Archive for the ‘7th’ Category

In Majeski v. Metropolitan Life Insurance Co., No. 09-1930 (7th Cir. 2009), the plaintiff, Kirsten Majeski, had been employed by Metropolitan Life Insurance Company (”MetLife”), and had participated in MetLife’s Short Term Disability Plan (the “Plan”).

The case centers on the decision of MetLife, as plan administrator, to reject Majeski’s claim for short-term disability benefits, after determining that Majeski had failed to submit enough evidence to support her claim. The district court had likewise rejected Majeski’s claim for the benefits and had granted summary judgment against her. Read more

When it is clear that the tort settlement proceeds are held in a separate account and the plan clearly provides for 100-percent reimbursement, the fact that the plan beneficiary is a minor child will not preclude the plan’s entitlement to reimbursement. The case is Iowa Health System, Inc. v. Graham, 2009 WL 2222780 (C.D. Ill., July 23, 2009). 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

By Stanley D. Baum – Erisalawyerblog.com

In Wetzler v. Illinois CPA Society & Foundation Retirement Income Plan, No. 08-2923 (7th Cir. 2009), the plaintiff, Thomas Wetzler, wanted a lump-sum payment of his entire retirement benefit from the Illinois CPA Society & Foundation Retirement Income Plan (the “Plan”). The Plan is a tax-qualified defined benefit pension plan. The plaintiff was a highly compensated employee. The Plan had always allowed lump-sum payments. However, prior to the plaintiff’s retirement, the Plan had been amended to reflect certain provisions of the Internal Revenue Code (the “Code”) and the underlying Treasury regulations, under which the Plan could not make a lump- sum payment to certain highly compensated employees, such as the plaintiff, when the Plan is not sufficiently funded (the “Amendment”). At the time of the plaintiff’s request for a lump-sum payment, there were not enough assets in the Plan to cover this payment. Therefore, honoring the plaintiff’s request would have caused the Plan to use all of its assets and violate the Code and the underlying Treasury regulations, and to also violate the Plan itself due to the Amendment. Explaining this to the plaintiff, the plan administrator for the Plan (the “Plan Administrator”) refused his request. The plaintiff filed suit in district court, alleging that the Amendment violated the anti-cutback rules of ERISA (found in 29 U.S.C. § 1054(g)) by eliminating a previously available benefit, and that the Plan Administrator acted arbitrarily and capriciously in denying his demands for a lump-sum payment. The district court granted summary judgment in favor of the defendant, and the plaintiff appealed. Read more

From the August 20, 2009 EBIA Weekly[Fischer v. Liberty Life Assurance Co. of Boston, 2009 WL 2366115 (7th Cir. 2009); Raybourne v. Cigna Life Ins. Co. of N.Y., 2009 WL 2392788 (7th Cir. 2009)]

The Seventh Circuit has decided a pair of LTD benefit cases that consider the impact of the U.S. Supreme Court’s Glenn decision. That case held that if an ERISA plan document gives a plan decisionmaker “discretionary” authority to make benefit decisions, those decisions are entitled to deferential review (i.e., they may be overturned by the courts only if they are arbitrary and capricious) even if the decisionmaker has a conflict of interest. The conflict is just one of the factors that must be considered when implementing deferential review. (See our article on Glenn at http://www.ebia.com/WeeklyArchives/ERISA/CourtCases/19423, and articles on other post-Glenn decisions at http://www.ebia.com/WeeklyArchives/ERISA/CourtCases/19769 and http://www.ebia.com/WeeklyArchives/ERISA/CourtCases/19756 (subscription required).) The Seventh Circuit cases summarized below illustrate how different underlying facts affect the Glenn analysis. Read more

The number of cases that apply the Supreme Court’s opinion in Metropolitan Life Insurance Company v. Glenn, 128 S. Ct. 2343 (2008) , when reviewing a decision to deny employee benefits by an administrator with a conflict of interest, continue to grow. The most recent example is Raybourne v. Cigna Life Insurance Company of New York, No. 08-2754 (7th Cir. 2009), where the plaintiff was a participant in his employer’s long-term disability benefits plan. Read more

In Administrative Committee of the Wal-Mart Stores, Inc. v. Gamboa, 479 F.3d 538 (8th Cir. 2007), an ERISA plan administrator brought suit seeking equitable reimbursement from a plan participant who had received a settlement from a tortfeasor. Although the reimbursement provision was contained in an SPD for a health plan, the employer had no formal written health plan. Reversing summary judgment for the participant, the Eighth Circuit held that the plan administrator reasonably construed the SPD to be on the plan document for purposes of a group health plan in the absence of any formal plan and that the reimbursement provision in the SPD was therefore enforceable. Read more

In Eckelberry v. Reliastar Life Insurance Co., 469 F.3d 340, the Fourth Circuit affirmed the insurer’s determination that the decedent’s fatal automobile collision did not qualify as an “accident” as defined under the subject ERISA plan. The insured died after he lost control of his car and collided headlong into the rear of a tractor trailer parked on the side of the road. At the time of the collision, the insured was not wearing his seat belt, and his blood alcohol level was 50 percent higher than the state’s legal limit. For purposes of establishing coverage, the plan defined accident as an “unexpected and sudden event in which the insured does not foresee.” The court determined that absent evidence of an insured’s subjective intent, an “objective analysis” governs whether death was “unexpected” when that term is undefined in accidental death policy. The court found that the circumstances of the insured’s accident were “perfectly consistent with his inebriated state” and noted that “all drivers know, or should know, the dire consequences of drunk driving.” In reaching its decision in favor of the insurer, the court joined what it characterized as “near universal accord that alcohol-related injuries and deaths are not ‘accidental’ under insurance contracts governed by ERISA.”

Read more

Anderson v. Dergance, 2009 U.S. Dist. LEXIS 51593 (N.D. Ill. June 18, 2009)

This ERISA plan reimbursement case applies the Sereboff holding to find in favor of an ERISA plan’s claims to specifically identifiable funds held in an attorney’s trust account following a personal injury settlement. Read more

by Fred Schneyer of PLANSPONSOR, www.plansponsor.com

An Indiana manufacturer has received a mixed ruling from a federal judge in a lawsuit alleging its misdeeds in the handling of its benefits program constituted a fiduciary breach. Read more

Sharon Mondry worked for American Family and sought payment for speech therapy for her son from her self-funded health plan sponsored by American Family and administrated by the CIGNA the TPA. CIGNA denied payment fro Zev Mondry’s speech therapy on the basis that it was educational training and not restorative pursuant to the terms of the Plan Document. After months of trying, Mondry finally obtained all the relevant Plan documents and eventually got CIGNA to reverse its denial and pay the claims. Mondry filed suit alleging that American Family and CIGNA had violated a statutory obligation to produce plan documents and breached their fiduciary duties by misrepresenting the terms of the Plan. Read more

Most lawsuits to recover damages in car accidents are resolved in state courts.  State courts will order that at least a portion of the judgment be deposited into court when it appears that a health plan may have the right to reimbursement.  But can a state court override the right of the health plan to recovery? This issue was addressed in Iowa Health System, Inc. v. Graham, 2008 WL 2959796 (C.D. Ill., July 30, 2008). Read more

TPAs rely heavily on ERISA’s requirements that claimants must exhaust their administrative remedies before going to court, and when they do sue, assuming that the Plan documents grant the claim administrator the appropriate discretionary authority, they must show that the claim administrator abused its discretion when denying their claim, before any court will get to the merits of their allegations.

Few plaintiffs are able to meet these burdens, and so either don’t sue or often get their lawsuits quickly dismissed.  Until recently most courts were not very sympathetic to plaintiffs’ arguments of procedural violations, but things are changing, the most significant development being the Supreme Court’s decision this summer in MetLife v. Glenn. Read more

ERISA preempted an Illinois state law outlawing any claim on a workers’ compensation award, because the law related to benefits plans regulated by ERISA, a federal trial court decided. As a result, an employer may seek reimbursement of group health plan funds from workers’ compensation awards. The health plan paid the expenses before a determination was made that the claims were work related. The court determined that the settlements included reimbursement for health expenses that were paid by the plan. At least one of the awards was worded to assert that it was not a payment for health benefits, but the judge said that was an effort to stop a recovery attempt. Read more

In the case of Franciscan Skemp Healthcare, Inc. v. Central States Joint Board Health & Welfare Trust Fund No. 07-3456 (7th Cir.)(July 31, 2008), the Seventh Circuit Court of Appeals determined that when a party files a pure state law claim against an ERISA plan, preemption to Federal Court is improper. Read more