The Friday 5: 5 Latest ERISA Litigation Highlights – Might 2021 | Saul Ewing Arnstein & Lehr LLP

Friday five of this month looks at cases related to disputes between beneficiaries over the proceeds of life insurance policies, an insurer’s use of independent medical assessors and in-house nurses to assess claims, the pre-existing condition restriction, and the shifting of legal fees to counseling the parties (as opposed to the parties themselves).

  1. The tenth circuit refuses to drag the insurer into a dispute between life insurance beneficiaries. In the event of a dispute over life insurance revenues, the insurer received life insurance benefits and paid them to a beneficiary. Then, after paying the original beneficiary, another former beneficiary stepped forward and applied for the same benefits. After losing it during the administrative process, the dissatisfied former beneficiary sued the insurer. Among other things, he alleged that the insurer should have investigated the legality of the predominant beneficiary’s claim in greater depth. The tenth circuit made it clear that the insurer had to consider at most “readily available information” and that the insurer was fulfilling its duty of investigation, particularly because the plaintiff did not provide additional evidence during the administrative complaint process to contest the predominant beneficiary’s claim. Although the court agreed with the insurer on the matter, it rejected the insurer’s argument that it was also entitled to reimbursement of its fees and costs. The tenth circuit found that the plaintiff’s position was sufficiently well founded to avoid sanctions. Stachmus v. The Guardian Life Ins. Co. of Am., No. 20-7019, 2021 WL 1590006 (10th Cir. April 23, 2021).
  1. The court rejects challenges to independent medical examinations carried out by the insurer. In a recent dispute over long-term disability benefits, the court denied a number of attacks by the plaintiff on the insurer’s independent medical reviews. The court found that “[d]agrees with [medical reviewers’] Conclusions are not the same as denying their methods. “The court also found, and relatively easily, evidence that the examiners had carried out a sufficiently thorough examination, and if the plaintiff wanted the examiners to examine additional information, it was always the plaintiff’s obligation to provide it . It was also found that the auditors were sufficiently independent from the insurer and from each other to ensure the legitimacy of the review process. Although the court applied the de novo review standard and specifically stated that it was inconsistent with the insurer’s conclusion that the plaintiff could work a full 40 hour week, it nonetheless found in the end that the plaintiff did not bear their burden to determine an underlying disability. Kay v. Hartford Life & Accid. Ins. Co., No. 19-209, 2021 WL 1378742 (SD Cal. Apr. 12, 2021).
  1. The court confirms the application of the pre-existing condition for a subsequent stroke. The plaintiff, an anesthetist, applied for long-term disability benefits after a stroke at the age of thirty-eight, which, according to the plaintiff, permanently disabled her due to reduced mental performance. The insurer denied the claim under the pre-existing condition restriction due to the recent pregnancy and treatment of the plaintiff for pre-existing mitral valve stenosis (a narrowing of the mitral valve of the heart) during the applicable review period. While the court agreed that the plaintiff did not suffer from or received direct treatment for the eventual disabling event, a stroke, during the lookback period, the court also found that the plaintiff received treatment for conditions that contributed to the causes or caused them. their eventual stroke during the relevant lookback period. Because the conditions under which the plaintiff was treated during the review period for the pre-existing condition limitation as opposed to a distant, attenuated or non-disabling condition sufficiently related to the stroke, the court upheld the application of the exclusion by the Insurer. Williams v. United from Omaha Life Ins. Co., No. 20-1001, 2021 WL 1648526 (MD Fla. April 12, 2021).
  1. Unlike a doctor, the insurer can rely on the in-house nurse to check the damage. The challenge for the Eighth Circle was that, unlike a doctor or other outside medical resource, an insurer employed an in-house nurse to assess eligibility for long-term disability benefits. The court found that nothing in the plan documents prevented the insurer from using an in-house nurse, while ERISA also stated that there was no ERISA rule per se that prevented an insurer from relying on a nurse instead of a doctor. Before the appeals court upheld the summary judgment of the insurer, the appeals court also examined the applicability of a relatively unique Arkansas state ordinance prohibiting the use of discretionary clauses in insurance contracts, including those that could affect the applicable standard of review in ERISA cases. The Eighth Circuit found that the prohibition does not apply to the policy in question, which came into existence before the regulation came into force, in particular due to the express prospective application of the regulatory language. Roebuck v. Usable Life, No. 19-1855, 2021 WL 1216217 (8th Cir. April 1, 2021).
  1. Switching of fees against lawyers representing the parties is not possible. In a life insurance dispute, the Eleventh Circle faced a first impression question of whether ERISA’s fee shift regulations allow fees to be awarded against an attorney as opposed to the attorney’s client. After a successful application to dismiss and assess the pleadings, the district court granted the insurer its fees and expressly instructed the plaintiff’s lawyer to pay the same by holding the lawyer responsible for the deficiency of the claims. For a number of reasons the appeals court found that “precedents, common sense and principles of legal interpretation demonstrate that the [ERISA fee shifting] The law allows fees to be awarded against parties, not their lawyer. “However, the Eleventh Circuit found that the insurer could still pursue an opposing counsel for sanctions under Rule 11 or other non-ERISA sanctions provisions, and the appeals court also found that the insurer could ask the district court to postpone charges the other party under ERISA in lieu of legal counsel. Peer v Liberty Life Assurance Co., No. 19-13974, 2021 WL 1257440 (11th Cir. April 6, 2021).

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