Sunday, December 26, 2010
If plaintiff loses the case against LTD insurance carrier, should she also pay her LTD carrier's attorney fees?
Here is an instance in which Aetna won the case against plaintiff because of the application of 'arbitrary and capricious' standard. Aetna also wanted the attorney's fees to be paid which was denied by the court because the court did not find any harassment of the carrier by the plaintiff
Are you a physician? Here is why you should consider not taking ERISA disability insurance
This article cogently explains the pitfall of ERISA for physicians. One wonders what kind of disability insurance he physicians hired by the LTD carriers take. I wish that was allowed in discovery.
Here is a relevant snippet from the article
"
"
Here is a relevant snippet from the article
"
Do you have group long-term disability coverage that pays you if you become disabled? If you get sick or hurt, are you relying on that group LTD policy to pay you benefits? If you do, don’t count on it. There are three primary reasons for this: (1) inferior contract language, (2) ERISA, and (3) relevant court decisions. If you become disabled, you may be in for the fight of your life. But unfortunately, while disabled, when you are most vulnerable, is the worst time to mount a fight against the big insurance company. As you read this article, think how you may become better prepared to deal with this potential problem. |
Use discovery as a tool to expose the procedure through which insurance companies deny claims
From . This is the defense attorney view of the current situation.
Our view is that plaintiffs should aggressively try to push for discovery and make the bad faith insurance company accountable for its decisions.
Although the cases seem to be fractured between and within the various federal
jurisdictions, certain general principles can nonetheless be derived from them.
First, after Glenn it is no longer the case that defendants can oppose all discovery in
ERISA benefits actions. There is authority in all federal jurisdictions that after Glenn,
plaintiffs are able to engage in some discovery, at least insofar as it relates to the
scope and discovery of any financial conflict of interest.
Second, many courts have made clear that discovery beyond the administrative
record should be narrowly limited to the issue of bias and self-interest,
although some have allowed free-ranging discovery. The common kinds of facts that courts have
permitted discovery on include (1) statistical information about the frequency of denials, (2) information about the use of medical consultants and other experts, (3) the financial incentive claim administrators
may have for deciding claims, and (4) efforts by the employer or insurer to
“wall off” decision-makers from having any financial stake in the outcome of a benefit
decision. Third, some courts appear willing to consider procedures to circumvent the need to engage immediately in discovery. For example, as illustrated by Greasey, courts might be persuaded to adopt a procedure by which they would initially review the administrative record to determine if they can decide whether or not the benefit decision was arbitrary and capricious without regard to considering the conflict of
interest. A claim denial might be so clearly supported and substantiated in the record
(or so clearly unsupported and unsubstantiated)
that it obviously is, or obviously is not, arbitrary and capricious. Only if the answer
to that threshold question is “no” would the parties then be put to the burden and expense
of engaging in discovery regarding the purported conflict of interest, its scope and extent, and whether it affected the decision. That, as explained in Greasey, would better serve ERISA’s fundamental goal of providing an expedient, inexpensive and expeditious method for reviewing claims. That approach also has authority from other courts, such as the Sixth Circuit in Kramer and the Third Circuit in Feigenbaum, which found it unnecessary to consider whether discovery was permissible in light of the fact that the denial
of benefits was obviously arbitrary and capricious given the medical evidence establishing
disability. Fourth, defendants opposing plaintiffs’ efforts to widen discovery should carefully distinguish merits discovery (which is generally disallowed) from discovery into the impact the conflict of interest may have had
on the benefit decision. Lastly, although it may not be possible to limit all discovery, it may be possible to minimize the amount if administrators adopt and implement procedures during the time of claim administration. As the Court of Appeals for the First Circuit observed in Denmark, after Glenn administrators should be expected to put in the administrative record express evidence of the measures taken to reduce bias stemming from any conflict of interest, and to provide evidence in each administrative record of the measures implemented. For example, claims administrators should include in administrative records signed or verified
certifications attesting to the fact that they derive no financial benefit from the denial of claims, that they are not subject to any bonus or incentive programs, that they incur no penalty as the result of any benefit decision, and similar issues that Glenn, and to a lesser extent Denmark, identified. In addition, claims administrators might
Discovery After Glenn page 48 also include such material with respect to any third-party administrators upon whose input claims decisions are based, such as the numbers of claims referred to third
parties for review, compensation rates, and any of the other kinds of material for which courts have recently permitted discovery in ERISA benefits cases. Although such measures cannot guarantee that courts will not permit discovery into them once litigation has begun, it is relatively clear that without that kind of material in the administrative record, courts will continue to permit
such discovery.
Our view is that plaintiffs should aggressively try to push for discovery and make the bad faith insurance company accountable for its decisions.
Although the cases seem to be fractured between and within the various federal
jurisdictions, certain general principles can nonetheless be derived from them.
First, after Glenn it is no longer the case that defendants can oppose all discovery in
ERISA benefits actions. There is authority in all federal jurisdictions that after Glenn,
plaintiffs are able to engage in some discovery, at least insofar as it relates to the
scope and discovery of any financial conflict of interest.
Second, many courts have made clear that discovery beyond the administrative
record should be narrowly limited to the issue of bias and self-interest,
although some have allowed free-ranging discovery. The common kinds of facts that courts have
permitted discovery on include (1) statistical information about the frequency of denials, (2) information about the use of medical consultants and other experts, (3) the financial incentive claim administrators
may have for deciding claims, and (4) efforts by the employer or insurer to
“wall off” decision-makers from having any financial stake in the outcome of a benefit
decision. Third, some courts appear willing to consider procedures to circumvent the need to engage immediately in discovery. For example, as illustrated by Greasey, courts might be persuaded to adopt a procedure by which they would initially review the administrative record to determine if they can decide whether or not the benefit decision was arbitrary and capricious without regard to considering the conflict of
interest. A claim denial might be so clearly supported and substantiated in the record
(or so clearly unsupported and unsubstantiated)
that it obviously is, or obviously is not, arbitrary and capricious. Only if the answer
to that threshold question is “no” would the parties then be put to the burden and expense
of engaging in discovery regarding the purported conflict of interest, its scope and extent, and whether it affected the decision. That, as explained in Greasey, would better serve ERISA’s fundamental goal of providing an expedient, inexpensive and expeditious method for reviewing claims. That approach also has authority from other courts, such as the Sixth Circuit in Kramer and the Third Circuit in Feigenbaum, which found it unnecessary to consider whether discovery was permissible in light of the fact that the denial
of benefits was obviously arbitrary and capricious given the medical evidence establishing
disability. Fourth, defendants opposing plaintiffs’ efforts to widen discovery should carefully distinguish merits discovery (which is generally disallowed) from discovery into the impact the conflict of interest may have had
on the benefit decision. Lastly, although it may not be possible to limit all discovery, it may be possible to minimize the amount if administrators adopt and implement procedures during the time of claim administration. As the Court of Appeals for the First Circuit observed in Denmark, after Glenn administrators should be expected to put in the administrative record express evidence of the measures taken to reduce bias stemming from any conflict of interest, and to provide evidence in each administrative record of the measures implemented. For example, claims administrators should include in administrative records signed or verified
certifications attesting to the fact that they derive no financial benefit from the denial of claims, that they are not subject to any bonus or incentive programs, that they incur no penalty as the result of any benefit decision, and similar issues that Glenn, and to a lesser extent Denmark, identified. In addition, claims administrators might
Discovery After Glenn page 48 also include such material with respect to any third-party administrators upon whose input claims decisions are based, such as the numbers of claims referred to third
parties for review, compensation rates, and any of the other kinds of material for which courts have recently permitted discovery in ERISA benefits cases. Although such measures cannot guarantee that courts will not permit discovery into them once litigation has begun, it is relatively clear that without that kind of material in the administrative record, courts will continue to permit
such discovery.
Ninth circuit - the most liberal of all?
From the article:
"The Court of Appeals for the Ninth Circuit noted in Burke v. Pitney Bowes, Inc. Long Term Disability Plan, 554 F.3d 1016 (9th Cir. 2009), that even before Glenn, in the
Ninth Circuit a district court could always “‘consider evidence outside the administrative record to decide the nature, extent, and effect on the decision-making process of any conflict of interest’
Plaintiffs suing under Ninth Circuit are somewhat lucky to have more liberal court permitting discovery on the bad faith insurance companies.
"The Court of Appeals for the Ninth Circuit noted in Burke v. Pitney Bowes, Inc. Long Term Disability Plan, 554 F.3d 1016 (9th Cir. 2009), that even before Glenn, in the
Ninth Circuit a district court could always “‘consider evidence outside the administrative record to decide the nature, extent, and effect on the decision-making process of any conflict of interest’
Plaintiffs suing under Ninth Circuit are somewhat lucky to have more liberal court permitting discovery on the bad faith insurance companies.
Views of the opposing counsel
It is always useful to understand the viewpoint of the opposing counsel.
DRI - that claims itself to be the "Voice of the Defense Bar" is one such organization.
According to the article at
"The Employee Retirement Income Security Act of 1974 (ERISA) promised to establish a nationally uniform, inexpensive and efficient way to adjudicate and review plan participants’ benefit claims, and to encourage employers to adopt pension and employee welfare benefit plans. According to the United States Supreme Court, ERISA has the “policy of inducing employers to employers or insurance companies) who both decide and pay claims operate under an inherent conflict of interest and, if the plan vests discretion to the administrator, a reviewing court must consider that conflict in deciding if a claim has been denied arbitrarily and capriciously. Although that holding was not a great departure from the law of most federal circuits, language in Glenn opened the door to potentially significant, costly and time-consuming discovery in ERISA litigation that most, if not all, circuits had previously barred. Moreover,
the lower courts’ application of that aspect of Glenn has been far from uniform, leaving
defendants in ERISA benefits actions subject to a wide variety of rules, principles,
and different expectations about the extent of permissible discovery depending on the jurisdiction in which suit is filed.
This article briefly describes how the various circuit courts of appeal—and district courts within those circuits—have applied Glenn with respect to discovery offer benefits by assuring a predictable set of liabilities, under uniform standards of primary conduct and a uniform regime of ultimate remedial orders and awards when a violation occurs."
While the objectives are noble, one should note that implementation has been faulty, to say the least. There are plenty of stories which detail how insurance companies have misused the regulations in the guise of the law. At this blog, we will continue to detail such stories and help promote awareness among the general population of the pitfalls of this regulation.
DRI - that claims itself to be the "Voice of the Defense Bar" is one such organization.
According to the article at
"The Employee Retirement Income Security Act of 1974 (ERISA) promised to establish a nationally uniform, inexpensive and efficient way to adjudicate and review plan participants’ benefit claims, and to encourage employers to adopt pension and employee welfare benefit plans. According to the United States Supreme Court, ERISA has the “policy of inducing employers to employers or insurance companies) who both decide and pay claims operate under an inherent conflict of interest and, if the plan vests discretion to the administrator, a reviewing court must consider that conflict in deciding if a claim has been denied arbitrarily and capriciously. Although that holding was not a great departure from the law of most federal circuits, language in Glenn opened the door to potentially significant, costly and time-consuming discovery in ERISA litigation that most, if not all, circuits had previously barred. Moreover,
the lower courts’ application of that aspect of Glenn has been far from uniform, leaving
defendants in ERISA benefits actions subject to a wide variety of rules, principles,
and different expectations about the extent of permissible discovery depending on the jurisdiction in which suit is filed.
This article briefly describes how the various circuit courts of appeal—and district courts within those circuits—have applied Glenn with respect to discovery offer benefits by assuring a predictable set of liabilities, under uniform standards of primary conduct and a uniform regime of ultimate remedial orders and awards when a violation occurs."
While the objectives are noble, one should note that implementation has been faulty, to say the least. There are plenty of stories which detail how insurance companies have misused the regulations in the guise of the law. At this blog, we will continue to detail such stories and help promote awareness among the general population of the pitfalls of this regulation.
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