F.2d at 382. In Gilbertson v. Allied Signal, Inc., we explained what this nonadversarial process should look like:

 

[ERISA and its implementing regulations require] a meaningful dialogue between ERISA plan administrators and their beneficiaries. If benefits are denied . . . the reason for the denial must be stated in reasonably clear language, . . . [and] if the plan administrators believe that more information is needed to make a reasoned decision, they must ask for it. There is nothing extraordinary about this: it's how civilized people communicate with each other regarding important matters."

 

"CONCLUSION

For the foregoing reasons, we REVERSE the district court's finding that Aetna's decision was not arbitrary and capricious, and REMAND the case for further consideration consistent with this opinion."

PASCACK VALLEY HOSPITAL, INC. v  LOCAL 464A UFCW WELFARE REIMBURSEMENT PLAN

(3rd Cir. 11/01/2004)

ERISA Does Not Pre-empt Hospital's PPO Discount Lawsuit

Excerpt: "The Supreme Court has recently clarified the inquiry in such cases:

 

It follows that if an individual brings suit complaining of a denial of coverage for medical  care, where the individual is entitled to such coverage only because of the terms of an ERISA - regulated employee benefit plan, and where no legal duty (state or federal)  independent of ERISA or the plan terms is violated, then the suit falls within the scope of ERISA §502(a)(1)(B). In other words, if an individual, at some point in time, could have brought his claim under ERISA §502(a)(1)(B), and where there is no other independent legal duty that is implicated by a defendant’s actions, then the individual’s cause of action is completely pre-empted by ERISA § 502(a)(1)(B)." (page 7)

 

"Coverage and eligibility, however, are not in dispute. Instead, the resolution of this lawsuit requires interpretation of the Subscriber Agreement, not the Plan." (page 10)

 

"The Ninth Circuit held that “the Providers’ claims, which arise from the terms of their provider agreements and could not be asserted by their patient assignors, are not claims for benefits under the terms of ERISA plans, and hence do not fall within § 502(a)(1)(B).” Id. at 1050. The court explained:

[T] he Providers are asserting contractual breaches . . . that their patient-assignors could not assert: the patients simply are not parties to the provider agreements between the Providers and Blue Cross. The dispute here is not over the right to payment, which might be said to depend on the patients’ assignments to the Providers, but the amount, or level, of payment, which depends on the terms of the provider agreements. Id. at 1051 (first emphasis added). 

Because the Providers asserted “state law claims arising out of separate agreements for the provision of goods and  services,” the court found “no basis to conclude that the mere fact of assignment converts the Providers’ claims into claims to recover benefits under the terms of an ERISA plan.” Id. at 1052.9" (page 11)

 

"Accordingly, removal in this case was improper, and the order of the District Court denying remand will be vacated. We will remand this case to the District Court with instructions that the District Court, in turn, remand to the Superior Court of New Jersey."

ERISAclaim.com Comments:

1. ERISA does not preempt pure provider (PPO/HMO) contract dispute in state court.  This ruling is significant with profound impact in today's managed-care market, as provider contract disputes are as popular as ERISA benefits dispute but unsuccessfully pursued by providers due to ERISA preemption;
2. Following the 11^th Circuit Court ruling, Leonard J. Klay v. Humana, on national class actions by 950,000 physicians, that provider’s class-action all RICO-related claims don not have to be arbitrated, claims over provider contract dispute was improperly certified as a national class and such claims shall be tried in each state jurisdiction, more state lawsuits are expected to explode over provider’s claim over state RICO claims, claims over PPO discount, bundling and down coding and prompt pay violation arising out of PPO contract instead of ERISA plan provisions;
3. This case is only limited to PPO discount dispute with a signatory party of subscriber agreement which happens to be the plan as well, where there is no coverage and eligibility dispute, ERISA is moot, or there is no denial from ERISA plan, and in absent of PPO discount, the claimant will be entitled to 100% reimbursement;
4. It is very important to understand the difference of ERISA and PPO, if ERISA benefits are in dispute or not moot, taking this approach of state court lawsuit for medical claims is still a claims suicide practice.

FELIX v. LUCENT TECHNOLOGIES

[10th Cir., 10/26]

JO ORTLIEB v UNITED HEALTHCARE

8th Cir., 10/28

"....Thereafter, Ortlieb contested the denial of coverage by filing her case in the district court. The district court reviewed the benefit determination using an arbitrary and capricious standard of review. In opposing United HealthCare’s motion for summary judgment, Ortlieb submitted four technical documents discussing TPN, none of which were included in the administrative record. The district court declined to consider the new evidence. Based on the administrative record, the district court determined United HealthCare reasonably relied on the assessments of multiple doctors that TPN was an unproven therapy for Ortlieb’s medical conditions. The district court rejected Ortlieb’s argument that United HealthCare had failed to consider the “life-threatening condition” exception to the unproven service exclusion. The court granted summary judgment in favor of United HealthCare. Ortlieb now appeals......"

 

ERISAclaim.com Comment:         "No Appeals, No Science"

 

If healthcare providers didn't appeal under ERISA in a timely fasion, the federal court may not consider these new evidence at trial, even they could truly scientifically persvasive, as they are not considered as these new scientic eveidence are not part of administrative records the court will exam under ERISA.

 

Timely ERISA appeal is more important than "true science" under ERISA, as federal law and rules are also important things to follow.

 

This will help all of us here in recent denials crisis.

Baker v. Tomkins Industries Inc.,
D. Kan., No. 03-2434-KHV

20 pages. US District Judge Kathryn Vratil overturned the decision to deny coverage to the plaintiff for a cochlear implant after losing her hearing. Judge Vratil said the denial was 'arbitrary and capricious.' Vratil also ruled that the coverage denial notices the plaintiff received from the health insurance plan didn't meet the requirements of the Employee Retirement Income Security Act.

 Tythcott V. Aetna Life Insurance Co. (PDF)

(United States District Court, District of Connecticut)

(Aetna Cannot Be Sued Under ERISA for Denying Benefits)

11 pages. Aetna Life Insurance cannot be sued under ERISA because it is a third-party administrator. District Court of Connecticut ruled after considering the employer's plan documents: the master plan documents, the administrative services contract (SAO agreement), and the summary plan description (SPD) -- that Aetna was not a fiduciary or "a designated plan administrator" under ERISA.

 

Excerpt: "As evidence of the intent of the contract, defendant points to the Administrative Services Contract between defendant and Cooper Industries, which states, in relevant part:

Aetna in performing its obligations under this Contract is acting only as agent for the Contractholder [CooperIndustries] and the rights and responsibilities of the parties shall be determined in accordance with the law of agency except as otherwise provided. The Contractholder hereby delegates to Aetna authority to make determinations on behalf of the Contractholder with respect to benefits, subject, however, to a right of the Contractholder to review and modify any such determination. For the purposes of the Federal "Employee Retirement Income Security Act of 1974" and any applicablestate legislation of similar nature, the Contractholder shall, however, be deemed the administrator of the Plan.

The service contract clarifies the ambiguity present in the summary plan description relative to Aetna’s role. The service contract coupled with the plan documents evidence that Aetna was not intended to serve as a designated plan administrator for purposes of ERISA.

 

Further, both summary plan description and the service contract

provides for Aetna’s discretion to be curtailed by review and modification by Cooper Industries, which provisions are fatal to plaintiff’s argument that Aetna controlled the distribution of funds and benefit decisions. Accordingly, this case does not involve a factual dispute concerning which entity actually controls the distribution of funds and benefit decisions. See Am. Medical Ass’n v. United Healthcare Corp., 2003WL348963 (S.D.N.Y. 2003)(denying motion to dismiss against insurance companies where a factual dispute existed as to which entities were the plan administrators and whether any of the insurance companies controlled the distribution of funds and decided whether or not to grant benefits).

 

ERISAclaim.com Comment:

1. Summary Plan Description (Is) Ambiguous;
2. TPA Administrative Serves Only (ASO) Disclaims (Liability);

3. Patient (People) Suffers;

4. Whole country, No one cares; (McDougall vs Pelchart, et al (Aetna, UPS)

5. SPD laws, legal logics helps? (who is the plan administrator?)

6. Nothing matters (Aetna Health Inc. v. Davila)

7. Solutions with "Aetna Fiduciary Options"

GUALANDI v. ADAMS

2nd Cir., 10/01/2004

A public school plan is not subject to ERISA.

PROVIDENCE HEALTH V MCDOWELL

9th Cir. 10/01/2004

"Overpayment" Recovery, ERISA Ordeal

Mortgage Lenders Network USA, Inc. v. CoreSource, Inc.

ERISA, TPA, ASO, Fiduciary

Who & Where to Sue in Managed Care Dispute?

Jones v. Metro Life, GM, et al
6th Cir. 09/29/2004

"Discretion to interpret a plan, however, does not include the authority to add eligibility requirements to the plan. See Univ. Hosps. of Cleveland, 202 F.3d at 849-50.(5) We conclude that MetLife acted arbitrarily and capriciously when it interpreted the term “accident” in a manner that adds requirements not found in the Plan documents or supported by federal common law.

The Plan documents do not define the term “accident.” Specifically, the Plan documents do not require that an insured be engaged in “unusual activity” or meet with an “external force or event” in order for her injury to be considered an accident. MetLife could have expressly included such a requirement. Indeed, many of the insurance policies discussed in the cases cited by the parties did contain such a requirement. Because the policy at issue in this case did not include an “unusual activity” or “external force or event” requirement, MetLife attempts to rely upon federal common law to supply this requirement......

 

In this case, MetLife added an eligibility requirement under the guise of interpreting the term “accident” that does not exist in either the Plan documents or federal common law; therefore, MetLife’s interpretation of the Plan is arbitrary and capricious. When denying Jones’s claim for PAI benefits, MetLife applied an arbitrary-and-capricious definition of the term “accident.” Moreover, in its May 7, 2001 denial of Jones’s request for administrative review, MetLife indicated that it had not determined whether Jones was totally and permanently disabled. Because application of the correct definition of accident and the ultimate resolution of Jones’s claim requires additional findings of fact, we will remand this case to MetLife. Compare Univ. Hosps., 202 F.3d at 852, with Williams v. Int’l Paper Co., 227 F.3d 706, 715-16 (6th Cir. 2000)."

State of Connecticut v. Health Net, Inc.,

11th Cir. 09/10/2004

State Can NOT Enforce ERISA, Publicly or Privately

"This appeal presents an issue of first impression in this Circuit: whether a state, after obtaining assignments from some of its citizens for claims that those citizens have under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 (ERISA), has standing to assert those claims on behalf of its citizens in federal court. We conclude that Appellant, the State of Connecticut (“Connecticut”), in its capacity as assignee, has failed to demonstrate that it has suffered or will suffer an actual or imminent invasion of a legally protected interest that is concrete and particularized. Therefore, Connecticut does not have standing to pursue its claims, as an assignee, under Article III of the United States Constitution. We also hold that Connecticut does not have statutory standing under ERISA to pursue the claims of its citizens in its capacity as parens patriae. Accordingly, we affirm the judgment of the district court dismissing Connecticut’s Complaint."

ERISAclaim.com Comment:

State Can NOT Enforce ERISA, Publicly through regulation or Privately through assignment.

 

The State of Connecticut has tried very aggressively, in the patient rights campaign in past 10 years, to regulate managed care problems, with fatal obstacle of ERISA preemption, because most Americans obtained health insurance through employment in employer-sponsored health plans, either self-insured or fully-insured, governed under ERISA.

 

The State of Connecticut has tried, as the first State and the only one so far, the ERISA assignment practice to secure legal standing in federal court in order to enforce ERISA indirectly as private assignee or constitutional challenge to heal ERISA problems in managed care crisis, once again such effort has failed from this ruling.

 

For legislators, regulators, patient rights advocates, health care providers and industry experts, this case has taught all of us another lesson that ERISA regulation has to be enforced by federal government, Department Of Labor (DOL), interpreted and adjudicated in federal court. Entire country must get educated on ERISA clam regulation, especially for health care providers, American workers and state regulators.

 

If we ignore these hard lessons, from recent Supreme Court ruling in Aetna v Davila and this case, and continue to fantasize ourselves with state regulations on ERISA governed managed care problems and health care crisis, we will destroy our health-care system in this country.

CARPENTERS HEALTH V VONDERHARR

9th Cir. 09/15/2004

Personal Injury, ERISA Subrogation/Reimbursement/Pre-emption

"In sum, neither Harris Trust nor Great-West Life overruled our circuit precedent. Indeed, Great-West Life was a case affirming our circuit and referenced one of the cases that the Trust claims it overruled.

 

[4] The actions asserted by the Trust are nothing more than garden-variety legal claims for contractual restitution that are not cognizable under ERISA. Thus, the district court was entirely correct in its dismissal of the Trust’s ERISA claims."

ERISAclaim.com Comment:

Different rulings have be made by different appeals court in federal level, and then federal or state jurisdiction will continue to confuse every one. Supreme court has declined to hear this issue from 7th Cir. since Great-West Life.

 

This confusion will greatly impact current "over-payment" recoupment practice by the industry.

 

Wal-mart Benefits Committee will have to play by 7th & 9th Cir. rules.

Kosiba v. Merck & Co Inc

3rd Cir. 09/13/2004

"However, there is evidence of procedural bias in Merck’s intervention in the appeals process to request an independent medical exam. This is especially problematic because the record before the defendants prior to Dr. Dev’s examination provided reasonably sound as well as unequivocal support for Epps-Malloy’s claim for benefits; the choice to request a third medical opinion therefore strongly suggests a desire to generate evidence to counter Epps-Malloy’s physicians’ diagnoses. Because Merck’s intervention, notwithstanding its delegation of claims administration to a large and experienced carrier, undermines the defendants’ claim to the deference normally accorded an ERISA plan fiduciary with discretionary authority, we conclude that the District Court should have applied a moderately heightened arbitrary and capricious standard of review. Additionally, with respect to the merits, the District Court failed to address Epps-M alloy’s fibromyalgia diagnosis, an omission which itself alone would require a new trial. For these reasons, we will reverse the judgment of the District Court and remand for a new trial."

Leonard J. Klay v. Humana

"A Major Court Victory for All Physicans"

Appeal from the United States District Court
for the Southern District of Florida
_____________________
(September 1, 2004)

 

"This is a case of almost all doctors versus almost all major health maintenance organizations (HMOs), coming before us for the third time in as many years; there have been twenty-one published orders and opinions in this case from various federal courts. The plaintiffs are a putative class of all doctors who submitted at least one claim to any of the defendant HMOs between 1990 and 2002. They allege that the defendants conspired with each other to program their computer systems to systematically underpay physicians for their services. We affirm the district court’s certification of the plaintiffs’ federal claims, though we strongly urge the district court to revisit the definition of these classes, and reverse the district court’s certification of the plaintiffs’ state claims. We do not reach the district court’s certification of a California Subclass since the defendants did not specifically challenge the certification on appeal....."

 

"We have nothing but the defendants’ conclusory, self-serving speculations to support their claim that this trial could devastate the managed care industry. “Because considering the financial impact of a judgment presupposes success on the merits and requires the trial court to express an opinion on the harshness Vel non of a particular remedy prior to trial itself, it ought to be allowed only in extreme cases.” Roper, 578 F.2d at 1114. More importantly, however, if their fears are truly justified, the defendants can blame no one but themselves. It would be unjust to allow corporations to engage in rampant and systematic wrongdoing, and then allow them to avoid a class action because the consequences of being held accountable for their misdeeds would be financially ruinous. We are courts of justice, and can give the defendants only that which they deserve; if they wish special favors such as protection from high—though deserved—verdicts, they must turn to Congress."

 

V.

"For the reasons articulated above, we affirm the district court’s grants of class certification as to all RICO-related claims, though we urge it to reconsider the precise scope of the classes, and reverse the district court’s grant of class certification as to all state-law claims other than the claim based on California law. We do not disturb the district court’s certification of the California Subclass because the defendants did not specifically challenge that on appeal."

 

Given the number of parties involved in this case, it threatens to degenerate into a Hobbesian war of all against all. Nevertheless, we feel that the district court—a veritable Leviathan—will be able to prevent the parties from regressing to a state of nature. One can only hope that, on remand, the proceedings will be short, though preferably not nasty and brutish.

 

SO ORDERED."

1. This federal 11th appeals court ruling is a major court victory for class action lawsuits for "almost all doctors versus almost all major health maintenance organizations (HMOs)";

2. This ruling may signal a great likelihood of quick settlements for all major insurance companies as Aetna and CIGNA reached with 950,000 physicians;

3. This ruling has given a green light for new class actions filed against almost every Blue Cross Blue Shield Plans and intermediaries;

   1. Nearly Sixty Blue Cross/Blue Shield Affiliates throughout the Country Sued by Physicians (HMO Crisis Newsroom)

   2. Thomas/Kutell, MD v. BCBS, Case #03-21296 - Judge Dubé

   3. Jun 18, 04 Plaintiffs' Second Amended Class Action Complaint
      Jun 28, 04  Solomon:  First Amended Complaint - Class Action

4. It is critical to understand physicians' state claims (breach of contract, HMO/PPO payment or fraud) were decertified except for California, and benefits claims by patients were previously dismissed.  The physicians' medical claims class-action status has been decertified except for California, the remaining litigation is about physicians' RICO claims;

5. Now it is more important to revisit Aetna and CIGNA settlement: Settlements = ERISA + 3 E. B.

6. Intriguing consequences of this ruling for physicians' state claims is whether individual state class actions by physicians and their state associations may motion back to their original jurisdictions, as original class-action consolidation has been proven by this ruling impractical and inappropriate, this ruling does not decide merits of physicians' state claims, but consolidated venue from all 50 states into Miami Florida and physicians state claims were not dismissed with prejudice.

Class-Action Status Is Upheld for Doctors Suing Insurers (The New York Times)

"An appeals court upheld class-action status yesterday for a lawsuit brought on behalf of at least 600,000 doctors contending that six of the nation's largest health insurers regularly reduce payments for medical services."

Eleventh Circuit Court of Appeals Affirms Class Certification for RICO Lawsuit Filed by the Nation’s Doctors Against Leading HMOs (hmocrisis.com)

"Plaintiff’s Lead Counsel Archie Lamb: Largest Physician Led Class Certification in Federal Court History Has Now Been Affirmed

 

Wednesday September 1, 2004:  The Eleventh Circuit Court of Appeals issued a sweeping decision today affirming class action certification in the landmark RICO case filed to combat widespread and chronic abuses by some of the nation’s largest for profit HMOs." 

THE PAUL REVERE LIFE INS. CO. v. DANIEL E. BROMBERG (1st Cir. 08/30/2004)

"We determined that ERISA was inapplicable to the individual policy because the employer's responsibility for administering and funding her coverage ended once its employee obtained the conversion policy."

BANUELOS V CONSTRUCTION LABOR

(9th Cir. 08/24/2004)

This case, in conjunction with recent 1st Circuit ruling in GLISTA v. UNUM LIFE INSURANCE [PDF] [WP] (1st Cir. 08/11/2004), demonstrated an important ERISA secret (compliance for winning) that the court shall not consider evidence not previously presented to the plan administrator or outside outside administrator records, and the court will not review the merits of reasons from the plan administrator not previously articulated or disclosed to the claimant at administrative appeals, especially when the plan has delegated discretionary authority to the plan administrator in order to gain advantages of abuse of discretion review standard.  Noncompliance and phantom reviews will backfire against the plan at judicial reviews.

Justofin v. Metro Life Ins Co

"IV. Conclusion

 

Contrary to the decision of the District Court, we conclude that the 1999 amendment to Loretta Justofin’s life insurance policy was not void as a matter of law, as it is for a jury to decide whether the misrepresentations in the application for the policy amendment were made knowingly or in bad faith and whether they were material. As to the other issues appealed: MetLife did not waive its right to contest the amended policy’s validity by failing to investigate Loretta’s statements pertaining to her arthritis; the District Court, while it may have good reasons to deny summarily the Justofins’ claim of bad faith against Metlife, needs to set out these reasons; the District Court did not abuse its discretion in granting MetLife’s motion to amend its pleadings to add a counterclaim; and, on remand, the District Court retains discretion to address the Justofins’ allegations of discovery abuse and motions for sanctions and additional discovery. In this context, we vacate the District Court’s grant of summary judgment and remand for further proceedings consistent with this opinion."

GLISTA v. UNUM LIFE INSURANCE [PDF] [WP]

(1st Cir. 08/11/2004)

"This case requires that we address for the first time two questions of general import: (a) the admissibility in ERISA cases of internal guidelines and training materials that interpret certain plan terms and are promulgated by the plan administrator; and (b) whether a plan administrator may defend a denial of benefits on the basis of a different reason than that articulated to the claimant during the internal review process.We decline to adopt hard-and-fast rules as to either question. We conclude that such internal documents are admissible under certain conditions, which are met here. We also conclude that where a plan administrator articulates in litigation an additional reason for denial of benefits that differs from the reasons articulated to the plaintiff, reviewing courts have a range of options available. Here, we decline to consider the merits of the reason not articulated to Glista. Considering only the reason articulated to Glista, we conclude that the denial of benefits was arbitrary and capricious."

 

"We reverse the grant of judgment in favor of Unum and hold that Glista is entitled to judgment. We remand with instructions that an order be entered requiring Unum to pay the benefits that Glista seeks, including all benefits past due, with any interest to which he may be entitled. Glista is awarded his costs."

ERISAclaim.com Comment:

This case ruling emphasized that the plan must disclose internal guidelines as "relevant document" under ERISA on internal appeal process, as clarified by new ERISA claim regulation, and any denial reasons or grounds not disclosed to the claimant on appeal process will not be considered by the court. This is also profound and significant for medical necessity determination, bundling and down coding, usual, customary and reasonable (UCR) fee dispute , pre-existing condition and urgent care  denials in managed-care crisis under ERISA.

EARNEST CLARDY V. ATS, INC.

 

"CONCLUSION

It is the opinion of this court that the Mississippi law requiring a Chancellor's approval before a parent may contract away a minor's legal rights is not preempted by ERISA in this case. As a consequence, the "reimbursement agreement" signed by Earnest and Nadine Clardy in this case is not enforceable against Kenneth Clardy in this case. The defendants' motion for partial summary judgment in this cause shall be denied."

Critchlow v. First Unum (2nd Cir.)

02-7585

Critchlow v. First Unum [Dissenting] (2nd Cir.)

02-7585

"On August 12, 2003, a divided panel of this Court, in an amended majority opinion by Judge Van Graafeiland, with B.D. Parker, J., concurring and Kearse, J., dissenting, concluded that the dismissal of the complaint should be affirmed. On August 27, 2003, a judge of this Court requested a poll to have the appeal reheard en banc. The mandate was issued inadvertently on August 28, 2003, and was recalled on June 21, 2004, in light of the pendency of the en banc poll. While the en banc poll was pending, Judge Parker reconsidered his earlier decision and voted to reverse the judgment. Therefore, with the issuance of the present opinion, the earlier decision in this case, reported at 340 F.3d 130 (2003), is vacated. For the reasons that follow, the judgment is reversed, and the matter is remanded for entry of judgment in favor of plaintiff."

 

"We conclude that the UNUM Policy provision excluding loss resulting from "intentionally self-inflicted injuries" does not unambiguously apply to a death resulting from autoerotic asphyxiation. And to the extent that that phrase, or the term "injuries" within it, is ambiguous, it must, in accordance with ERISA principles, be construed against UNUM. The district court should have rejected as a matter of law UNUM's contention that it properly denied plaintiff benefits on the basis of the exclusion for "intentionally self-inflicted injuries."

QualChoice Inc v. Rowland (6th Cir.)

Appeal from the United States District Court

for the Northern District of Ohio at Cleveland.

"This court has explicitly held that subrogation is not available in a situation such as this, when the plan participant or beneficiary has already recovered, because subrogation allows a plan fiduciary only to step into the shoes of a plan participant or beneficiary and assert the rights of the participant or beneficiary against another; subrogation does not allow a plan fiduciary to obtain a judgment of personal liability against a plan beneficiary or particpant. Mosser, 347 F.3d at 623-24; see also Dobbs at 588, 604. Therefore, QualChoice may have been able to use subrogation to step into the shoes of Rowland during the settlement negotiations with W & LE, but QualChoice may not now use the doctrine of subrogation to impose personal liability on Rowland.......

 

Applying the Supreme Court’s cases, we hold that a plan fiduciary’s action to enforce a plan-reimbursement provision is a legal action, regardless of whether the plan participant or beneficiary recovered from another entity and possesses that recovery in an identifiable fund."

Wiggin v. Bridgeport Hosp., Inc.,

ERISA preemption

"Plaintiffs’ counsel was given leave to amend, and, on August 6, 2002, filed an amended complaint alleging only four counts (fraudulent inducement, fraudulent misrepresentation, breach of fiduciary duty, and "common law") and principally seeking "medical and health insurance reimbursement for a medical condition which [plaintiffs were] told was covered under [plaintiffs’] health insurance coverage and other damages due [plaintiffs]." Nowhere in the amended complaint is there any mention of or reference to ERISA, any other statutory provision, or any federal cause of action."

 

"III. Conclusion

For the foregoing reasons, defendants’ motions to dismiss [Doc. ## 16 & 19] are GRANTED. The Clerk is directed to close this case."

Glynn v. Bankers Life and Casualty Co., 

Motion to dismiss, ERISA preemption

Crawley v. Oxford Health Plans, Inc.,

Motion to remand, ERISA preemption

"Oxford has urged the application of ERISA to the facts of this case, because Crawley would not have been eligible for an individual policy with Oxford-NY without the conversion provision in his ERISA plan with his former employer. Oxford does not dispute, however, that Crawley was in fact eligible to convert to an individual policy. Since this conversion is now complete and the right to convert is not in question, these facts do not support application of ERISA."

Cole v. General Electric Co.

ERISA, failure to exhaust administrative remedies

"In sum, the Court finds that Cole failed to exhaust his administrative remedies on all of his claims – whether they were actually or constructively denied. Thus, GE is entitled to judgment on the entirety of Cole’s claims."

Smith v. Reliance Standard Life Insurance Company

06/16/04
 

"Accordingly, this Court accepts the opinion of Dr. Helffenstein, as it has no reason not to. In so doing, this Court is not stating that a plan or claim administrator is bound to provide an explanation of the reasons rejecting opinions of any physician, a requirement that might run afoul of the Supreme Court’s holding in Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834 n. 4 (2003) (“we conclude that ERISA does not support judicial imposition of a treating physician rule, whether labeled “procedural” or “substantive.” ). Rather, this Court is applying the teaching of that case: “Plan administrators may not arbitrarily refuse to credit a claimant’s reliable evidence . . . .”
Nord, supra, 538 U.S. at 823."

Maximum Comfort, Inc v. Tommy G. Thompson

(06/30/2004, United States District Court for the Eastern District of California)

 "CONCLUSION

For the foregoing reasons, the court hereby ORDERS as

follows:

1. Plaintiff's motion for summary judgment and permanent injunction is GRANTED;

2. Defendant, and his agents, officers, employees, representatives, and all persons acting in concert or participating with him, are ENJOINED from recouping, offsetting or otherwise collecting from plaintiff any alleged overpayments for any of the beneficiaries which are the subject of this action from any amounts due and owing to plaintiff; and
......

IT IS SO ORDERED.

DATED: June 28, 2004."

ERISAclaim.com Comment:

This case ruling has profound impact on current "over-payment" refund and recouping practice in U.S. healthcare market. Please see more details at the conclusions of

"Overpayment" Refund Request Response & Appeals -  ERISAclaim.com

Singh v. Prudential Health

(4th Cir., 07/03/2003)

"In sum, we conclude that Singh’s State common-law claims are claims for benefits due under the terms of an ERISA plan and are therefore "completely preempted," such that federal removal jurisdiction exists. In reaching the conclusion that Singh’s claims seek to enforce a term of the Prudential plan, we conclude that, although the Maryland HMO Act "relates" to an employee benefit plan, it is saved as a State regulation of insurance that does not conflict with § 502(a) of ERISA, such that it defines a term of the ERISA plan. Because Singh’s claims seek to enforce a term of the Prudential plan, as so modified by State law, they are within in the scope of § 502(a) and must be adjudicated as federal claims under that section. Finally, we conclude that any claimed relief that supplements, supplants, or conflicts with the remedies provided by § 502(a) must be rejected as preempted."

NW Memorial Hospital vs. Village of S Chicago Heights

 

Heffner vs. Delta Airlines Inc

"The Administrative Committee, appointed by the Board of Directors of Delta Airlines, is the Plan Administrator and performed the final review of Plaintiff's claim under the Plan. Plaintiff filed this action pursuant to the provisions of ERISA, 29 U.S.C. § 1131, et seq. seeking judicial review of the decision denying her long-term disability benefits.

Although, the parties appear to be at odds as to the timing and sequence of some of the facts alleged, the material facts generally are not in dispute. Plaintiff, who suffers back pain, applied for long-term disability benefits. Plaintiff's application for long-term disability benefits was denied by Aetna Life Insurance Company ("Aetna"), the Plan Administrator Designee, effective November 26, 1998. Plaintiff appealed the denial of benefits through the two levels of review available. The second level of review is by the Administrative Committee itself. The Administrative Committee concluded that as of November 26, 1998, Plaintiff was not physically disabled for purposes of the Plan...."
 

Knight vs. Amer Med Sec

"The court finds the case law holding that a conversion policy is not governed by ERISA to be persuasive and well reasoned. The court holds that the Knights' policy is not an employee welfare benefit plan subject to ERISA."

CAREFIRST BLUE CROSS BLUE SHIELD v. MERCK-MEDCO MANAGED CARE, LLP, PAID PRESCRIPTIONS, LLC, and NATIONAL RX, INC.
 

CARTER V HEALTH NET OF CALIFORNIA

(9th Cir., 07/06/2004)

ERISA, PPO, Arbitration?

"Donald Carter (“Carter”) and his daughter Kathryn Carter (“Katie”) appeal the district court’s order vacating an arbitration award against Health Net of California (“Health Net”), an insurance company, on the ground that the arbitrator did not have jurisdiction over Health Net. The Carters argue that the district court lacked subject-matter jurisdiction over the opposing petitions to vacate and confirm the arbitration award because neither presented a federal question. We agree, and remand this case to the district court for remand to state court."

Knoblauch v. Metropolitan Life Insurance Company, Inc., et al.

(MANNION, M.J.)

"Again, the court is satisfied that the plaintiff has set forth a genuine issue of material fact as to whether the plan administrator complied with the procedures required by the plan.....

 

O R D E R

1. Defendants motion for summary judgment (Doc. No. 18) is DENIED;"

Sopp v. CNA Insurance Company, et al.

(MANNION, M.J.)

"As indicated above, the burden of proof remains with the claimant to establish total disability. Mitchell, 113 F.3d at 439. This court is not free to substitute its own judgment for that of the plan administrator in determining eligibility for plan benefits, and may reverse the administrator’s decision only if it was arbitrary and capricious. Abnathya, 2 F.3d at 45. The record on the whole establishes that the decision to terminate short term disability benefits as of August 31, 1999, and to not approve long term disability benefits, was not arbitrary and capricious. . Thus, summary judgment in favor of the defendants is warranted. Conversely, the plaintiff has failed to show there is a genuine issue of material fact that requires resolution by trial, nor that he is entitled to Summary Judgment as a matter of Law."

Hunter v. Federal Express

"The Plan names FedEx as its Administrator and empowers the Administrator to "receive, evaluate and process all . . . claims and . . . allow payment of benefits under the Plan in accordance with its terms." See App. 285-86,318. FedEx, however, elected to outsource the initial evaluation and processing of claims to Kemper. See App. 464-98. The Plan and the Kemper outsourcing agreement both recognize that FedEx has "sole and exclusive discretion" to determine whether it will pay long term disability benefits to any claimant under the Plan. ....

If Kemper denies benefits to a claimant, then FedEx's Benefit Review Committee ("BRC") must "conduct[ a] review[] of denial of benefits and provid[e] the claimant with written notice of the decision reached."

Algayer v. Metropolitan Life Ins.

"Conclusion

We therefore conclude that the Plan's three-year clause is applicable here and bars Algayer's claims. MetLife triggered the period of limitation on January 18, 2000 when it gave Algayer a final opportunity to submit proof of her disability, and the insurer unequivocally notified her on September 1, 2000 that it had decided to deny her claim for the resumption of benefits. At the latest, then, Algayer knew in September of 2000 that her only remaining option was to file suit within the limitation period set forth in the Plan. Algayer's unilateral decision in 2002 to submit additional proof did not reset the clock because, at that point, MetLife reasonably regarded her case as closed. By the time she filed suit in January of 2004, the limitation period had expired.

An appropriate Order and Judgment follow."

Madaffari  v. Metrocall Co Grp

Who can be sued as proper defendants?

Group insurer and the plan

"Nevertheless, because of its examination of the Jass opinion, and because the intent of ERISA is that the "party legally responsible for paying benefits governed by ERISA is a party that can be sued," the Court is unable to say that ReliaStar is not a proper defendant in this action.6 Penrose, 2003 WL 21801214*3 ReiaStar's motion to dismiss is therefore denied with respect to Count I."
 

Burris v. Five River Carpenter District Council Health & Walfare Fund

Admin Comm Wal-Mart v.  Varco  

Leonard J. Klay v. Humana, Inc.

00-01334 MD-FAM

06-30-2004

"Before TJOFLAT, BIRCH and GOODWIN , Circuit Judges. *
TJOFLAT, Circuit Judge:

In this putative class action, physicians are suing many of this country’s 1 largest HMOs, alleging that these organizations conspired to systematically underpay them for their medical services. The defendant HMOs immediately moved the district court to stay the proceedings and compel the named plaintiffs to arbitrate their claims. The court held that certain claims were arbitrable, and others nonarbitrable.......

 

V.

For these reasons, the district court’s injunction, in its entirety, is REVERSED."

Federal Judge Sees 'Disturbing Pattern of Erroneous and Arbitrary' Denials by First Unum, Unum Life (PDF)

(U.S. District Court for the District of Massachusetts, via Brininger LTD ERISA Litigation Web Site at www.erisa.md)

At p. 45 of 76-page document; Trust v. First Unum Life Insurance Company of America (D. Mass. No. 02-12477-WGY, June 15, 2004). Excerpt: "[A]n examination of cases involving First Unum and Unum Life Insurance Company of America, which like First Unum is an insuring subsidiary of Unum Provident Corporation,19 reveals a disturbing pattern of erroneous and arbitrary benefits denials, bad faith contract misinterpretations, and other unscrupulous tactics."

 

 

Klassy, Jim v. Physicians Plus Insurance Co.

(7th Cir., 06/15/2004)

"MANION, Circuit Judge. Jim and Barbra Klassy sued Physicians Plus Insurance Company (“Physicians Plus”) and Dr. Gary Johnson, alleging numerous claims stemming from Physicians Plus’s refusal to approve payment for a bloodless hip surgery for Barbra, who is a practicing Jehovah’s Witness. The district court dismissed the Klassys’ claims, one for failure to state a claim and the others as being completely preempted by the Employment Retirement Income Security Act of 1974. 29 U.S.C. §§ 1001, et seq. (“ERISA”). The district court then gave the Klassys the opportunity to amend their complaint to state a claim under ERISA, but they instead filed this appeal. On appeal, the Klassys challenge only the district court’s holding that Barbra’s medical malpractice claim against Dr. Gary Johnson is completely preempted by ERISA. We affirm."

 

 

PEO Liable for Failure to Provide COBRA Notices; Over $300,000 Awarded (Employee Benefits Institute of America Inc. (EBIA))

Physicians' Multispecialty v. The Health

(11th Cir. 06-03-2004)

"V. CONCLUSION

We conclude that ERISA’s silence on the assignability issue cannot be interpreted to mandate affirmatively an absolute right to assign. Rather, we conclude that ERISA’s silence on the assignability issue leaves the matter of assignability of welfare benefits to the agreement of the contracting parties. The Plan provision in this case clearly provides that a participant or beneficiary cannot assign benefits. This is a valid, enforceable provision. Thus, PMG cannot maintain an ERISA action. Accordingly, we reverse the district court’s grant of summary judgment and remand this case to the district court for further proceedings consistent with this opinion.

REVERSED and REMANDED."

    This is a 2001 claim, before the new ERISA claim regulation went into effect. The anti-assignment practice has been ruled inconsistently among different jurisdictions.

    This is why New ERISA Claim Regulation established new federal standard on assignment practice.

John Daniels v   Wayne Bursey  

"MATTHEW F. KENNELLY, District Judge:

 

Unfortunately, these rather elementary principles have been forgotten by several of the lawyers in this case, assuming they understood them to begin with. The level of invective in these lawyers’ presentations in this case has far exceeded the high end of the normal range. And at least some of the disputes have been without precedent in my own experience."

ERISAclaim.com Comment:

Why lawyers hate each other in court? Because it's ERISA, so frustrating, can't help. A must read, but don't follow.

Scott v. Hartford Life & Accident Ins. Co.

2004 U.S. Dist. LEXIS 8702 (E.D. Pa. 2004)
 

INSURER'S  DENIAL LETTERS MUST EXPLAIN SPECIFIC REASONS FOR DECISION AND COMPLY WITH DOL CLAIM REGULATIONS.

QualChoice, Inc. v. Rowland (6th Cir. 2004)

Sixth Circuit Holds Action to Enforce Plan Reimbursement Provision Under ERISA Is 'Legal'

(Employee Benefits Institute of America Inc. (EBIA))

American Chiropractic v. Trigon Healthcare

4th Cir. 05/06/04

Decision: Affirmed LOWER COURT INFORMATION: Western District of Virginia at Abingdon CA-00-113-1 James P. Jones (Presiding Judge)

"OPINION

 

WILLIAMS, Circuit Judge:

 

In this appeal, we consider whether Trigon Healthcare, Virginia’s largest for-profit health insurance company, and its affiliated companies (collectively, Trigon),¹ were engaged in an anticompetitive conspiracy with medical doctors and medical associations whose purpose was to harm chiropractors. American Chiropractic² filed this eight count complaint alleging violations of federal antitrust laws, the Racketeer Influenced and Corrupt Organizations Act (RICO), and various state laws, claiming that Trigon and the medical doctors and associations were engaged in a conspiracy that used Trigon’s reimbursement policies and treatment guidelines to limit severely the flow of insurance dollars to chiropractors and steer those monies toward medical doctors. Trigon argues that no conspiracy exists, and that it implemented its coverage policies unilaterally based on market supply and demand. The district court agreed with Trigon, dismissing two counts of the complaint for failure to state a claim and disposing of the remaining counts by granting Trigon’s motion for summary judgment. Although we apply different reasoning than the district court in some areas, we affirm its disposition of the case in favor of Trigon."

Gorini v. AMP Incorporated

 2004 U.S. App. LEXIS 7460 (3d Cir. 2004)

$160,000 Statutory Penalty for Failure to Provide SPD and Plan Document, Even No Benefits Available

Excerpt: "When considering whether to impose such penalties, the court can consider (1) bad faith or intentional conduct of the plan administrator, (2) length of delay, (3) number of requests made, (4) documents withheld, and (5) prejudice to the participant. Romero v. Smith Kline Beecham, 309 F.3d 113, 120 (3d Cir. 2002) (citations omitted). Here, the district court found that Tyco’s failure evinced a pattern of “conscious choices to decline to disclose” and “recalcitrance”4 in providing documents Gorini was entitled to under ERISA. JA 30-31. Although the court did not literally use the words “bad faith,” given the analysis of Tyco’s conduct, it is difficult to reach any conclusion other than that Tyco did act in bad faith."

Failure to Provide Plan Documents Resulted in Statutory Penalties of $160,000 (Employee Benefits Institute of America Inc. (EBIA))

Excerpt: "Although the trial court determined that the employee was not entitled to severance benefits, it assessed a penalty against the employer in the amount of $160,780 for the employer's failure to provide the requested documents. The employer appealed the penalty assessment, arguing that ... the employee was not a plan participant and consequently was not entitled to penalties under ERISA Section 502(c) ..."
 

Cooperative Benefit Adm'rs, Inc. v. Ogden

 2004 U.S. App. LEXIS 7300 (5th Cir. 2004)

COURT DISMISSING FIDUCIARY'S FEDERAL COMMON-LAW UNJUST ENRICHMENT CLAIM FOR RECOVERY OF BENEFIT OVERPAYMENTS

Linder v. BYK-Chemie USA Inc.,

2004 U.S. Dist. LEXIS 6228 (D. Conn.2004)

Claimant Could File Suit Because Plan Failed to Decide Claim Within 90 Days (Employee Benefits Institute of America Inc. (EBIA))

Excerpt:  “......Linder argues, however, that under the Department of Labor regulations in effect since January 1, 2002, administrative remedies are deemed to be exhausted if the Plan Administrator fails to respond to a claim for benefits within 90 days. He argues that the Plan's claims procedures, which provide that a claimant may administratively appeal if the Plan Administrator fails to respond within 90 days, are invalid, as they fail to comply with ERISA's procedural requirements. The Court agrees.

 

Under the express terms of the regulations, Linder's claim is deemed exhausted, and he is entitled to bring suit in federal court. See 29 C.F.R. § 2560.503-1(l)."

ERISAclaim.com Comment:

In this latest 2004 case ruled under new ERISA claim regulation, a failure to render a timely decision by the plan administrator resulted in "deemed denial", "deemed exhaustion of remedy" and "loss of deferential review standard", the worst for the plan in ERISA litigation. (Please note this is a pension claim)

Guardsmark, Inc. v. Blue Cross & Blue Shield of Tenn., Civ. No. 01-2117 (W.D. Tenn. 2004)

Authority to Grant or Deny Claims and to Write Checks Makes Third-Party Administrator a Fiduciary (EBIA.COM)

PROVIDENT LIFE v SHARPLESS

"An ERISA restitution claim is equitable in nature and does not provide a right to a jury trial. Borst v. Chevron Corp., 36 F.3d 1308, 1323 (5th Cir. 1994); Calamia v. Spivey, 632 F.2d 1235, 1237 (5th Cir. 1980). Sharpless contends, however, that she was entitled to a jury trial because Provident’s claim was legal rather than equitable."

ERISAclaim.com Comment:

This (5th Cir.) is interesting point comparing to the recent 7th Cir. ruling on "equitable" v. "legal" claim when plan is asking for money back.

Leipzig, Steven v. AIG Life Insur Co (7th Cir. 03/25/2004)

"But the district court dismissed the counterclaim for want of subject-matter jurisdiction, ruling that because a demand for money is a “legal” rather than an “equitable” claim, it does not fall within ERISA’s grant of jurisdiction for claims by ERISA fiduciaries, as opposed to claims against them. See Leipzig v. AIG Life Insurance Co., 257 F. Supp. 2d 1152 (N.D. Ill. 2003), discussing §502(a)(3) of ERISA, 29 U.S.C. §1132(a)(3), and Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002)."

BAKER v METRO LIFE INS CO