Burke Harvey, LLC

Arbitrary and Capricious Standard Continues to Favor Plan Administrators

The First Circuit, in O’Shea v. UPS decided September 15, 2016, upheld a denial of monthly payments under an annuity plan to a deceased UPS worker’s family because the worker died prior to the annuity start date. The decedent, who was terminally ill, delayed his retirement start date in order to accrue the maximum paid vacation and personal time he had for the remainder of his employment. He was not advised on his benefits application or by Human Resources that there was a survival requirement beyond the annuity date in order to receive the benefits. The application merely stated that the benefits would be “subject to the terms of the plan”. The retirement plan provided for a Preretirement Survivor Annuity for active employees spouses in the event they died prior to their annuity start date. The plan does not explicitly state that this is the sole provision available in those circumstances. After the decedent’s family was denied the annuity benefits, the plan justified that denial by interpreting the Preretirement Survivor Annuity provision as the sole benefit in light of the absence of another benefit for those circumstances.
The Court reviewed this interpretation under the arbitrary and capricious standard, which does not seek to find the best reading of the plan but rather if the administrator’s interpretation was reasonable. UPS’s interpretation was upheld as reasonable since there was no other term in the plan that applied to the decedent’s circumstances. Despite the fact that the decedent did not choose the Preretirement Survivor Annuity benefit, rather the annuity that paid a Single Life Annuity payable over 120 months, did not persuade the court that UPS’s interpretation failed under the standard of arbitrary and capricious. The Court’s application of this standard often favors the plan administrator and not the beneficiary. Particularly in this case the Court considered the argument that the single life annuity did not expressly state there could be no payment of the benefit if the employee died prior to the annuity start date, but agreed with UPS’s interpretation that the other annuity is the sole benefit since there was yet again an absence of language in the plan that guaranteed or provided another benefit under these circumstances. The Court’s willingness to allow an administrator to hinge its interpretation on the absence of express language for eligibility perquisites as well as additional remedies in the event of a plan participant’s early death, demonstrates just how favorable the arbitrary and capricious standard is for plan administrators.

Posted in Disability Benefits, Long Term Disability |

Reliance Standard’s Denial Found Arbitrary and Capricious

The Sixth Circuit recently reversed a twelve month mental disorder limitation against Reliance Standard adopting the “but-for” approach for Mental and Nervous Disorder Limitations of the Fifth, Ninth, and Third circuits. Okuno v. Reliance Standard Life Ins.Co. Ms. Okuno was approved solely for mental disorder benefits for her auto-immune disease and narcolepsy due to the fact that she exhibited a psychiatric component that “contributed to” her physically disabling conditions. The Sixth Circuit found that a “reasoned and deliberate” review for these circumstances is to assess the physical disability separate from the mental or nervous disorder and concluded denying benefits on the basis a mental disorder contributes to a physical condition is inappropriate.

The court went further in disparaging Reliance’s denial for Ms. Okuno’s physical disabilities because it its inherent conflict of interest is readily apparent based on their file. The court noted that file reviews by paid employees of the insurance company, without physical examinations “raises questions about the accuracy of the benefits determination.” Shaw v. AT&T Umbrella Ben. Plan No. 1, 795 F.3d 538, 550 (6th Cir.). Ms. Okuno did not even claim a mental disorder in her application; however Reliance denied her claim based on a mental disorder, which the court found “necessitated further review” beyond exclusively relying on file reviews. Reliance also acted arbitrarily in denying benefits without consulting a mental health expert. Prior decisions of this court suggest that failure to consult with a specialist on the condition the entire denial was based on is improper. Also, Reliance improperly denied Ms. Okuno by failing to consult the insured’s treating physicians. The Court held although no special deference is required to be given to treating physicians, there cannot be a total refusal to consider those opinions. Finally, the differing rationales from each of Ms. Okuno’s denials showed direct evidence that Reliance’s denial was arbitrary and capricious.

Posted in ERISA, Long Term Disability |

Supreme Court Issues ERISA subrogation Opinion

In a surprising bit of good news for plaintiffs, on January 20, 2016, the Supreme Court issued Montanile v. Board of Trustees of National Elevator, 577 U.S.  (2016).  In this action, the plaintiff was seriously injured by a drunk driver, which required payments from his ERISA plan of more than $120,000 for his medical expenses. The plaintiff recovered a $500,000 settlement from the tortfeasor and the ERISA plan sought reimbursement of the funds it had paid from the settlement. Most ERISA plans now contain specific language allowing the ERISA plan to seek reimbursement under a subrogation clause. The Court explained, however, that the ability of an ERISA fiduciary to recover sums paid from a third-party tortfeasor to a plaintiff under Section 502(a)(3) of ERISA is grounded in equity.  And whether the relief requested “is legal or equitable depends on the basis for [the plaintiff’s] claim and the nature of the underlying remedies sought.”

Prior precedent of the Supreme Court explained that the enforcement of a lien created by an agreement to convey a particular fund to another party—is equitable. Moreover, other precedent of the Court established that the nature of the ERISA plan’s underlying remedy, i.e., the enforcement of a lien against “specifically identifiable funds that were within [plan participant’s] possession and control” did not apply to the facts at hand.  Here, because there was no specific funds capable of identifying, the ERISA plan “fiduciary cannot bring a suit to attach the [plan] participant’s general assets under §502(a)(3) because the suit is not one for ‘appropriate equitable relief’.”   

If you or a loved one is in need of legal help and counsel, contact the long term disability attorneys at Burke Harvey, LLC for a free legal consultation.


Posted in ERISA, Supreme Court |

Sixth Circuit Allows Lawsuit to Continue Despite ERISA Requirment

On October 2, 2015, in Waskiewicz v. UniCare Life & Health Ins. Co., the Sixth Circuit reversed a district court’s granting of summary judgment in favor of Ford’s ERISA Plan because the insured, who suffered from major depression and gender identity disorder, failed to provide notice of her disability to the Plan after she suffered a debilitating breakdown.  According to the terms of the Plan, an employee was required to provide notice within a five-day period if the employee is absent for more than five (5) consecutive workdays.  The insured failed to provide such notice and was terminated.  The Plan administrator then denied the claim for benefits and the insured sued under ERISA. The Sixth Circuit reversed with instructions that the insured should be allowed the opportunity to show the failure to comply with the notice requirements, resulted from the very disability for which the insured sought benefits, i.e., her debilitating breakdown.

Posted in 6th Circuit Court, Disability Benefits, ERISA |

Court Imposes Penalty against ERISA Fiduciary for Failure to Provide Plan Documents

A few months ago, we wrote about the case of McDonough v. Aetna, 783 F.3d 374 (1st Cir. 2015) wherein the First Circuit upheld a penalty award against Aetna for failing to provide plan documents to an ERISA participant. This week, in the case of Harris-Frye v. United of Omaha, (E.D. Tenn. 2015), the plaintiff sought a penalty under ERISA for the Plan Fiduciary’s failure to provide documents relating to an ERISA life insurance policy. The Court upheld a Magistrate Judge’s recommendation to impose a penalty of $12,760 for failure to provide the life insurance policy; importantly, the Court further an additional sanction of $61,380.oo for the Plan’s failure to provide the “plan document.”

Posted in Disability Benefits, ERISA |

Sixth Circuit Continues to Give Meaning to “Equitable Relief”

On June 18, 2015, the Sixth Circuit in Pearce v. Chrysler Group LLC Pension Plan, 2015 WL 3797385, found that a retirement plan participant could state an equitable claim under ERISA for supplemental pension benefits until he became eligible for Social Security benefits, notwithstanding the fact he was terminated prior to receiving the benefits and the Plan document provided that terminated employees were not eligible for those type benefits.

The Sixth Circuit cited to the Supreme Court’s decision in Cigna Corp. v. Amara, 131 S. Ct 1886 (2011), and found that the district court had abused its discretion in denying, on futility grounds, Pearce’s motion to amend his complaint to add equitable claims of reformation, estoppel and surcharge under 1132(a)(3), because “a material conflict between the SPD and the Pension Plan can give rise to a claim for equitable relief.” These equitable claims of (1) reformation; (2) estoppel; and (3) surcharge potentially provide equitable relief when an ERISA participant is precluded from direct relief under that statute for a claim of money benefits.

Posted in 6th Circuit Court, Disability Benefits, ERISA, Long Term Disability |

Eleventh Circuit Vacates Prior Decision on ERISA Fiduciary

The Eleventh Circuit revisited its holding in Pruitt v. SunTrust Banks, Inc., No. 14-13207 (11th Cir. June 30, 2015), a putative ERISA class action brought against ERISA fiduciaries by plan participants, concerning certain investments in the plan.  The district court had dismissed the case based on ERISA’s borrowed six-year statute of limitations.  In related proceedings, another panel of the Court had affirmed that conclusion in Fuller v. SunTrust Banks, Inc., 744 F.3d 685 (11th Cir. 2014).  Recently, the Supreme Court decided Tibble v. Edison International, 135 S. Ct. 1823 (2015) which held under trust law, which controls the contours of an ERISA fiduciary’s duties, “a fiduciary normally has a continuing duty of some kind to monitor investments and remove imprudent ones.” 135 S. Ct. at 1828-29. Accordingly, the Supreme Court held that a plaintiff can effectively allege that a defendant breached its duty of prudence under ERISA “by failing to properly monitor investments and remove imprudent ones[,] . . . [and] so long as the alleged breach of the continuing duty occurred within six years of suit, the claim is timely.” Id. at 1829.  In light of this holding, the Eleventh Circuit panel vacated the district court’s summary judgment to defendant and remanded for reconsideration in light of Tibble v. Edison International.

The Burke Harvey, LLC national ERISA lawyers fully understand the ERISA guidelines and how they apply to each individual, specific case they handle.  Our expertise of the LTD claims process and federal ERISA guidelines gives us the ability to offer each client the customized advice needed to understand your legal rights and options to help you successfully pursue and obtain the benefits you are entitled to under your long term disability policy.  Contact our Burke Harvey, LLC long term disability lawyers for a free legal consultation.



Posted in 11th Circuit Court, Disability Benefits, ERISA, Long Term Disability |

Seventh Circuit Reaffirms Requirement to Exhaust Administrative Remedies

In Orr v. Assurant Employee Benefits (7th Cir. May 19, 2015) the district court dismissed a lawsuit for life insurance benefits because the plaintiffs did not first exhaust their administrative remedies.  On appeal, the Seventh Circuit affirmed noting that the denial letter plaintiffs received informed them of their right to seek review and included a copy of USIC’s Life Claims Denial Review Procedure.  That document stated in boldfaced, all-caps print, that a request for review must be submitted in writing within 60 days and warned: “If … you do not complete both the first and second review before filing a lawsuit, a court can dismiss your lawsuit.” The exhaustion of administrative remedies is a requirement of most ERISA plans and courts will enforce its requirements by dismissing lawsuits that do not comply with this requirement.

Posted in 7th Circut Court, Disability Benefits, ERISA, Insurance Law, Labor & Employment Law, Long Term Disability, Retirement Benefits, USIC |

Supreme Court Clarifies Statute of Limitations for Trustees Fiduciary Duty Claim under ERISA

In Tribble v. Edison Int’l, the United States Supreme Court found that ERISA beneficiaries claims were not time barred under a six year statute of limitation, from the date of the original purchase of investments, because ERISA fiduciaries have an ongoing duty derived from trust law that requires them to continue to monitor, and remove imprudent, trust investments. As long as a plaintiff’s claim alleging breach of the continuing duty of prudence occurred within six years of suit, the claim is timely.  Justice Breyer, writing for the Court, explained:

In determining the contours of an ERISA fiduciary’s duty, courts often must look to the law of trusts. We are aware of no reason why the Ninth Circuit should not do so here. Under trust law, a trustee has a continuing duty to monitor trust investments and remove imprudent ones. This continuing duty exists separate and apart from the trustee’s duty to exercise prudence in selecting investments at the outset. The Bogert treatise states that “[t]he trustee cannot assume that if investments are legal and proper for retention at the beginning of the trust, or when purchased, they will remain so indefinitely.” A. Hess, G. Bogert, & G. Bogert, Law of Trusts and Trustees 684, pp.145–146 (3d ed. 2009) (Bogert 3d). Rather, the trustee must “systematic[ally] conside[r] all the investments of the trust at regular intervals” to ensure that they are appropriate. Bogert 3d §684, at 147–148;

Posted in ERISA, Insurance Law |

Second Circuit Finds That New York’s Anti-Subrogation Statute Is Not Preempted By ERISA

Recently, the Second Circuit held in Wurtz v. The Rawlings Company, — F.3d—, 2014 WL 3746801, that New York’s anti-subrogation, Section 5-335, is “saved” by ERISA’s “saving clause” and applies to health insurers providing coverage through ERISA plans. This will provide some significant relief to New York ERISA participants and beneficiaries.

Plaintiffs filed a class action in state court alleging violations of New York law relating to efforts to secure reimbursement of medical benefits from plaintiffs’ tort settlements.  The defendants removed the case to federal court and the federal trial judge dismissed it on the basis of ERISA preemption.

On appeal, The Second Circuit reversed finding that ERISA did not provide “complete preemption” or “conflict preemption,” because the New York state claims survived under ERISA’s savings clause. This opinion is at odds with rulings from other circuits which mean the issue may eventually find its way to the Supreme Court.

If you or someone you love is in need of experienced and successful legal representation for any type of disability and or long term disability case, contact the Burke Harvey LLC long term disability national attorneys.  These lawyers offer free legal consultations and or case evaluations to anyone in need.

Posted in ERISA, Labor & Employment Law, Long Term Disability |

Eleventh Circuit reaffirms statute of limitations will bar an ERISA claim if plaintiff does not act to recover benefits.

In Witt v. Metropolitan Life, decided November 25, 2014, the Eleventh Circuit had to apply a statute of limitations defense to the following facts: “But what happens when the defendant says it issued a formal denial letter and the plaintiff says he never received the letter, but it is undisputed the defendant terminated benefits and did not pay the plaintiff any benefits for 12 years? This Court has not addressed this situation before.” Not surprisingly, as soon as the Plaintiff did not receive any further benefits from the defendant the Court found that his cause of action accrued.  Even applying a six year statute of limitations, the court found it time barred.

Posted in ERISA, Long Term Disability, LTD Appeals |

Sixth Circuit issues ERISA Preemption Decision involving Maternity Rights.

On September 30, 2014, the Sixth Circuit published Sherful v. Newson, wherein it found that a Wisconsin law that allowed women who had given birth six weeks unpaid leave, interfered with the provisions of an ERISA plan set up by Nationwide to cover its employees in 49 states and was therefore preempted under federal law.  After taking six weeks paid leave pursuant to Nationwide’s Short term Disability (“STD”) Plan, the employee requested an additional six weeks unpaid leave pursuant to the Wisconsin law. The Plan Administrator denied the request finding that the employee was no longer disabled pursuant to the Plan’s provisions.  The Sixth Circuit affirmed the district court’s finding that the Plan Administrator had to follow the Plan’s provisions pursuant to federal law and therefore the state law was preempted.  ERISA preemption of state laws, including those for punitive damages, allow insurance companies to deny claims with the assurance that the ultimate downside for denying a valid claim is limited.

Posted in ERISA, Long Term Disability |

ERISA Plans Typically Retain Authority to Recover Overpayments or to recover settlement funds from a tortfeasor pursuant to Subrogation Rights.

Some of Burke Harvey’s LTD clients find themselves in an overpayment situation, owing money to the insurance company, when they are awarded Social Security benefits but have not reduced their payment from the insurance company by this estimated amount. A similar situation of having to repay an insurance company arises when an ERISA plan has paid health benefits and a recovery is made from a third party responsible for an accident.  In Airtran Airways, Inc. v. Elem, No. 13-11738  (11th Cir. Sept. 23, 2014) Brenda Elem participated, as an employee of AirTran, in a self-funded employee welfare benefit plan. After Elem suffered injuries in a car accident and the plan paid over $100,000 for her medical care, Elem sued the other driver and settled for $500,000.


AirTran sought reimbursement from Elem, but Elem’s attorney, Mark Link, misrepresented that Elem had settled for only $25,000. The ERISA plan discovered the fraud when he accidentally sent the plan a copy of a settlement check for $475,000. After AirTran sued Elem, Link, and Link & Smith, P.C., for violations of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a)(3), the district court granted summary judgment and awarded attorney’s fees and costs in favor of AirTran.  The primary issue is whether the Plan may recover medical costs it spent on behalf of a beneficiary after she and her attorney conspired to hide and disburse settlement funds she received after a car accident.  Elem, Link, and the law firm contest the summary judgment on the ground that AirTran failed to satisfy the strict tracing rules of equitable restitution, but these rules do not apply to the equitable lien by agreement that the AirTran plan created. See Sereboff v. Mid Atlantic Med. Serv., Inc., 547 U.S. 356, 364-65, 126 S. Ct. 1869, 1875 (2006). Elem and Link argue that the district court abused its discretion when it awarded AirTran attorney’s fees and costs, but the district court had the authority to sanction them for their bad faith.

Posted in ERISA, Long Term Disability |

Second Circuit Addresses Own Appellate Jurisdiction After District Court Reverses Plan Administrator’s Denial of Benefits

ERISA participants are often told they must exhaust their administrative remedies., i.e., appeal an adverse decision to the claims administrator, before filing a lawsuit. In Mead v. Reliastar, decided September 16, 2014, the Second Circuit held that a Plan Administrator must do a similar thing, comply with the district court’s instructions to compute owed benefits before appealing that order.  The district court had found that “Reliastar’s denial of Mead’s claim for “own occupation” benefits was arbitrary and capricious identifying several flaws in Reliastar’s reasoning, and further noting Reliastar had “ignored” several physical requirements of Mead’s former position, refused to recognize the “ample” objective evidence supporting her subjective complaints of pain, and provided “obviously false or misleading reasons” for discrediting the conclusions of its own neurologist.”  Accordingly, the district court ordered Reliastar to compute the amount of benefits owed for the initial “own occupation” two year period under the Plan, and further ordered the administrator to determine if Mead met the “any occupation” definition of disabled.


After noting that its sister circuits are split on this issue, and, broadly speaking, fall into three different camps. A majority of circuits—the First, Fourth, Sixth, Eighth, and Eleventh—hold that because an ERISA remand order contemplates further proceedings before the plan administrator, it is not “final” and therefore may not be immediately appealed except when the familiar collateral order doctrine applies. Next, the Second Circuit explained that the Third, Ninth, and Tenth—have analogized ERISA remands to decisions remanding matters to administrative agencies and have imported into the ERISA context their precedents governing the finality of administrative remand orders, which permit immediate appeals in certain circumstances.  Finally, it noted that the Seventh Circuit took its own approach, by analyzing the finality of ERISA remand orders by reference to the statute governing remands to the Social Security Administration, 42 U.S.C. § 405(g), which also permits immediate appeals in certain situations.


Eventually, the Second Circuit adopted an approach most akin to the majority of circuits which typically hold that a remand to a plan administrator is not final, but left open the possibility of certain circumstances arising which would allow an appeal.

Posted in Uncategorized |

Peter Burke Gets Favorable Reversal In Suchanek v. Sturm

On June 4, 2014, Peter Burke argued to the 7th Circuit in the consolidated case of Suchanek v. Sturm, contending that the District Court committed reversible error in not certifying a class of consumers from eight states that had purchased Defendant’s instant coffee product for their Keurig brewers, and further, by entering summary judgment against each of the named plaintiffs.  On August 22, 2014, the Seventh Circuit reversed the district court on both accounts entering the attached opinion. The lawyers at Burke Harvey believe that this opinion vindicates the rights of consumers to assert claims for products whose advertising is deceptive and or misleading to a reasonable consumer.

Read the Court Document Here.

Posted in 7th Circut Court, Opinion |

Failure to Include Time Limit to Bring a Lawsuit in ERISA Denial May Extend the Statute of Limitations

At Burke Harvey, we have written about a claimant’s need to be aware of applicable statutes of limitations that may apply to their claim, as a failure to bring suit within that time may forever bar that claim.  On August 7, 2014, the Sixth Circuit issued the opinion of Moyer v Metro. Life Ins. Which found that a claimant’s lawsuit was timely filed where the denial letter he received from his claims administrator did not comply with the requirements of ERISA.  As the court explained: “ERISA § 1133 governs adverse benefit determination letters. It explicitly authorizes the Secretary of Labor to establish regulations explaining the meaning of the statute and requires that the statute be applied “[i]n accordance with regulations of the Secretary.” 29 U.S.C. § 1133 . . . . The regulations require that benefit denial letters provide: “[a] description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action . . . following an adverse benefit determination on review.”   The Court further explained that the “exclusion of the judicial review time limits from the adverse benefit determination letter was inconsistent with ensuring a fair opportunity for review and rendered the letter not in substantial compliance. Moreover, “[a] notice that fails to substantially comply with these requirements does not trigger a time bar contained within the plan.” See Burke v. KodakRet. Income Plan, 336 F.3d 103, 107 (2d Cir. 2003). The disability lawyers at Burke Harvey are trained to look for such errors that claims administrators might make when sending denial letters.

Posted in Uncategorized |

A New Opinion from the Eighth Circuit Provides for Equitable Relief Under ERISA

A new decision entitled Silva v. Metropolitan Life issued on August 7, 2014, clarifies when equitable relief may be available under ERISA.  Silva was the beneficiary of a life insurance policy MetLife had issued to his son.  After accepting premiums on the policy, MetLife found that the policy had been issued in error because the insured had never filled out a health form questionnaire, which MetLife argued was required because the policy amount was more than three times the applicant’s salary.  The district court granted summary judgment to MetLife but ordered that approximately $126 in premiums be refunded.  On appeal the Eight Circuit reversed finding that the plaintiff could state a claim for equitable relief and that the following three remedies of (1) surcharge; (2) reformation; and (3) estoppel were available to the claimant.  This opinion is one more decision since the Supreme Court’s groundbreaking opinion in Amara v. Cigna.

Posted in Uncategorized |

ERISA Polices Contain Definition of Disabled Defined by How Much a Person Can Earn

In the recent case of Robinson v. Liberty Life Assur. Co., 2014 U.S. Dist. LEXIS 79366 (M.D. Pa. June 11, 2014) the court examined this issue in detail. In that case, the parties filed cross-motions for summary judgment regarding Plaintiff’s eligibility for long-term disability benefits under a policy governed by ERISA. The court denied Plaintiff’s motion and granted Defendant’s finding the existence of substantial record evidence supporting Defendant’s denial of benefits and held that Defendant did not act arbitrarily and capriciously. One particularly interesting issue in this matter involved Plaintiff’s challenge of the earnings test performed by Defendant’s vocational consultant. Defendant argued that Plaintiff had waived any argument protesting the earnings associated with the identified occupations because she failed to raise such assertion during the administrative review. Though the Court ultimately examined the merits of Plaintiff’s contention, it is noteworthy that the Court did so only after stating it was arguable that Plaintiff had, in fact, waived her claim regarding wage calculation by failing to raise it during the administrative proceeding. Certainly any claimant should be careful to evaluate and dispute, if necessary, any wage calculations or earnings tests during the administrative process and the lawyers at Burke Harvey are trained to recognize and raise this potential issue.

Posted in Uncategorized |

Robinson v. Liberty Life Assur. Co., 2014 U.S. Dist. LEXIS 79366

The parties filed cross-motions for summary judgment regarding Plaintiff’s eligibility for long-term disability benefits under a policy governed by ERISA. The court denied Plaintiff’s motion and granted Defendant’s finding the existence of substantial record evidence supporting Defendant’s denial of benefits and held that Defendant did not act arbitrarily and capriciously. One particularly interesting issue in this matter involved Plaintiff’s challenge of the earnings test performed by Defendant’s vocational consultant. Defendant argued that Plaintiff had waived any argument protesting the earnings associated with the identified occupations because she failed to raise such assertion during the administrative review. Though the Court ultimately examined the merits of Plaintiff’s contention, it is noteworthy that the Court did so only after stating it was arguable that Plaintiff had, in fact, waived her claim regarding wage calculation by failing to raise it during the administrative proceeding. Certainly any claimant should be careful to evaluate and dispute, if necessary, any wage calculations or earnings tests during the administrative process.

Posted in Uncategorized |

ERISA Will Affect Which Claims May Be Brought and Where They May Be Heard

Most disability plans that are employer sponsored are governed by ERISA, which limits the type of claims that may be brought and allows the lawsuit to be heard in federal court.  In Burroff v. Hartford Life & Accident Ins. Co., (D.Kan. June 11, 2014) the plaintiff filed his lawsuit in state court and Hartford removed the case to federal court claiming ERISA preemption.  Because the plaintiff worked for the University of Kansas Hospital Authority, the disability plan that governed his claim was a “governmental plan” not subject to ERISA.  Accordingly, the federal court remanded the lawsuit to state court where the claim would be adjudicated.  If you work for a state or local government entity or hospital affiliated with a religious order, your disability plan may not be subject to ERISA which would ultimately affect the value of your potential claim.  The lawyers at Burke Harvey have represented several nurses with disability claims that were not subject to ERISA because they were participants in governmental plans.

Posted in Uncategorized |

District Court Issues Opinion Remanding Lawsuit to Plan Administrator to Address Procedural Issues

In the opinion of Criss v. Assurant Inc., Judge William Acker Jr., of the United States District Court for the Northern District of Alabama, found that remand to a Plan Administrator was appropriate where the Defendant had not made adequate finding regarding the plaintiff’s physical limitations.  Calling into question ERISA’s quasi-administrative regime, Judge Acker noted the inherent conflict when a Plan Administrator has been granted discretion to make its own determinations under the Plan document.  Judge Acker also called into question various aspects of the policies definitions contending perhaps that some definitions of “disabled,” as contained in the document, were incapable of actually being determined.  The lawyers at Burke Harvey were pleased that their client now has the prospect of having her claim being  reassessed under judicial scrutiny.

Posted in Uncategorized |

Circuit Court Allows Breach of Fiduciary Claims to Proceed Against Plan Fiduciary

In Fish v. Greatbanc Trust Co., the Seventh Circuit reversed a district court’s granting of summary judgment in favor of the Plan fiduciary based on a statute of limitations defense.  The district court found that a three year statute should apply based upon materials that were furnished to the employee owners at the time of a buyout gave them knowledge of the potential violation of ERISA.  Reversing, the Seventh Circuit held a longer six year period should apply because not only are the substantive documents that were provided as part of the buyout package relevant, but also any processes used to negotiate, evaluate, and approve the transaction at issue.  Hence, there was not an undisputed fact regarding actual knowledge of the breach of ERISA duties, and the six year limitations period would apply.

Posted in ERISA |

ERISA Fiduciary Held Liable for Self-Dealing

The Sixth Circuit recently affirmed a trial court’s judgment against Blue Cross and Blue Shield of Michigan (“BCBSM”) finding that the entity engaged in “self-dealing” in violation of section 1106(b)(1) of ERISA, by reporting inflated charges for services it paid as a third-party administrator for Hi-Lex Corp.  BCBSM collected this additional revenue in addition to the “administrative fee” it charged Hi-Lex each month for each of the 1,300 employees covered under the Plan. The facts of this case are unique in that BCBSM breached a duty it owed to the Plan as a fiduciary, but it is heartening that a Circuit Court has enforced the fiduciary principles of ERISA.

Posted in ERISA |

Second Circuit Awards Prevailing Plaintiff Attorneys fees in ERISA Lawsuit

One of the difficulties in prosecuting an ERISA governed claim is the deference the administrator has in making benefits determinations.  Accordingly, even when a Plaintiff prevails on a claim, courts have been unwilling to award the plaintiff attorneys fees. Recently, on March 11, 2014, the Second Circuit in Donachie v. Liberty Life Assurance Co. affirmed the district court’s grant of summary judgment to a plaintiff on the benefits determination but reversed the district court’s refusal to award attorney fees for prevailing. After finding that the summary judgment was proper because “Liberty ignored substantial evidence from Donachie’s treating physicians that he was incapable of performing his current occupation, while failing to offer any reliable evidence to the contrary. See Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003) (holding that plan administrators may credit reliable evidence that conflicts with a treating physician’s evaluation,” but “may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician.”) The district court denied his request for attorneys’ on the basis that he had “failed to show any bad faith by Liberty’s administrator in making its LTD benefits determination.”  “[I]f a court chooses to consider factors other than a plaintiff’s “success on the merits” in assessing a request for attorneys’ fees, Chambless still provides the relevant framework in this Circuit, and courts must deploy that useful framework in a manner consistent with our case law. A court cannot selectively consider some factors while ignoring others.” Hopefully, this recent decision will receive the attention of district courts among all the federal circuits and encourage them to award attorney fees when the plaintiff has achieved success in an ERISA matter.  If fee awards become more commonplace, perhaps insurance companies and administrators will think long and hard before denying worthy claims.

Posted in ERISA, Long Term Disability, LTD Appeals |

Another Court applies ERISA’s Six Year Statute of Limitations to Bar a Claim

We recently discussed the decision of Fuller v. SunTrust Banks, Inc., No. No. 12-16217 (11th Cir. Feb. 26, 2014), where the Eleventh Circuit found that an action brought against ERISA fiduciaries for malfeasance in connection with the selection of certain plan investments was barred by ERISA’s six year statute of limitations.  Likewise, the First Circuit held in Riley v. Met Life Ins., that a claimants suit for miscalculation of monthly benefits was also barred by the six year limitations period.  Here, Riley was an employee of Metropolitan Life Insurance company that began receiving long term benefits from his employer in 2005.  At that time, Riley contested the amount of his monthly benefit but never filed a lawsuit over the issue until 2012.  The district court granted summary judgment and the First Circuit affirmed finding that the claim accrued in 2005.  The court rejected the plaintiff’s argument that because payments were paid monthly that each payment constituted a separate breach.

Posted in ERISA, Long Term Disability |

ERISA’s Six Year Statute of Limitations Applies to Breach of Fiduciary Duty Claims

We have previously written about the preclusive effect on an individual’s claim under ERISA if not brought within the applicable statute of limitations.  For this reason, it is important to check the language of any policy that may have been provided to you.  Not surprisingly, the statute of limitation will also apply in a class action for breach of fiduciary duties.  In Fuller v. SunTrust Banks, Inc., No. No. 12-16217 (11th Cir. Feb. 26, 2014), an action was brought against ERISA fiduciaries for malfeasance in connection with the selection of certain plan investments.  The Eleventh Circuit found that the suit was barred by the applicable six year statute of limitations, because “the date of the last action which constituted a part of the breach” alleged in Count 2, occurred when the Committee Defendants selected the investments at issue. See ERISA § 413(1), 29 U.S.C. § 1113(1).  Even though the fiduciaries took other actions while the securities were held, it was the act of picking the securities in the first instance that started the statute of limitations.

Posted in ERISA, Long Term Disability |

ERISA Preemption & Welfare Benefit Plans

ERISA preemption also applies to the Regulatory side of Welfare Benefit Plans. We typically write about court decisions affecting a claimant’s right to disability benefits under an ERISA governed LTD plan and have expressed our dismay at the broad reach of ERISA preemption as it applies to those types of claims. The recent case of America’s Health Ins. Plans v. Hudgens, No. 13-10349 (11th Cir. Feb. 14, 2014), shows that ERISA’s preemptive scope also applies to medical providers seeking prompt payment for their services. In this case, the district court granted a preliminary injunction to an association representing self-insured ERISA plans, who were seeking to enjoin (as being preempted by ERISA) operation of a Georgia statute imposing prompt pay requirements relating to payments to providers and imposing interest and penalties for noncompliance. The Eleventh Circuit affirmed the grant of injunctive relief, holding: (1) association had standing to pursue claim; and (2) there was a likelihood of success on the merits, given that the statute “relate[s] to” an ERISA plan, and regardless of whether ERISA’s savings clause applies to the statute (as being a law regulating insurance), the “deemer” clause (under which, “if a plan is insured, a State may regulate it indirectly through regulation of its insurer and its insurer’s insurance contracts; if the plan is uninsured [or self-funded], the State may not regulate it”), mandates preemption.

Posted in ERISA, Long Term Disability, LTD Appeals |

ERISA Case Shows How Hard for Claimants To Receive Disability Benifits Under That Statute

A recent ERISA case shows what a Nightmare it has become for Claimants to receive Disability benefits under that Statute:  For those readers familiar with the Dickens’ classic, Bleak House, a recent decision from the Sixth Circuit, Javery v. Lucent Tech. Long Term Disability Plan, decided February 3, 2014, shows that today’s legal system can be just as slow and serpentine as it was in London in the 1850s.  In this opinion, CIGNA acted as the Plan administrator and paid Short term Benefits to Javery from May 19, 205 through November 25, 2005, or a period of 6 months STD benefits.  At the end of this time, Lucent suggested that Javery would qualify for long term benefits LTD, but CIGNA denied the claim finding that the plaintiff did not satisfy the definition of disabled under the Plan, i.e., “prevented by reason of . . . disability . . . from engaging in [his] occupation or employment at [Lucent].”  After meandering through the courts, and a remand to CIGNA, to reexamine the issue of Plaintiff’s entitlement to benefits, CIGNA upheld its earlier denial.  The district court upheld that denial and an appeal to this Court resulted.  Luckily, for the Plaintiff, the Plan did not give discretion to the administrator so the level of review was de novo, instead of arbitrary and capricious.  Applying the de novo standard, the Sixth Circuit found that the plaintiff satisfied the definition of disabled as of November 26, 2005.  Accordingly, plaintiff was entitled to additional LTD benefits for one additional year.  In true Dickens fashion, however, because the Plan’s definition of disabled changed after receiving LTD benefits for one year, the Sixth Circuit remanded the issue of further entitlement to LTD benefits to the Plan Administrator to apply the new definition. We have no doubt, that after a thorough examination of the issue, the Plan Administrator will rule against Javery’s claim for further LTD benefits.  Unfortunately, such is the plight of ERISA claimants.

Posted in ERISA, Long Term Disability, LTD Appeals |

In ERISA Claims, the Support of a Treating Physician Can Be Critical

Having the support of a treating Physician can be Critical for an insured’s’ ability to receive Disability benefits.  We often write how ERISA often provides a claims administrator with much discretion when it comes to approving or denying benefit claims.  The recent case from the Sixth Circuit, styled McClain v. Eaton Corp. Disability Plan, decided January 25, 2014, highlights the fact that an insured should have the support of her treating physician regarding her inability to work in order to be successful on her claim.  In this action, the plan administrator paid the claim for 24 months under an “own occupation” definition of disabled. At the end of 24 months, the administrator stopped paying benefits when the definition of disabled changed to any occupation.  Unfortunately for Ms. McClain her treating physician specifically found that she could perform some part time work.  The claims administrator cited to this piece of evidence as support for its assertion that the insured could work.  The Sixth Circuit affirmed the trial courts grant of summary judgment finding that this decision was not “arbitrary or capricious.”  If you are applying for long term disability benefits, or even for social security disability benefits, having a physician support your claim is critical.

Posted in ERISA, Long Term Disability, LTD Appeals |

Accidental Death Benefits Claim Through ERISA

“ERISA MAY Also Apply to a Claim for Accidental Death Benefits”  We usually see the application of ERISA to a claim for short term or long term disability benefits or to a claim involving health benefits.  The recent case of Nichols v. Unicare Life and Health Insurance Co., decided January 16, 2014, by the Eighth Circuit shows that the reach of that statute can also apply to a claim for accidental death benefits.  In this case, the deceased wife had been taking several prescription medications and died as a result of the combination of them.  The insurance company denied death benefits on the basis of an intoxication exclusion and the husband filed suit.  The district court granted the benefits, finding that the deceased wife did not intend to die as a result of taking the medications and that her death was the result of an accident.  The Eighth Circuit affirmed the ruling noting that the insurance company had “ignore[d] the subjective evidence submitted by Nichols, and instead makes leaps to get to the `objective` conclusion it desires.” (opinion at p. 9)  The Court further noted that there was “no evidence whatsoever that Dana intended to kill herself or thought it likely she would die on May 3, 2010. The subjective evidence, in the form of letters and statements from her husband and parents, suggests otherwise.” Id.  The Court also noted that the word accident had not been defined in the policy, and therefore, the wife’s death could be viewed as the unexpected result of ingesting medications and fit within that term’s meaning.


Although this is an ERISA claim involving accidental death benefits, one can draw some parallels between this type of claim and a claim for long term disability benefits under ERISA.  The lawyers at Burke Harvey typically submit affidavits, declarations, and statements of the claimant and their family members and co-workers as part of any appeal.  This “subjective” evidence allows the claimant to frame his or her condition in testimony that is based on direct observation.  Second, to the extent a term or phrase in an insurance policy is undefined, the doctrine of  Contra proferentem (Latin: “against [the] offeror”), also known as “interpretation against the draftsman”, provides that the preferred meaning should be the one that works against the interests of the party who provided the wording.  Having a lawyer involved at the appeal stage will ensure that any policy language regarding the definition of “disability’ will be examined before the final appeal has been filed. If you are submitting an appeal for long term benefits feel free to call the lawyers at Burke Harvey for help.

Posted in ERISA, Long Term Disability |

LINA Must Consider Evidence Developed in a Claimant’s Social Security File

Having Required a Claimant to go through the SSI process, the Eleventh Circuit Finds that LINA Must consider evidence Developed in a claimant’s Social Security File. Melech v. LINA, decided January 6, 2014, is an important decision for claimants under ERISA policies because the Court acknowledged that a claims administrator – in this case LINA – has an obligation and duty to consider relevant medical evidence presented to Social Security because the administrator required the claimant to apply for the benefit. As the Court explained:

[T]he Policy effectively requires all claimants to apply for SSDI at the outset; if a claimant fails to do so, LINA can reduce her benefits under the Policy, if any, by the amount of SSDI LINA says she could have gotten. In the event that LINA decides to pay a claim, the Policy allows LINA to hold the claim open, at least with respect to the total amount LINA must pay, until the SSA reaches a final decision. LINA may assist the claimant in obtaining SSDI, even going so far as to transfer the medical evidence that LINA gathered to LINA’s vendor, who then presumably transfers it to the SSA. And if the SSA denies the claimant’s application, LINA can force the claimant to exhaust her administrative appeals. All this effort makes perfect sense from LINA’s perspective because—having decided to pay the claim—every dollar the claimant gets from the SSA is one less dollar LINA has to pay.

The Eleventh Circuit did not take exception that the claimant was required under the terms of the policy to aply for social security benefits, but rather, the fact that LINA would ignore the evidence once it no longer suited its needs. The Court explained:

[T]he Policy terms that required Melech to apply for SSDI and LINA’s seemingly self-interested disregard for her SSDI application give us pause. We find nothing necessarily troubling in the terms of LINA’s Policy that allow it to benefit from the SSA’s alternative compensation mechanism. Nor do we take issue with the lengths LINA has gone to to ensure that its claimants apply for SSDI, or even LINA’s right to second guess an SSA denial. However, in light of these openly self-interested efforts, we are troubled by the implication of LINA’s actions in Melech’s case, where it ignored her SSDI application and the evidence generated by the SSA’s investigation once it no longer had a financial stake in the outcome.

The Court further found relevant the fact that “LINA’s disclosure authorization form allows it to obtain information directly from the SSA,” but because LINA denied the claim based on the evidence available to it at the time, LINA did not wait for the conclusion of the SSA process, notwithstanding the fact that the evidence generated by the SSA’s investigation might prove useful in determining whether Melech was eligible for benefits under the Policy. The Court succinctly stated, “having sent Melech to the SSA to seek alternative compensation, LINA was not free to ignore the evidence generated by the SSA.”

Court document here

Posted in Disability Benefits, Labor & Employment Law, Long Term Disability, Uncategorized |

Good News for ERISA Claimants that Suffer from Fibromyalgia, Chronic Fatigue Syndrome, or an Autoimmune Disease?

Is the Recent Opinion of Williams v. United of Omaha, 2013 U.S. Dist. LEXIS 141563 (N.D.Ala.)  (September 30, 2013) a Breath of Fresh Air for ERISA Claimants that Suffer from Fibromyalgia, Chronic Fatigue Syndrome, or an Autoimmune Disease?  ERISA claimants suffering from fibromyalgia, chronic fatigue syndrome, or autoimmune diseases that are difficult to diagnosis, often have an uphill climb in securing ERISA benefits from an insurance carrier.  Benefits are often denied on the basis that the symptoms are self-reported, that there is no “objective” evidence of the disease or ailment, or that the insured underwent with no apparent discomfort an IME (independent medical exam) or FCE (functional capacity exam).

These issues were recently addressed in the above opinion where the Court found that United of Omaha’s decision to terminate benefits after paying them for two years was de novo wrong. The Court called the insurance company to task over several different things which are discussed below.  First, although the vocational expert listed the insured’s occupation as “L” EDC, which would indicate it was a “light” exertion level, United of Omaha’s denial letter to Williams listed insurance sales agent as a sedentary exertion level position. The Court also found that the records and testimony of Williams’s treating physician, Dr. McLain, the Chief of Rheumatology at Brookwood Hospital, provided sufficient evidence supporting his diagnoses of fibromyalgia, rheumatoid arthritis, osteoarthritis, Sjogren’ssyndrome, and thyroid disease.

The Court further explained that Fibromyalgia is a disease like chronic fatigue syndrome with subjective symptoms such as pain generalized all over the body, fatigue, stiffness, disturbed sleep, and multiple tender spots; the symptom that distinguishes fibromyalgia from other rheumatic diseases is the existence of tender spots in 18 fixed locations  located throughout allfour quadrants of the body that cause a patient to flinch when pressed firmly. Sarchet v.Chater, 78 F.3d 305, 306 (7th Cir. 1996). Importantly, the Court noted that if it “were to require objective facts such as lab tests or an xray to support a diagnosis, no patient would ever be disabled based on fibromyalgia.

Next, the Court found the Plaintiff’s treating more credible than the insurance company’s paid reviewers.  I explained: ”While the Supreme Court held that ERISA administrators are not required to defer to treating physicians over reviewing physicians, the district court handling ERISA appeals may evaluate the weight of each doctor’s opinion based on the extent of the patient treatment history, the doctor’s specialization or lack thereof, etc. See Black & Decker Disability Plan v. Nord, 538 21 U.S. 822, 832 (2003). For a conditions as subjective and variable as fibromyalgia and rheumatoid arthritis, direct contact with the patient over a period of time would provide a more thorough opportunity to assess her credibility regarding level of pain and the true pattern of her abilities. Therefore, in the instant case, the court will focus heavily on the opinions and treatment records of Williams’s treating physicians such as Dr. Odi and Dr. McLain.

The Court also discounted a physical therapist’s evaluation, which had found the Plaintiff capable of performing certain sedentary work, because that evaluation, while providing information regarding what physical functions Williams could perform for three hours on a particular day, is not determinative of Williams’s work capacity; even the evaluator acknowledged that, given Williams’s fibromyalgia, a more accurate evaluation of her work tolerances would require a two-day evaluation to gauge her response on day two to the effects of day one testing, but no two-day testing was performed.

Interestingly, the Court indirectly hinted at the inherent conflict of interest that an Administrator operates under when it not only makes the benefits determination but also pays the claim.  The Court stated: “Extensive referrals and a bundle of paperwork are not necessarily indicative of reasonableness or unreasonableness on the part of the company. The paper trail could well represent a good company wanting to be thorough and to make a reasonable, well-informed decision. But, it could also represent a company’s less admirable wish to stop paying expensive but appropriate disability benefits and a commitment to keep hiring experts until it could cobble together the right opinions to appear to justify an unreasonable denial of benefits.

We are pleased with the well reasoned comprehensive opinion of Williams v. United of Omaha, 2013 U.S. Dist. LEXIS 141563 (N.D.Ala.)  (September 30, 2013 )that was just released and hope it marks the type of jurisprudence other federal Courts will use when reviewing ERISA benefit claims.

Posted in Disability Benefits, ERISA |

Not all ERISA Plan Administrator’s Determinations are Equal

The recent decision of the Fifth Circuit in Porter v. Lowe’s Co., decided September 24, 2013, once again demonstrates that benefit determinations can be difficult to overturn under the ERISA regime because of built in deference to those determinations.  In this case, the District Court reversed the Plan Administrator’s denial of benefits concluding that the administrator had abused his discretion.  On appeal, the Fifth Circuit reversed finding that the decision was due deference because the ERISA Plan Document gave the administrator discretion;   Specifically, the ERISA Plan gave the Administrator the power “to interpret the terms of the Plan and to determine the eligibility for Plan benefits.”    The Fifth Circuit explained:

When, as here, the ERISA plan grants the administrator the discretion to interpret the meaning of the plan, this court will reverse an administrator’s decision only for an abuse of discretion.5 The fact that the evidence is disputable will not invalidate the decision; the evidence “need only assure that the administrator’s decision fall somewhere on the continuum of reasonableness—even if on the low end.” Stated differently, “If the plan fiduciary’s decision is supported by substantial evidence and is not arbitrary and capricious, it must prevail.”

Porter also argued that to the extent there was an ambiguity relating to the terms of the ERISA Plan, such ambiguity should be construed against the Administrator who drafted the document.  Rejecting this argument the Fifth Circuit cited to Winters v. Costco Wholesale Corp., 49

F.3d 550, 554 (9th Cir. 1995) (“We hold that the rule of contra proferentem is not applicable to self-funded ERISA plans that bestow explicit discretionary authority upon an administrator bto determine eligibility for benefits or to construe the terms of the plan.”).  Finally, because the Plan Administrator did not operate under a conflict of interest that was not an issue.

Posted in Disability Benefits, ERISA |

Second Circuit Issues New Opinion further Explaining Entitlement to Attorney fees Under ERISA.

On September 10, 2013, the Second Circuit issued its opinion in Scarangella v. Group Health Inc., providing further guidance on awarding attorney fees after the Supreme Court’s ruling in Hardt v. Reliance Std. Life Ins. Co., 130 S. Ct. 2149 (2010).  The question before the Second Circuit was “what must a party achieve or obtain to show some degree of success on the merits,” the triggering event for an award of fees under Hardt. Acknowledging that the Supreme Court in Hardt appeared to have left room for many factual scenarios to satisfy the standard of some success on the merits, the Second Circuit held that in evaluating ERISA fee applications, the catalyst theory remains a viable means of showing that judicial action in some way spurred one party to provide another party with relief, potentially amounting to success on the merits. We expect that this area of the law will continue to develop over the next few years as more and more courts give meaning to the Supreme Court’s holding in Hardt.

Posted in ERISA |

Who has the Burden of Proof to Discredit Evidence presented to an ERISA Plan Administrator?

According to the Fifth Circuit’s recent opinion in Truitt v. Unum Life Ins. Co. of America, decided September 6, 2013, the plan administrator may consider evidence from any source without a duty to investigate the source, and it is up to the insured to discredit the source.  Truiit had practiced law as an attorney and her policy had an “own occupation” policy which allowed her to receive benefits if she could not perform the material duties of the specialty in which she practiced.  Truiit had practed international arbitrations involving oil and gas issues. While it paid benefits Unum engaged in much surveillance of Truitt, which showed inconsistencies in her reported limitations and her actual functioning capabilities.  Unem then received an unsolicited communication from an acquaintance of Truiit, who provided 600 pages of e-mails which ostensibly showed Truiit engaged in International travel during the time she received benefits. The Court cited to 29 U.S.C. § 1133, which requires a plan administrator to identify “specific reasons” for denying benefits which then allows a claimant to attempt to discredit that evidence by, among other things, attacking its source. The Fifth Circuit found that Unum’s decision to consider the emails was not an abuse of discretion as Truitt did not introduce any evidence that the emails were forged or hacked.

Unum also sought $1 million in benefits it had paid Truiit and the District Court denied that claim applying Texas law, the state where truitt had been employed.  The Fifth Circuit reversed that finding saying that federal common law should govern Unum’s claim for reimbursement citing Provident Life & Accident Ins. Co. v.Sharpless, 364 F.3d 634, 641 (5th Cir. 2004) (“Federal common law governs rights and obligations stemming from ERISA-regulated plans[.]”).  Accordingly, the Fifth Circuit vacated that part of the district court’s opinion and remanded for further proceedings. A copy of the opinion is attached below and presents an interesting read.

Truitt v Unum- PDF

Posted in Long Term Disability, Unum Life Insurance Company of America |

The Level of Review from an Administrator’s Denial, Could be Determinative of the Outcome of Your LTD Lawsuit.

The Level of Review from an Administrator’s Denial, Could be Determinative of the Outcome of Your LTD Lawsuit.  Once again, a recent Circuit Decision turned on the level of review afforded to the administrator of an ERISA plan.  In Gross v. Sun Life, decided August 16, 2013, the First Circuit reversed the district court’s grant of summary judgment to Sun Life finding that the court applied the wrong standard of review to the denial.  Sun Life argued on appeal that the district court correctly found that a deferential standard of review, the arbitrary and capricious standard, should apply because of two statements in the policy: “Proof [of claim] must be satisfactory to Sun Life” and “Benefits are payable when Sun Life receives satisfactory Proof of Claim.”  The Appeals Court then discussed an existing split in the circuits relating to what language is sufficient in a ERISA Plan to trigger a deferential review before concluding, “[h]aving now fully considered the issue, we agree with those courts holding that the “satisfactory to us” wording, without more, will ordinarily fail to meet the “requisite if minimum clarity” necessary to shift from de novo to deferential review.”

Posted in ERISA, Sun Life |

Latest Decision Highlights Several Pitfalls Claimants Face Trying To Obtain Disability Benefits

A recent Decision from the Sixth Circuit Shows how the ERISA Framework Favors the Administrator in Several Ways:  In Frazier v. LINA, U.S. App. LEXIS 16078; 2013 FED App. 0206P, decided August 5, 2013, (6th Cir.), the Sixth Circuit affirmed the trial court’s grant of summary judgment in favor of Life Insurance Company of North America against paying disability benefits to the plaintiff.  Several holdings from this opinion demonstrate the uphill battle claimants face in receiving benefits that are subject to ERISA.  First, the Court held that a Plan document could contain the needed language to provide the administrator “discretion.”  Second, if there is such discretion then the review is under the arbitrary and capricious standard and the insurance company only need assert a rational basis for its holding. Third, although LINA had the claimant apply for SSDI benefits with the assistance of Allsup, Inc., the plaintiff had no claim against LINA after Allsup abandoned the SSDI claim, and even though plaintiff received a favorable award from SSDI, LINA did not have to consider that evidence because it was received after it rendered its final denial.  This latest decision highlights several of the pitfalls claimants face in trying to obtain disability benefits governed by the ERISA regime.

Posted in Disability Benefits, ERISA |

Court agrees with Burke Harvey & Frankowski, and finds that Unum disability policy is not subject to ERISA.

On June 21, 2013, Judge William M. Acker, Jr. issued his Order and Memorandum Opinion in McLain v. Unum, 2013 U.S. Dist. LEXIS 87413 (June 21, 2013), attached hereto. The issue before the Court was whether a disability policy the plaintiff purchased through his business was part of an ERISA plan and subject to ERISA preemption. McLain and another co-owner of the business both purchased disability policies for themselves. No policies were ever offered to any non-owner employees of the company. Unum argued that these two policies constituted an ERISA plan and that McLain could not assert a state law claim for bad faith or breach of contract. Judge Acker found that the factual situation resembled that of Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 US 1, 124 S. Ct. 1330, 158 L. Ed. 2d 40 (2004), where the Supreme Court explained that “[p]lans that cover only sole owners or partners and their spouses. . . fall outside of [ERISA’s] domain.” Id. at 4 (emphasis added). He then held that “an “S” corporation with only two shareholders is analogous to and indistinguishable from a partnership for the purposes of defendants’ motion. The reasoning that exempts a plan covering only partners from ERISA also applies to SELS. The plan at issue here covered only two owners and no employees. Therefore, it is much more similar to a plan covering only partners than to a plan covering owner and non-owner employees.”

McLain v. Unum, 2013 U.S. Dist. Lexis 87413 [PDF]

Posted in ERISA, Unum Life Insurance Company of America |

LINA Continues to be in Trouble with State Regulators

Two weeks ago, Burke Harvey & Frankowski, LLC wrote about the settlement that LINA had entered into with five states relating to its improper claims handling practices on Long Term Disability policies.  Today, the Attorney General of Massachusetts announced that the Commonwealth had fined LINA $5 million dollars because it failed to uphold provisions of a settlement agreement it had entered into with that state.  Specifically, the state had accused LINA of using deceptive practices to sell supplemental health insurance to veterans and other Massachusetts residents.  To read a story from the Boston Globe commenting on this matter please click here.


If you or a loved one has experienced issues with a long term disability policy that LINA or CIGNA has administered, feel free to contact  the attorneys at Burke Harvey & Frankowski, LLC.

Posted in Cigna, Long Term Disability |

Kenseth v. Dean Health Plan

Courts Continue to Give Meaning to Equitable Relief Available Under ERISA:  The recent decision of Kenseth v. Dean Health Plan, decided June 13, 2013, is the latest decision from a Circuit Court to give meaning to the equitable relief that may be available to an ERISA participant for a breach of fiduciary duty.  In Kenseth, the plan participant requested an opinion from the Defendant’s employee whether an expensive procedure would be covered.  After receiving assurance that it would be covered, the plaintiff went ahead with the surgery.  Later, the plan denied coverage and the plaintiff faced a $70,000 bill from the hospital.  If the plan had paid for the procedure, however, the hospital could have only billed approximately half for the procedure under its contract with the plan.  Importantly, the hospital and the plan had a financial overlapping interest.  Accordingly, the Seventh Circuit concluded that “Kenseth may thus bring a claim for make-whole damages against the plan fiduciary. This is true even if the plan’s language unambiguously supports the fiduciary’s decision to deny coverage.”


Hopefully, this decision and other recently decidedt cases will provide ERISA plaintiffs with additional remedies and claims to assert against insurance companies that breach their fiduciary duties to the insured. For instance, other recent cases include Amara v. Cigna Corp., 2012 WL 6649587, *8 (D. Conn. Dec. 20, 2012) (trustees may be surcharged where they have not personally profited from the breach, in situations where they negligently or knowingly permit third parties to benefit from the trust property); Koehler v. Aetna Health, Inc., 683 F.3d 182, 189 (5th

Cir. 2012) (even if the plan’s language unambiguously supports the administrator’s decision, a beneficiary may still seek to hold the administrator to conflicting terms in the plan summary through a breach of fiduciary claim under section 1132(a)(3)); CGI Techs. & SolutionsInc. v. Rose, 683 F.3d 1113, 1121 (9th Cir. 2012) (under Cigna, a district court, sitting as a court of equity in a section 1132(a)(3) action, need not honor the express terms of an ERISA plan where traditional notions of equitable relief so require).

For more information about dealing with Cigna LTD issues, please visit http://burkeltd.wpengine.com/ltd-insurance-issues/cigna/

Posted in Cigna, ERISA |

CIGNA Enters Settlement with Five States Which Allows Wrongfully Denied Policyholders in those States a Chance to Have Claims Reassessed.

CIGNA also agrees to set Aside $77 Million as part of the settlement.

The states of California, Connecticut, Massachusetts, Maine and Pennsylvania have agreed to a settlement with CIGNA, wherein CIGNA will pay approximately $1.6 million in fines and fees. The Company and its subsidiaries also set aside $77 million for projected payments to policyholders whose claims weren’t handled properly. The settlement covers policyholders in those states that had claims denied between January 1, 2008 and December 31, 2010. As part of the settlement, CIGNA has agreed to update its claims-handling processes as state standards for claims procedures have evolved overtime. Under this settlement, CIGNA is also required to enhance claims procedures in the future and participate in a two-year monitoring program conducted by the insurance departments of the five lead states. The settlement covers CIGNA’s subsidies, Connecticut General Life Insurance Company and Life Insurance Company of North America.

The foregoing settlement is very reminiscent of a similar settlement Unum entered into approximately ten years ago with state insurance commissioners. When commenting on the settlement, Peter Burke explained that disability claimants who have a policy that is subject to ERISA already have the deck stacked against them, and when a company like CIGNA or Unum engages in improper claims handling practices, that makes the process even that more difficult for the person seeking benefits. For more information relating to this settlement, or for help with any long term disability claim, please call Burke Harvey & Frankowski, LLC toll free at 888-930-9091 or visit www.bhlongtermdisability.com.

Posted in Cigna, ERISA |

Denied ERISA LTD Claims

Has your ERISA LTD claim been denied, because the Insurance company did not believe or discounted your complaints of pain using language such as the “severity of impairment” does not show you are disabled? Many insurance companies are denying claims where a claimant’s complaints of pain are at issue by discounting their validity or just saying in effect, you might hurt, but we don’t think you hurt too much to be disabled. In the case of DuPerry v. LINA, 2011 U.S. App. LEXIS 1399 (4TH Cir., Jan 24, 2011), the Fourth Circuit overturned LINA’s denial of benefits. The claimant suffered from rheumatoid arthritis, osteoarthritis and fibromyalgia, all of which are diseases that are painful but do not lend themselves to “objective” criteria of the degree of pain. The claimant supported her claim with evidence that she relied significantly on her family to performs activities of daily living, that she sometimes used a cane or walker, and that she spent most of her time in her bedroom. The treating physician supported the disability claim. The insurer denied the claim based on a file review that found no objective evidence of the condition, that the osteoarthritis appeared controlled by medication, and that “generally, patients with fibromyalgia are able to work a sedentary occupation.” The court concluded this was an insufficient basis to disregard the treater’s opinion of disability. If you have had an ERISA LTD claim denied where an insurance company used the phrase the “severity of impairment” does not show you are disabled, please contact the lawyers at Burke Harvey & Frankowski, LLC regarding this matter.

Learn more about making a claim under ERISA: http://burkeltd.wpengine.com/our-ltd-practice/making-a-claim-under-erisa/

Posted in ERISA |

U.S. Airways, Inc. v. McCutchen

Most ERISA plans, whether for long term disability benefits or for health benefits, require the insured to pay back funds that it might receive from other sources. In the instance of a LTD beneficiary, these funds can come from social security or a pension or a worker’s compensation claim and can result in the beneficiary being required to repay those sums. In the health benefits setting, the United States Supreme Court issued an opinion on April 16, 2013, styled U.S. Airways, Inc. v. McCutchen, opinion by Justice Kagan, which held that a beneficiary that received health benefits from an ERISA plan could be required to repay those sums from a settlement with a tortfeasor, even if the amount that had to be paid back left little or no money to the client after deducting attorneys’ fees. The legal implication of the ruling is clear – ERISA plans can expressly disavow the common law made whole doctrine and recover monies from a health beneficiary even if the client has not been made whole in the settlement.

Posted in ERISA, Long Term Disability |

Hannington v. Sun Life & health Ins. Co.

As many recipients of disability benefits know, insurance companies will require you to file for social security benefits in order to offset the amount it may owe to you in benefits. Essentially, the insurance company gets a credit for this “other income.” A recent decision from the First Circuit, styled Hannington v. Sun Life & health Ins. Co., issued (March 29, 2013) found that Sun Life could not reduce a participants benefits under the ERISA governed Plan, even though he was also receiving veterans benefits. On appeal, the First Circuit upheld the district court’s decision and held: Sun Life’s decision to offset Plaintiff’s service-connected disability compensation (VA benefits) was governed entirely by its interpretation of several statutes, the district court ought to have reviewed de novo Sun’s determination that Plaintiff’s VA benefits were “other income” under the plan; and (2) Plaintiff’s VA benefits were not “other income” for purposes of reducing the payment Sun owed Plaintiff under the Plan. In essence, the Plan administrator was not entitled to any deference in its interpretation and the district court and appeals court reviewed the question on their own without any presumption in favor of the plan administrator. If you or a loved one have an issue with an insurance company attempting to offset or reduce your monthly benefit, feel free to contact the lawyers at Burke Harvey & Frankowski: http://burkeltd.wpengine.com/ltd-insurance-issues/dealing-with-insurance-companies/

Posted in Disability Benefits, Long Term Disability |

Tibble v Edison International

In Tibble v Edison International, the U.S. 9th Circuit Court of Appeals affirmed a California court’s decision on March 23, 2013, involving Erisa’s statute of limitations (SOL) on a claim involving breach of fiduciary duty. The plaintiffs’ represented the workforce for the company and were suing as a class action claiming their investments were a result of imprudent investing and self dealing. ERISA § 413 provides that no action may be commenced “after the earlier of”: (1) six years after (A) the date of the last action which constituted a part of the breach or violation, or (B) in the case of an omission the latest date on which the fiduciary could have cured the breach or violation, or (2) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation unless it’s a case for fraud or concealment. The Court decided that there was no actual knowledge for the three year SOL to be applicable and therefore upheld the six year SOL. The Department of Labor’s (DOL) interpretation of the ‘safe harbor’ provision was consistent with the statutory interpretation and therefore did not bar the claim since the breach or loss was not a “direct and necessary” result of the beneficiary’s action.

As for the claim of breach of fiduciary duty by failing to invest prudently and involving self dealing, the Court relied on the established law that ERISA administrators abuse their discretion if they act without explanation or “construe provisions of the plan in a way that conflicts with the plain language of the plan” or violate the requirement that the fiduciaries are to employ the appropriate methods to investigate the merits of the investment and to structure the investment. Here, the administrators of the Plan took the necessary steps to diversify the investments; the only exception was for the three specific mutual funds, which were not properly investigated.
Feel free to contact one of the lawyers at Burke, Harvey, & Frankowski LLC to help with any questions or concerns you may have involving your long term disability policy: http://burkeltd.wpengine.com/about-our-firm/

Posted in ERISA |

Judge v. Metro Life Ins. Co.

On March 25, 2013, the Sixth Circuit issued the ERISA opinion of Judge v. Metro Life Ins. Co., whereby the appeals court affirmed a summary judgment in favor of the plan administrator on several different issues that an ERISA plaintiff confronts in trying to receive benefits. The court found that the plaintiff was not totally and permanently disabled under the terms of the Plan, a very restrictive definition for disabled. The court further found that MetLife could rely on a file review of a paid nurse instead of having the plaintiff sent out for an Independent Medical Exam (“IME”). Finally, the court did not find that MetLife had a conflict of interest that affected its denial decision, even though it both had to evaluate and pay the claims. This decision reinforces the several hurdles that ERISA presents for a person seeking long term disability benefits.

Posted in ERISA, Metropolitan Life Insurance |

Metropolitan Life Ins. Co. v. Cotter

In Metropolitan Life Ins. Co. v. Cotter, the Massachusetts Supreme Court just rendered an opinion on March 15th interpreting requirements under an “own occupation” policy that was not subject to ERISA. The plaintiff was diagnosed with cancer and was thereafter terminated from his employment. Metropolitan Life paid benefits under the “own occupation” policy for some time and the plaintiff eventually found employment is a less stressful job. At that time Metlife filed a declaratory action asking for a determination that its obligation to pay benefits ended and also asked for a determination that it was owed a refund of paid benefits. The Supreme Court of Massachusetts held that because the plaintiff was no longer receiving treatment for the condition that caused the disability, and was therefore not seeking treatment to return him to his former occupation, that the obligation to pay benefits ended. The court at least found that the plaintiff did not have to repay any benefits he received while in the new job.

If you have an “own occupation” policy read the policy’s terms and conditions carefully. Some of these policies allow for other work if you are unable to return to your former occupation. Other “own occupation” policies also allow for employment in other jobs and then take an “offset” of the owed benefits for the income from the new job. If you have an “own occupation” policy and have any questions regarding the policy’s conditions, feel free to contact the lawyers at Burke Harvey & Frankowski, LLC and visit: http://burkeltd.wpengine.com/our-ltd-practice/own-occupation-disability/

Posted in Metropolitan Life Insurance |

L.I. Head Start Child Dev. Servs., Inc. v. Economic Opportunity Comm’n of Nassau Cnty., Inc.

Another ERISA case form the Second Circuit which allows for a Plaintiff to assert breach of fiduciary duty for a breach of contract claim. It appears that courts are now starting to recognize that a breach of fiduciary claim is viable under ERISA.

Plaintiffs sued the administrators of CAAIG contending that they breached their fiduciary duties to CAAIG under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., by failing to ensure that CAAIG had sufficient assets with which to satisfy the judgment. The district court agreed and entered judgment against the Plan Administrators. The court concluded that LIHS had standing under ERISA 502(a) as a fiduciary of the Plan; the Underfunding Claim and EOC Suffolk Delinquency Claim were timely; the Administrators conceded that the breach of a contractual obligation in the Plan documents constituted a breach of their fiduciary duties under section 404(a)(1) of ERISA; and the Administrators breached their fiduciary duties with respect to the Underfunding Claim and the EOC Suffolk Delinquency Claim. Accordingly, the court affirmed the judgment.

Posted in ERISA |

Thurber v. Aetna Life Ins. Co.

A new decision from the Second Circuit that reinforces the challenges a plaintiff must overcome in an ERISA LTD benefits case. Here, not only did the Circuit court find that an arbitrary and capricious standard applied to Aetna’s conduct but it also overturned the district court’s denial of summary judgment on Aetna’s claim for an overpayment. Plaintiffs in ERISA cases often fact the overpayment issue because the insurer can take credit for amounts received from social security.

Plaintiff appealed from the district court’s grant of Aetna’s motion for summary judgment on the issue of whether the insurer improperly denied plaintiff long-term disability benefits under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Because Aetna’s reservation of discretion was sufficient to compel use of the arbitrary and capricious standard of review, the court affirmed summary judgment to Aetna on its denial of benefits. The court also held that Aetna’s action seeking return of overpaid benefits was properly brought under 29 U.S.C. 1132(a)(3) as an equitable counterclaim. Accordingly, the court reversed the district court’s denial of summary judgment on the counterclaim.

For more information about the challenges of obtaining Aetna LTD Benefits visit: http://burkeltd.wpengine.com/ltd-insurance-issues/aetna/

Posted in Aetna, ERISA |

Helton v. AT&T Inc.

It appears that there is a growing trend among circuit courts to give meaning to ERISA’s breach of fiduciary remedies, even when benefits are claimed as a result of that breach. The opinion below is against AT&T, an entity that has a self-funded ERISA plan that it administers.

Plaintiff brought this action under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., against AT&T after her claim to recoup her lost benefits was denied. The district court found that AT&T unreasonably denied plaintiff’s claim and failed to adequately notify her of a material change to its pension plan that allowed her to collect full benefits earlier than she had originally understood. The court held that the district court properly considered limited evidence outside of the administrative record but known to AT&T when it rendered plaintiff’s benefits determination; correctly determined that AT&T breached its statutory and fiduciary duties to plaintiff; and did not err in awarding plaintiff her lost benefits. Accordingly, the court affirmed the judgment.

Posted in ERISA |

Cardoza v. United of Omaha Life Insurance

Petitioner Jose Cardoza brought this lawsuit pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), to challenge United of Omaha Life Insurance Company’s calculation of his long-term disability benefits (LTD benefits). United of Omaha answered, asserting its calculation was appropriate, and counterclaimed, demanding that Petitioner reimburse it for payments of short-term disability benefits (STD benefits) which it claimed were miscalculated. On cross-motions, the district court granted Petitioner’s motion for summary judgment and denied United of Omaha’s motion, concluding United of Omaha’s decision to calculate Petitioner’s LTD benefits and recalculate his STD benefits as it did was arbitrary and capricious. United of Omaha appealed. Upon review, the Tenth Circuit concluded that the district court erred in granting Petitioner’s motion for summary judgment with respect to United of Omaha’s LTD benefits calculation: “[t]he plain language of the long-term disability benefits policy instructed United of Omaha to base its calculation of Cardoza’s LTD benefits on his earnings as verified by the premium it received. Thus, United of Omaha’s decision to do so was reasonable and made in good faith.” The district court did not err, however, in granting Petitioner’s motion for summary judgment with respect to United of Omaha’s recalculation of his STD benefits and demand for reimbursement “United of Omaha’s decision to recalculate Cardoza’s STD benefits based on his earnings verified by premium rather than his actual earnings was not reasonable.” The Court therefore reversed in part, affirmed in part, and remanded the case to the district court for further proceedings.

For more information on Short-term Disability and Long-term Disability Benefits, visit: http://burkeltd.wpengine.com/our-ltd-practice/long-term-vs-short-term-disability/

Posted in ERISA, Insurance Law, Labor & Employment Law |

Taveras v. UBS AG et al.

Plaintiffs brought a putative class action on behalf of current and former UBS and UBSFS employees, alleging that defendants violated various fiduciary duties imposed on them by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. Plaintiffs argued that the district court erred in analyzing their claim for breach of the duty of prudence, as it applied a presumption of prudence to the fiduciaries of both investment plans at issue. The court held that the district court wrongly applied the presumption as to one of the two plans, the Savings and Investment Plan (SIP), as the SIP Plan Document neither required nor strongly encouraged investment in UBS stock or the UBS Stock Fund. The court held, however, that the District Court correctly applied the presumption of prudence as to the second plan, the Plus Plan, which required plan fiduciaries to invest in the UBS Stock Fund. Accordingly, the court affirmed the dismissal order of the district court in part, vacated in part, and remanded the case for further proceedings. Plaintiffs’ remaining arguments were addressed in a companion Summary Order.

Posted in ERISA, Professional Malpractice & Ethics |

Gearlds, Jr. v. Entergy Services, Inc., et al

Plaintiff appealed from the district court’s dismissal of his suit alleging claims of equitable estoppel and breach of fiduciary duties pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. The district court dismissed the complaint for failure to state a claim. The court held that plaintiff stated a claim for relief that was cognizable under ERISA, in light of CIGNA Corp. v. Amara. Because relief was available under the surcharge doctrine under Amara, the court did not address the equitable estoppel claim and the district court was free to consider that claim on remand. Finally, the district court did not err in dismissing Defendant Entergy Mississippi where plaintiff failed to allege that Entergy Mississippi sponsored or administered the plan or made any decisions with respect to his benefits.

Posted in ERISA, Labor & Employment Law |

Price v. Bd. of Trs. of IN Laborers’ Pension Fund

The Fund, a multi-employer pension plan under ERISA, has a Plan, providing for administration by a Board with authority to make benefit determinations and amend the Plan, including retroactively. No amendment may result in reduced benefits for any participant whose rights have vested, except in specified circumstances. Price began receiving Plan disability benefits under the “Total and Permanent Disability Benefit” category in 1990, after work-related injuries left him unable to work. In 2001, the Fund notified Price that he no longer qualified for benefits under this category, but that he could continue receiving benefits under provisions for “Occupational Disability Benefit.” His benefits were discontinued after 2006, according to an Amendment. Price became eligible for early retirement in 2012. The Board rejected an appeal. The district court granted Price judgment in his suit under ERISA, 29 U.S.C. 1132(a)(1)(B). On remand from the Sixth Circuit, for review determination of vesting under the arbitrary and capricious standard, the judge again ruled in favor of Price. The Sixth Circuit again reversed; the court failed to look to the terms of the plan but instead found that because the Board’s decision letter did not discuss whether the benefits vested, the Board’s decision was arbitrary and capricious.

For more information about making a claim under ERISA, visit http://burkeltd.wpengine.com/our-ltd-practice/making-a-claim-under-erisa/

Posted in ERISA, Insurance Law, Labor & Employment Law |

Angela Hopkins v. AT&T Umbrella Benefit Plan No. 1, Southwestern Bell Telephone Co.

On February 11, 2013, a district court in Missouri allowed a Plaintiff to supplement the record on summary judgment with a favorable decision from an Administrative Law Judge finding the plaintiff disabled.  The court found significant the fact that AT&T self-insured plan required the Plaintiff to file for disability benefits, helped with the application, and when the plaintiff received the favorable award attempted to recover over $40,000 as an offset to benefits it had already paid. Even though the ERISA Plan wanted to use the award as a basis to recover monies paid to the plaintiff, it did not want to consider the favorable findings of disability. This practice is not employed by self-insured ERISA plans but also employed by Unum, The Hartford, The Standard, LINA, and other disability carriers when they deny claims.

For more information view our denied claims page: http://burkeltd.wpengine.com/our-ltd-practice/denial-of-ltd-claim/

View Order Here


Posted in Disability Benefits, Hartford Life Insurance |

Reindl v. Hartford Life and Accident Ins.

Plaintiff brought this action under 29 U.S.C. 1132(a)(1)(B) claiming that Hartford wrongfully terminated her long-term disability benefits under an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001-1461. The court affirmed the judgment of the district court granting summary judgment in favor of Hartford where plaintiff failed to exhaust her administrative remedies by failing to file a timely administrative appeal. The letter at issue could have reasonably been construed by Hartford as a request for documents rather than a request for an appeal.

Posted in ERISA, Hartford Life Insurance |

FDA Approves New Drug For The Chronic Management Of Some Urea Cycle Disorders

As a public service announcement, Burke Harvey & Frankowski LLC posts information about new drugs because many of its clients suffer from debilitating conditions.

Hyperion Therapeutics, Inc. announced on Friday, February 1, 2013, that the U.S. Food and Drug Administration (FDA) has approved RAVICTI for the treatment of Urea Cycle Disorders (UCD) in patients two years of age and older.

These inherited conditions involve a lack of enzymes that help the body remove ammonia from the blood. In people with UCDs, ammonia buildup can lead to coma, brain damage or death, the FDA said Friday in a news release.

Ravicti is a nearly tasteless, odorless liquid formulation which is intended to work similarly to Buphenyl in removing ammonia, but without the pill burden or need to mask taste. Three teaspoons of HPN-100 equals approximately 40 tablets of sodium phenylbutyrate. Clinical trials showed improved patient compliance and control of ammonia, including stabilization of fluctuations throughout the day and overnight.  Both children and adults in the trial demonstrated improved cognitive function on Ravicti.

The drug is expected to be commercially available by the end of April 2013.

Posted in FDA, Urea Cycle Disorders |

Kirkendall et al v. Halliburton, Inc. et al

Kathy Joy Kirkendall and her co-plaintiffs filed this putative class action suit, pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1002-1461, which included claims for redetermination of benefits and for improper amendment of plan terms. Plaintiffs filed suit without first availing themselves of the procedure described for “benefits claims” in pension plan documents and the district court dismissed based on Kirkendall’s failure to exhaust her administrative remedies. The court held that because Kirkendall reasonably interpreted the plan’s exhaustion requirement not to apply to a determination of future benefits and did not exhaust her administrative remedies as a result, she was not required to exhaust her administrative remedies. The court also held that Halliburton’s actions did not constitute an amendment within the meaning of ERISA section 204(g).

Posted in ERISA, Long Term Disability |

Duckworth v. Allianz Life Ins. Co., et al

Allianz appealed the district court’s grant of judgment in favor of plaintiff on his claim that Allianz miscalculated the monthly benefit to which he was entitled under a long-term disability insurance policy. Allianz contended that the district court improperly interpreted the offset provision of the policy. The court concluded that the policy’s offset provision was not afflicted with ambiguity and the district court should not have resorted to canons of construction to determine the unwritten intent of the provision. Accordingly, the court reversed and remanded for entry of judgment in favor of Allianz.

Posted in Allianz Life Insurance Company, Long Term Disability |

Colby v. Union Sec. Ins. Co.

Plaintiff was a partner in a medical practice where she served as a staff anesthesiologist. When Plaintiff’s dependence on opioids came to light, her employer had in force a group employee benefit plan, underwritten and administered by Union Security Insurance Company & Management Company for Merrimack Anesthesia Associates Long Term Disability Plan (USIC), which included long-term disability (LTD) benefits. When Plaintiff applied for those benefits, USIC refused to pay benefits past the point when Plaintiff was discharged from a treatment center, finding that Plaintiff’s risk for relapse was not the same as a current disability. Plaintiff brought suit in the federal district court. The district court ultimately awarded Plaintiff LTD benefits for the maximum time available under the plan, concluding that categorically excluding the risk of drug abuse relapse was an unreasonable interpretation of the plan. The First Circuit Court of Appeals affirmed, holding that, in an addiction context, a risk of relapse can be so significant as to constitute a current disability.

Posted in Long Term Disability, USIC |

Siegel v. Connecticut General Life Ins., et al

Plaintiff, a former software developer for Lockheed Martin Corporation, brought this action for judicial review after Connecticut General terminated his disability benefits in 2007. The court held that the district court properly applied an abuse of discretion standard; on the record, it was not an abuse of discretion to terminate plaintiff’s benefits; and the district court did not err in denying plaintiff an opportunity to depose the expert at issue. Accordingly, the court affirmed the judgment.

Posted in ERISA, Long Term Disability |

Penalty Charged Under ERISA for Failure to Provide a Summary Plan Description (“SPD”) on Request

In Latimer v. Washington Gas Light Company, No. 1:11 cv 571 (GBL/TRJ)(E.D. Va. June 6, 2012), the Court imposed a total penalty in the amount of $37,510 or $110 per day for 341 days against the plan administrator for violating Section 104(b) of ERISA.  To be awarded the statutory penalty allowed by Section 502(c)(1) of ERISA, a plaintiff need only show that the plan administrator did not comply with the statute.  Further, under section 502(c)(1), each failure or refusal to comply with a request for any information is to be treated as a separate violation.  The amount of the penalty to be imposed, if any, is left to the discretion of the court.  The court will typically consider the following factors:  prejudice to the plaintiff and the nature of the plan administrator’s conduct in responding to the participant’s request.  Frustration, trouble and expense, including the trouble and expense of engaging an attorney to induce the defendant’s compliance, are treated as prejudice to the plaintiff for this purpose.

Posted in ERISA, Long Term Disability |

Kifafi v. Hilton Hotel Retirement Plan, et al

Appellee, an employee and participant in Hilton’s retirement plan, sued for violations under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Appellee alleged that the Plan’s benefit accrual formula was impermissibly backloaded and that Hilton, the Plan sponsor and administrator, violated both ERISA and the Plan by failing to credit certain years of service when calculating employees’ vested credit. The court affirmed the district court’s finding, that the Plan was impermissibly backloaded and that Hilton failed to calculate participants’ vesting credit properly, because the district court handled the case well within its discretion.

Posted in ERISA, Long Term Disability |

Shy v. Navistar Int’l Corp.

In 1992 Navistar attempted to reduce its costs for retired employee health and life insurance benefits. Navistar’s retirement benefit plan is a registered employee health benefit plan under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 and Navistar is both plan administrator and fiduciary. In 1993, the district court entered judgment in a class action challenging the change, adopting an agreement between the parties and retaining jurisdiction. The Agreement established the Retiree Health Benefit and Life Insurance Plan. The Plan established the Health Benefit Program Summary Plan Description, which contains a description of the health benefits and is furnished to all beneficiaries. The Agreement divides health benefits into two plans: Plan 2 for those eligible for Medicare and Plan 1 for those who are not eligible. A prescription drug benefit was provided under the Agreement, identical for both Plan 1 and Plan 2. When Navistar moved to substitute Medicare Part D into the Plan, class members claimed violation of the Agreement. The district court ordered Navistar to reinstate, retroactively, the prescription drug benefit that was in effect before Navistar made the unilateral substitution.

Posted in Navistar |

The Supreme Court Heard Oral Argument on November 27, 2012 to Determine “Appropriate Equitable Relief” Under ERISA

In U.S. Airways, an employee who was injured in a car accident recovered $110,000 from third parties and paid a 40% contingency fee to his attorney.  According to the ERISA health plan’s reimbursement provisions, U.S. Airways sought to recover from the employee the full amount of medical expenses the plan paid for his injuries, even though the plan’s payments exceeded the amount of the employee’s net recovery.  The U.S. Supreme Court granted certiorari to review U.S. Airways, Inc. v. McCutchen, 663 F.3d 671 (3rd Cir. 2011) and address a split among the circuits regarding whether equitable principles can limit an ERISA plan’s reimbursement rights.

The district court held that U.S. Airways was entitled to recover the full amount paid by the plan. The Third Circuit reversed, holding that equitable relief under ERISA section 502(a)(3) can be limited by equitable defenses and principles that were typically available in equity. The Third Circuit applied the traditional equitable principle of unjust enrichment and concluded that full reimbursement was inappropriate and inequitable relief because the employee would be left with less than full payment for his medical bills and U.SAirways would receive a windfall. The Third Circuit remanded the case to the district court to determine “appropriate equitable relief.”

The Supreme Court heard oral argument to review whether the Third Circuit correctly held that ERISA section 502(a)(3) authorizes courts to use equitable principles to rewrite clear plan language requiring full reimbursement for benefits paid.

Posted in ERISA, Long Term Disability |

Are you currently using Advantage, Allsup or Crowe Paradis to secure Social Security benefits?

If so, the recent decision of Raybourne v. CIGNA Life Ins. Co., highlights the structural conflict of interest a LTD carrier such as CIGNA operates under in making a LTD determination.

The recent decision of Raybourne v. CIGNA Life Ins. Co. ___F 3d ___ (7th Cir. 2012) decided Nov. 21, 2012, emphasizes the role of conflict of interest and a favorable SSA decision in an ERISA LTD analysis.  Despite denying benefits to the Plaintiff, Cigna encouraged him to apply for Social Security disability benefits through its consultant, Advantage.  Advantage represented to the SSA that Mr. Raybourne was disabled and Mr. Raybourne received a favorable SSA determination. Cigna recouped payments it made to Mr. Raybourne during his initial period of disability from the SSA award and then denied his subsequent appeals for long-term disability benefits.  In denying benefits to Mr. Raybourne, Cigna failed to provide a reasonable explanation for crediting the opinion of a non-examining, in-house physician, who determined that Mr. Raybourne was not disabled, over the opinion of Mr. Raybourne’s treating physician or over the credibility finding of the ALJ, both of which were supported by substantial medical evidence documenting the source of Mr. Raybourne’s pain.  The Court found:

“Under Glenn, a court may use a structural conflict of interest to break a tie in a close case ‘where circumstances suggest a higher likelihood that it affected the benefits decision.’ 554 U.S. at 117.  See also Jenkins v. Price Waterhouse Long Term Disability Plan, 564 F.3d 856, 861-62 (7th Cir. 2009)(under Glenn, where the case is borderline, the inherent conflict of interest can push the analysis over the edge towards finding that the administrator’s decision was capricious).  Such appears to be the case here, and like the district court, we conclude that Cigna’s denial of benefits was not supported by substantial medical evidence but instead was the result of a structural conflict of interest.” (p. 25-26)

In this case, by properly factoring conflict of interest into the review, it appears that the Court has taken a step in curtailing the common practice of LTD carriers of ignoring evidence supportive of disability without explanation.  If you currently use Allsup, Advantage or Crowe Paradis to help secure Social Security benefits make sure they work for you and not the insurance company.

If you have any questions about long term disability please give us a call or visit our LTD benefits page for more information.

Posted in ERISA, Long Term Disability, LTD Appeals |

Is heightened scrutiny of the benefits decision required when the plan administrator consults with the plan’s funding source?

In the recent decision of Day v. AT&T. ___F. 3d ___ , 2012 WL 5359628 (9th Cir. November 1, 2012), the Court determined that a plan administrator’s consultation with the plan’s funding source does not create a structural conflict of interest.  In this case the plaintiff disputed how Sedgwick calculated his benefit payments under the AT&T ERISA plan and filed suit. AT&T funded the plan but conferred full discretion to Sedgwick as plan administrator.  Under ERISA, plan administrators both administering and funding the plan operate under a “structural conflict of interest” which requires heightened scrutiny of the benefits decision.  Although the Plan in this case delegated a plan administrator separate from the funding source, the Court had to determine whether a structural conflict of interest could be found when Sedgwick, the plan administrator, consulted with AT&T, the funding source, on benefits issues.  The court found that it did not; stating, “Just because Sedgwick consulted with AT&T in responding to Day’s concerns…does not show that AT&T had any influence over Sedgwick’s decision making process in that regard.”

Posted in ERISA, Long Term Disability |

Stephan v. Unum Life Insurance Company of America

In a recent 9th Cir. Opinion, Stephan v. Unum Life Insurance Company of America, __F. 3d __, 2012 WL 3983767 (9th Cir. September 12, 2012), the Court held that the fiduciary exception to attorney-client privilege applied to internal memoranda created by Unum’s in-house counsel, at the request of Unum’s claims analyst because it constituted advice on plan administration and was given before the interests of the parties became adverse.  The Court also held, in some circumstances, a bonus may be considered in benefit calculations. The Plaintiff in this case earned $200,000 annually, plus a $300,000 guaranteed annual bonus. He became permanently disabled and Unum paid benefits using his monthly salary without considering his bonus in calculating his benefit.    The Court affirmed the district court’s ruling that the proper standard of review is abuse of discretion but reversed the district court’s grant of summary judgment to Unum.  The case was remanded to the district court for reconsideration of the weight Unum’s conflict of interest ought to be accorded in determining whether Unum abused its discretion.  The district court was instructed to reconsider the nature and impact of Unum’s conflict of interest and to re-weigh the relevant evidence and determine whether Unum abused its discretion in failing to include Plaintiff’s bonus in its pre-disability earnings calculation.

If you have a Unum disability claim or need more information on Unum claims and denial issues please give us a call at 888-880-9046 or visit our Unum claims and denials page.

Posted in Long Term Disability, Unum Life Insurance Company of America |

When is an Appeal not an Appeal?

In Reindl v. Hartford Life and Accident Insurance Co., __F.Supp.2d___(E.D. Mo. 2012) attached hereto, an appeal was deemed untimely because a law firm had written the insurance company and stated that it intended to appeal but did not in fact formally appeal within the required time.  Although a law firm committed the error in this instance an important lesson for those claimants seeking to appeal on their own can be learned – there are many pitfalls that the wary and unsuspecting may fall into when attempting the appeal process on their own.

For more information give Burke, Harvey & Frankowski a call at 888-880-9046 or visit our page on appealing a denied long term disability claims.



Posted in Long Term Disability, LTD Appeals |

A.J., et al v. UNUM, et al

Court: U.S. 8th Circuit Court of Appeals

Docket: 11-3578

Opinion Date: October 19, 2012

Judge: Per curiam

Areas of Law: ERISA, Family Law, Insurance Law

Decedent, father of plaintiffs, died without naming a beneficiary of his Unum life insurance. Plaintiffs sued Unum, asserting a breach of the policy and an Employee Retirement Income Security Act, 29 U.S.C. 1002 et seq., violation. The district court concluded that they lacked standing and dismissed the suit. The court concluded that the estate’s decision not to appeal precluded the children from having a reasonable or colorable claim to benefits. Because plaintiffs could not become entitled to benefits, the court held that the district court properly dismissed the case.

Posted in ERISA, Insurance Law, Long Term Disability |

FDA will be holding an open public hearing regarding treatment of peripheral neuropathies

Many of Burke Harvey & Frankowski’s long term disability clients suffer from peripheral neoropathies.  As a part of a public service, Burke Harvey and Frankowski wants the public to know that the FDA will be holding an open public hearing and workshop to further the understanding of the development of disease-modifying agents for the treatment of painful peripheral neuropathies. Comments for the open public hearing due by February 1, 2013. Written comments due by March 1, 2013.  Please click on the attached pdf for further information. Federal Register PDF

Posted in Long Term Disability |

Treasurer, Trustees of Drury Ind. v. Goding, et al.

Court: U.S. 8th Circuit Court of Appeals

Docket: 11-2885

Opinion Date: September 7, 2012

Judge: Melloy

Areas of Law: ERISA, Injury Law, Insurance Law

Defendant Goding was a beneficiary of an Employee Retirement Insurance Security Act (ERISA), 29 U.S.C. 1001 et seq., Plan administered by Drury. Goding sustained injuries in a slip and fall accident and received benefits from the Drury-administered Plan, as well as compensation through the settlement of a civil suit related to those injuries. Pursuant to a subrogation provision in the ERISA Plan, Drury attempted to secure reimbursement from Goding for the benefits it paid but was unable to do so after Goding declared bankruptcy. Drury then attempted to obtain that reimbursement from the firm that represented Goding. The court affirmed the district court’s finding that Drury could not obtain such reimbursement because the firm had not agreed to the Plan’s subrogation provision and consequently was not contractually bound by it; Drury could not maintain a suit against the firm in equity and could not bring a state cause of action for conversion against the firm; and the firm should be awarded attorneys’ fees for successful defense of a subsequent motion.

Posted in ERISA, Insurance Law |

Reese v. CNH America LLC

Docket: 11-1359

Opinion Date: September 13, 2012

Judge: Sutton

Areas of Law: Contracts, ERISA, Health Law, Insurance Law, Labor & Employment Law

In a 2009 opinion, the Sixth Circuit held that, in a 1998 collective bargaining agreement, CNH agreed to provide health-care benefits to retirees and their spouses for life, but rejected the suggestion that the scope of this commitment in the context of healthcare benefits, as opposed to pension benefits, meant that CNH could make no changes to the healthcare benefits provided to retirees. The court remanded for a determination of reasonableness with respect to CNH’s proposed changes to its retiree healthcare benefits, under which retirees, previously able to choose any doctor without suffering a financial penalty, would be put into a managed-care plan. The court listed three considerations: Does the modified plan provide benefits “reasonably commensurate” with the old plan? Are the proposed changes “reasonable in light of changes in health care”? And are the benefits “roughly consistent with the kinds of benefits provided to current employees”? On remand, the district court granted CNH summary judgment without reaching the reasonableness question or creating a factual record from which the determination could be made on appeal. The Sixth Circuit again remanded.

Posted in ERISA, Insurance Law |

Dudenhoefer v. Fifth Third Bancorp

Docket: 11-3012

Opinion Date: September 5, 2012

Areas of Law: Banking, Class Action, ERISA, Securities Law

Former Fifth Third employees participated in a defined contribution retirement plan with Fifth Third as trustee. Participants make voluntary contributions and direct the Plan to purchase investments for their individual accounts from preselected options. The options included Fifth Third Stock, two collective funds, or 17 mutual funds. Fifth Third makes matching contributions for eligible participants that are initially invested in the Fifth Third Stock Fund but may be moved later to other investment options. Significant Plan assets were invested in Fifth Third Stock. Plan fiduciaries incorporated by reference Fifth Third’s SEC filings into the Summary Plan Description. Plaintiffs allege that Fifth Third switched from being a conservative lender to a subprime lender, its loan portfolio became increasingly at-risk, and it either failed to disclose or provided misleading disclosures. The price of the stock declined 74 percent. The district court dismissed a complaint under the Employee Retirement Income Security Act, 29 U.S.C. 1001, based on a presumption that the decision to remain invested in employer securities was reasonable. The Sixth Circuit reversed, holding that the complaint plausibly alleged a claim of breach of fiduciary duty and causal connection regarding failure to divest the Plan of Fifth Third Stock and remove that stock as an investment option.



Posted in ERISA | Tagged , , |

Can Unum Make You Apply for Social Security Benefits?

LTD Attorney Peter Burke interviewed about this highly questionable practice.

Long Term Disability Lawyer Peter Burke of Burke, Harvery and Frankowski, LLC was recently interiewed by LawyersandSettlements about this practice and how it can have a major impact on LTD benefits.

“It’s a standard practice for Unum and other insurance carriers that they require policy holders to apply for social security disability benefits,” says Peter Burke. “They take it as an offset; it reduces the amount of benefits they owe the policy holder.”

Read the full article here “Can Unum Make You Apply for Social Security Benefits?”  to learn more about this and other potential bad faith practices.

Posted in ERISA, Long Term Disability | Tagged , |

Schorsch v. Reliance Standard Life Ins. Co.

Court: U.S. 7th Circuit Court of Appeals

Docket: 10-3524

Opinion Date: August 28, 2012

Judge: Tinder

Areas of Law: ERISA, Insurance Law

Schorsch enrolled in a long-term disability plan in 1991, but apparently never received a summary plan description or explanation of the Employee Retirement Income Security Act, 29 U.S.C.1132. In 1992 she was in an automobile accident; in 1993 Schorsch began receiving disability benefits. In 2006, at the plan’s request, Schorsch underwent a medical exam, which resulted in a report finding her capable of performing a medium duty job. The plan notified Schorsch that it would terminate her benefits, but did not mention a surveillance report, which was part of the determination. , Schorsch’s counsel sent a letter, but neither Schorsch nor her attorney submitted a request for review. The plan notified Schorsch that the appeals period had passed. Schorsch’s claimed breach of contract and unreasonable denial of benefits under Illinois law and ERISA violations. The plan had lost the administrative record relating to Schorsch’s claim. The district court granted summary judgment on the ground of failure to exhaust administrative remedies. The Seventh Circuit affirmed. There are exceptions that may excuse a failure to exhaust, but Schorsch offered no evidence of reasonable reliance on information missing from the notice or that alleged deficiencies were material.


Posted in ERISA, Insurance Law | Tagged , , |

Moore v. Menasha Corp.

Docket: 10-2173 Opinion Date: August 22, 2012

Judge: Clay

Areas of Law: ERISA, Insurance Law, Labor & Employment Law

Plaintiffs are retired unionized employees of defendant and were covered by collective bargaining agreements that addressed healthcare benefits. The parties contest whether the CBAs guaranteed employees and their spouses lifetime healthcare benefits after retirement. After retiring, the employees and spouses continued to receive healthcare insurance from defendant. Between ages 62 to 65, defendant paid 80% of the premium costs. When the retirees turned 65, defendant assumed 100% of premium costs. In 2006, defendant informed plaintiffs that the company was instituting a new healthcare plan that would no longer cover 100% of the premiums. Plaintiffs claimed violations of the Labor Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Income Security Act, 29 U.S.C. 1132. The district court ruled in plaintiffs’ favor as to employee coverage, but in favor of defendant as to spouses. The Sixth Circuit reversed in part, in favor of plaintiffs. Although healthcare is a “welfare benefit,” not entitled to the same ERISA protection as pension benefits, employers are free to waive their power to alter welfare benefits. Defendant did so by offering vested healthcare coverage to retired employees and spouses, and by agreeing that CBAs could only be modified with signed, mutual consent of the parties.


Posted in Uncategorized |

Aschermann v. Aetna Life Ins. Co.

Aschermann suffers from degenerating discs and spondylolisthesis and had lumbar fusion operations in 2002 and 2004. Until 2003 she worked as a sales representative. Back pain left her unable to perform its duties. Between 2003 and 2009 she received disability payments under the employer’s disability plan, a welfare-benefit plan governed by the Employee Retirement Income Security Act. The policy provides that after the first two years of benefits, the question becomes whether the recipient can perform any job in the economy as a whole. Lumbermens stopped paying disability benefits to Aschermann in fall 2009, concluding that she could do sedentary work. The district court held that the decision to end her disability benefits was not arbitrary. The Seventh Circuit affirmed. Aschermann does not deny that her education B.S. in psychology and master’s degree in social work and experience suit her for many desk-bound positions, but claimed inability to work more than four hours a day. The insurer gave notice complying with ERISA, (29 U.S.C. §1133(1), that it wanted new diagnostic test results and other recent information; she was given a “reasonable opportunity” to supplement the file and receive a “full and fair review.”

Posted in Uncategorized |

Graham v. Hartford Life Ins. Co., et al.

Plaintiff sued Hartford seeking coverage under his life insurance policy for accidental dismemberment benefits after he suffered serious injuries to his eyes when a can of oven cleaner exploded in his face. The district court dismissed plaintiff’s suit, concluding it was untimely because it was brought three years after the loss, outside the policy’s time limitations for bringing legal actions against Hartford. Plaintiff appealed, arguing that he brought suit within Arkansas’s five-year statute of limitations for breach of contract actions, Ark. Code Ann. 23-79-202(b). The court agreed with plaintiff and held that prior case law was inconsistent with Hartford’s contention that the “period prescribed by law” referred to in section 23-79-202 meant something other than the full five-year period set forth in Ark. Code Ann. 16-56-111. Accordingly, the court reversed and remanded.

Original source with PDF download.

Posted in Uncategorized |

Hankins v. Standard Ins. Co.

After plaintiff was denied long-term disability benefits by Standard, he sought review of Standard’s determination under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. The court affirmed the district court’s grant of summary judgment in favor of Standard and held that there was substantial evidence supporting Standard’s denial of benefits. The court also held that a conflict of interest alone was not determinative where there existed substantial evidence on the record supporting the denial of benefits.

Original source with PDF download.

Posted in Uncategorized |

Fleisher v. Std. Ins. Co.

While working as a dentist, Fleisher obtained long-term disability insurance coverage under separate policies. He obtained the North American policy by membership in a professional organization. The Standard policy is an employee benefit, governed by the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B) and provides for monthly benefits to a maximum of “$10,000 before reduction by Deductible Income,” defined to include “[a]ny amount you receive or are eligible to receive because of your disability under another group insurance coverage,” but to exclude benefits paid under “any individual disability insurance policy.” In 2008, Fleisher became disabled and claimed benefits under both policies. Shortly after Fleisher began collecting under both policies, Standard reduced his monthly benefits from $10,000 to $8,500 based on its determination that the North American policy was another group insurance coverage, and that the $1,500 in benefits he receives under it is deductible income. The district court dismissed his ERISA suit. The Third Circuit affirmed, finding the decision supported by substantial evidence and not unreasonable.

Original source, with PDF download.

Posted in Uncategorized |

Lanfear v. Home Depot USA, Inc.

Lanfear v. Home Depot USA, Inc., No. 10-13002 (11th Cir. May 8, 2012)

The plaintiffs planned for their retirement by investing in a single retirement plan that is both an “eligible individual account plan” (“EIAP”) and an “employee stock ownership plan” (“ESOP”). Their employer, The Home Depot, Inc., offered that retirement plan as an employee benefit. The plaintiffs claim that the fiduciaries of the Plan, who are the defendants in this case, breached their fiduciary responsibilities under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. The complaint, as last amended, alleged that the defendants:

(1) continued to purchase and failed to sell Home Depot stock even though they knew based on nonpublic information that the stock price probably was inflated;

(2) provided inaccurate information to the Plan participants in fiduciary communications; and

(3) did not disclose to the Plan participants certain Home Depot business practices that had inflated Home Depot’s stock price.

The plaintiffs argue that those alleged breaches of the defendants’ fiduciary duties, which ERISA imposes, diminished their retirement funds.

The district court dismissed the Plaintiffs’ Third Amended Complaint, and the Eleventh Circuit affirmed. The Eleventh Circuit reasoned:

(1) the failure to exercise “prudence” claims did not fall within the “diversification” exemption of 29 USC 1104(a)

(2) because, following Kirschbaum v. Reliant Energy, Inc., 526 F.3d 243, 249 (5th Cir. 2008), a breach of prudent man standard for a fiduciary can exist where the allegation is that the investments were unsuitable in light of material nonpublic information, but (2) following the decisions of several other circuits, review of fiduciary decisions on self-invested stock is subject to an abuse of discretion standard, and under that standard the claims failed to state a claim.

Posted in ERISA |