Archive for the ‘6th’ Category

In Hall v. Liberty Life Assurance Company, No.s 08-4738/4739 (6th Cir. 2010), the plaintiff, . Sonya Hall, had received long-term disability benefits (the “LTD Benefits) for nearly five years through the National City Corporation Welfare Benefits Plan (the “Plan”). Liberty Life Assurance Company of Boston (”Liberty Life”), the third-party claims administrator, terminated the LTD Benefits when it determined that Hall was no longer totally disabled. The Plan then sought reimbursement for overpayment of the LTD Benefits, caused by retroactive Social Security benefits being awarded to Hall. Hall responded by filing suit against the Plan. Read more

MyHealthGuide Source: Meredith Z. Maresca, BNA’s Pension & Benefits Daily, 1/27/2010, www.bna.com

In a decision addressing identification of the proper defendant in a benefit claim action brought pursuant to the ERISA’s civil enforcement provision, the U.S. District Court for the Southern District of Ohio held that the health plan’s TPA potentially could be liable for the alleged wrongful denial of benefits to cover a beneficiary’s bone cancer treatment. Read more

Sixth Circuit Court of Appeals, No. 04-4067, March 21, 2006

The Sixth Circuit Court of Appeals reversed a district court’s order that a health benefit plan must pay a hospital the full amount billed for services rendered to a plan beneficiary, and remanded for further proceedings.

A beneficiary of South Lorain Merchants Assn. Health & Welfare Benefit Plan and Trust (the “Plan”) was admitted to University Hospital of Cleveland (“UHC”) in 2000. For services rendered, UHC sent a bill in the amount of $195,000 to the Plan. Without notifying UHC, the Plan audited the bill and provided payment in the amount of $107,000, a reflection of both a $49,000 preferred provider network discount (“Discount”) and the audit’s finding that the charges exceeded the usual, customary and reasonable (“UCR”) amount for such services by $39,000. Read more

The law in many states provides that reimbursement to a plan from tort settlements or judgments will not be allowed unless the plan participant is “made whole.” Certainly, the plan participant is not made whole if the settlement or judgment is less than the amount of benefits paid. But even if the settlement or judgment id greater than the amount of benefits paid by the plan, the plan participant may not be made whole by it. Sometimes, it’s hard to draw a clear line to determine when a plan participant is or is not made whole. Read more

Plan’s subrogation and reimbursement language may actually thwart their ability to recover from tort settlement proceeds benefits they paid. It is important for plan language to ensure that its recovery claim is limited to settlement proceeds. In one such case, a health plan did not identify a particular fund from which the reimbursement should be paid and it failed to say that the recovery was limited to third-party settlement proceeds. Because of the imprecise drafting, the court could assume the plan was trying to recover from the plan participant’s general assets. That created the possibility that a member could receive a recovery from a third party that was less than the benefit paid by the plan but would still have to repay the plan in full. As a result, the court found it impossible to award the recovery. Read more

Please see the following 6th Circuit Decision brought to our attention by Daran P. Keifer, Esq. of Kreiner & Peters Co. L.P.A.  The decision highlights that funds do not need to be maintained in order for a plan to seek reimbursement and that the Plaintiff attorney is personally liable for the percentage of reimbursement equal to his attorney fees.

6th Circuit Decision

From The Bench – The Self-Insurer Volume 26* August 2009

By John H. Eggertsen, Esq. and Michael Friedman, Esq.

After the U.S. Supreme Court’s recent decision in Metropolitan Life Ins. Co. v. Glenn ___ U.S.___, 128 S. Ct. 2343 (2008), many circuit courts have been applying a magnifying glass to their prior standard of review decisions, and making whatever adjustments they feel are necessary in light of this most recent guidance. We have discussed some of those cases in the past, and may do so again if circumstances warrant. In this discussion, however, we turn to a notable trend that had been emerging pre-Glenn, is continuing unabated and may be accelerating post-Glenn – that trend is the tendency of the courts to examine in greater detail the actual evidence on which claims determinations are based and the administrators’ rationales for making their determinations based on that evidence. Even under an arbitrary and capricious standard of review, generally held to be the most deferential standard, the courts are more willing to take the administrators’ word at face value. In addition, courts are scrutinizing claim determinations with an eye towards ERISA’s procedural requirements, and striking down those that fail to comply. The two cases discussed here are clear evidence of both these trends. Read more

by B. Janell Grenier, The Fiduciary Guidebook, www.fiduciaryguidebook.com

One of the key aspects of determining whether ERISA fiduciary law applies has to do with whether the benefit plan at issue is an ERISA-covered plan. ERISA provides an exemption from its applicability under 29 C.F.R. Section 2510.3-1(j) for certain “group or group-type insurance programs.” If a plan meets all four requirements of this exemption, then the plan is not an ERISA-covered plan, but will be governed by state law. Read more

In Wenner v. Sun Life Assurance Co. of Canada, 482 F.3d 878 (6th Cir. 2007), the Sixth Circuit found that Sun Life’s failure to give plaintiff an opportunity to appeal the new grounds for its termination of his benefits violated ERISA’s notice requirements. The insurer initially terminated plaintiff’s benefits because he failed to provide requested medical information; on appeal, it upheld its decision on entirely different grounds. The court held that Sun Life failed to provide a full and fair review of the decision denying the claim, as required by ERISA, when it refused to allow plaintiff a second appeal. In considering the appropriate remedy, the court reasoned that because Sun Life previously determined plaintiff was entitled to benefits, he should not be denied those benefits until his insurer complied with ERISA. Accordingly, the court affirmed the reinstatement of plaintiff’s benefits.

In Bond v. Ecolab, Inc., 2007 WL 551595 (E.D. Mich. Feb. 21, 2007, an ERISA plan participant died while engaging in autoerotic asphyxiation. The police and medical examiners concluded that the participant’s death was accidental. The plan’s claims administrator, MetLife, denied the beneficiary’s claim for benefits based on the plan’s exclusion for self-inflicted injuries. In entering judgment in favor of defendants, the district court rejected plaintiff’s argument that the death certificate’s identification of the manner of death as accidental was controlling and held that MetLife’s decision to deny benefits was not arbitrary and capricious because MetLife’s determination that the participant’s intentional disruption of oxygen to his brain was a self-inflicted injury and was not unreasonable in light of the plan’s language.

by John Wood of ERISA and Disability Benefits Law Blog, www.erisaontheweb.com

Sherry DeLisle continued working after her car crashes in 1998 and 2000. She suffered spinal and closed head injuries. Her employer, Krandall & Sons, fired her on April 17, 2002, stating that “she was not doing her job.” Eight months later, DeLisle filed for long-term disability benefits with Sun Life, the insurer of Krandall’s disability plan. She submitted medical records and statements of five treating physicians. She listed April 17, 2002, as her date of disability. Read more

In American Council of Life Insurers v. Ross, case, 2009 U.S. App. LEXIS 5748,F.3d (6th Cir. 2009), the Sixth Circuit held that a Michigan law prohibiting insurers from including discretionary language in insurance policies fell within the scope of ERISA preemption “savings clause” and was therefore enforceable. The court relied on the Supreme Court’s Miller decision, which articulated a new test for determining whether a state law “regulates insurance” and is, therefore, saved from ERISA preemption. Applying the Miller test, the Sixth Circuit held that this particular law regulated insurance because it directly controlled the terms of insurance contracts by prohibiting insurers and insureds from entering into contracts having discretionary language.The case is particularly noteworthy because the court cites the Glenn case in support of its decision that the state law should not be preempted. The Court stated that Glenn provides further support for holding that Michigan’s law is not preempted by ERISA. The Court reiterated that a conflict of interest exists when the same insurer is responsible for examining and paying a benefits claim. Read more

In International Coal Group, Inc. v. Pennington, 2009 WL 321038 (E.D. Ky., Feb 9, 2009), another U.S. district court in Kentucky did not consider the state law in question and ruled in the plan’s favor.

Dorothy Pennington was injured in an automobile accident and was covered under her husband’s self-funded group health plan provided through his employer, International Coal Group (ICG). The plan paid $41,800 for her medical care and she settled her claims for $225,000. Read more

There are many situations where a state has a provision that appears to require a plan to intervene in a tort claim lawsuit to protect its right to subrogation or reimbursement. Does the plan lose its right to seek reimbursement in federal court if it did not intervene in the state lawsuit brought by the plan participant? Normally, that issue is not raised, but it was considered by a U.S. district court in Kentucky, which initially ruled against the plan. The case is Humana Health Plans, Inc. v. Powell, 2008 WL 5096055 (W.D. Ky., Dec 1, 2008). Read more

Since the Glenn decision, a number of circuits have had an opportunity to consider and apply the Glenn Court’s reassessment of ERISA’s standard of review.Roumeliote v. LTD Plan for Employees of Worthington Industries, 298 Fed. Appx. 472 (6th Cir. 9/11/2008).

This was the first circuit to apply Glenn since Glenn was a Sixth Circuit decision and the Sixth Circuit’s determination in that case was affirmed by the Supreme Court. The Sixth Circuit affirmed the district court’s decision that the claim administrator’s denial of benefits was not arbitrary. Read more