Posted By Adam V. Russo on July 9, 2010

In considering the administrative record in ERISA benefits cases, courts this year addressed both what must be included in the administrative record and the admissibility of its contents. In Nally v. Life Insurance Co. of North America, plaintiff argued her deceased husband’s employee benefit plan impermissibly relied on evidence such as police and expert reports that would not be admissible under the Federal Rules of Evidence or the Supreme Court’s decision in Daubert v. Merrell Dow Pharmaceuticals. The Third Circuit held that when the plan gives the plan administrator discretion to construe and interpret the plan, evidence in the administrative record is admissible “for the purpose of determining whether the administrator’s review was arbitrary and capricious.”48 The court further noted that plaintiff failed to point to any legal support for her assertion that a plan administrator deciding a claim for benefits could only consider evidence that would be admissible in a district court proceeding.

Category: 3rd, Exclusion | No Comments »
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Posted By Adam V. Russo on July 9, 2010

In the context of an ERISA claim in which the insurer’s structural conflict of interest was a factor in the court’s analysis, the court concluded the record was insufficient to determine if the insured’s drinking antifreeze was accidental in Catledge v. Aetna Life Insurance Co. The policy excluded loss “caused or contributed to by: an intentional self-inflicted injury” or “use of…intoxicants.” According to the death certificate, corroborated by police reports, the insured died after he “drank antifreeze,” which the coroner called an “accident.” The court criticized Aetna for failing to construe what the decedent’s intent was when he drank antifreeze and concluded Aetna should have sought “to clarify the ambiguous record prior to making a decision on the intertwined questions of whether [the insured] died” of accidental causes.

Category: Claims Procedures, Exclusion, South Carolina | No Comments »
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Posted By Adam V. Russo on July 9, 2010

The court in Munger v. Transguard Insurance Co. of America, Inc. distinguished between a foreseeable event and a foreseeable injury in upholding a denial of an accident claim. The plaintiff, a tractor and trailer operator, sustained injury to his back while performing the duties of his employment, which he had done “hundreds of times” over the years. In affirming Transguard’s claim denial, the court found that regardless of whether the injury was unforeseeable, unexpected, and unintended, in order to satisfy the definition of accident in the policy, the injury must have been caused by an event that was unforeseeable, unexpected, and unintended. The court found plaintiff’s voluntary action while performing his work was the foreseen consequence of an undertaking that resulted in his foreseeable injury, such that his injury was not covered under the policy.

Category: Exclusion, Michigan | No Comments »
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Posted By Adam V. Russo on July 9, 2010

This year’s lone felony/intoxication case raises an interesting question: when is driving under the influence a felony? In Kay-Woods v. Minnesota Life Insurance Co.,13 the insured died in a single-vehicle accident while driving with a revoked license and under the influence of alcohol and cocaine. The policy provided that benefits would not be paid if the death resulted from or was caused directly by commission of a felony. Although the spouse argued the cause of the revoked license was a previous reckless driving conviction, the evidence showed this same reckless driving conviction extended an earlier DUI license revocation. Under Illinois Vehicle Code, driving under the influence of alcohol was a Class felony; therefore, the district court ruled that the felony exclusion applied.

Category: Exclusion, Illinois, Summary Plan Description | No Comments »
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Posted By Adam V. Russo on July 9, 2010

The special administrator of the estate of a deceased employee, who was an ERISA plan participant, brought action against the employee’s former employer for breach of fiduciary duty seeking to recover the amount of the employee’s life insurance coverage before his first medical leave of absence, which lapsed when the employee was terminated without notice. (more…)

Category: 8th, ERISA | No Comments »
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Posted By Adam V. Russo on July 9, 2010

Like Ross, the Ninth Circuit issued a similar ruling in Standard Insurance Co. v. Morrison. Montana requires its commissioner of insurance to disapprove any [insurance] form…if the form…contains…any inconsistent, ambiguous, or misleading clauses or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract… (more…)

Category: 9th, Preemption, Summary Plan Description | No Comments »
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Posted By Adam V. Russo on July 9, 2010

Defendant-appellee Ken Ross is the commissioner of the Michigan Office of Financial and Insurance Services (OFIS). OFIS is responsible for licensing, examining, and supervising insurers and nonprofit health care corporations doing business in Michigan. To this end, OFIS’s authority includes the power to disapprove insurance policy forms and documents associated with such forms that are filed by insurers and nonprofit health care corporations doing business in the state. Under OFIS’s authority to regulate insurance, it promulgated rules, Michigan Administrative Code Rules 500.2201-500.2202 and 550.111-550.112, prohibiting insurers from issuing, delivering, or advertising insurance contracts or policies that contain “discretionary clauses” and providing that any such clause is void and of no effect. The rules took effect June 1, 2007. Given that employee benefit plans established or maintained under ERISA commonly contain discretionary clauses, the rules would prohibit any entity covered by them from “issuing, advertising, or delivering to any person in the State of Michigan, including an employee benefit plan subject to ERISA, an under-written policy or certificate that includes a discretionary clause.” (more…)

Category: 6th, ERISA, Flexible Spending Accounts, Michigan, Preemption, Summary Plan Description | No Comments »
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Posted By Adam V. Russo on July 9, 2010

Juli Pollitt, a federal employee, had health insurance administered by Health Care Service Corp. (HCSC). In July 2007, HCSC stopped paying claims submitted on behalf of Pollitt’s son Michael and began trying to collect from health care providers any payments made on Michael’s behalf since 2003. According to HCSC, it did this because the Department of Labor, which tells HCSC which federal employees have what coverage, instructed HCSC that Pollitt’s coverage was for herself only rather than for herself and her family. According to Pollitt’s complaint in this suit, however, HCSC reached this conclusion on its own because the Department of Labor had failed to pay the appropriate premium into a fund that covers the expense of the medical benefits. Instead of checking with the department or with her, Pollitt’s complaint alleged, HCSC abruptly stopped covering Michael’s medical expenses and made demands for reimbursement that subjected her family to humiliation and expense. Just as abruptly, HCSC changed course in October 2007 and started paying the claims again. But even then, Pollitt asserted, HCSC did not inform medical providers, who continued trying to collect from Pollitt the back payments they thought HCDC was dunning them for. (more…)

Category: 7th, Claims Procedures, Claims Review, Exclusion | No Comments »
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Posted By Adam V. Russo on July 9, 2010

Sandra Chronister was employed as a nurse at Baptist Health in Arkansas. In 1995, she was injured in a car accident, and thereafter sought disability benefits under Baptist Health’s long-term disability plan, which was insured and administered by Unum Life Insurance Co. of America. Unum initially granted her application for disability benefits. At Unum’s urging, Chronister also applied for, and received, social security disability benefits. After twenty-four months, however, Unum informed Chronister that it was terminating her benefits under the “self-reported symptoms” limitation of the plan. Chronister exhausted her administrative remedies and then brought suit. The Eastern District of Arkansas ultimately determined that substantial evidence did not support Unum’s decision to deny Chronister benefits based on the self-reported symptoms limitation. The district court remanded the matter to Unum with directions to reopen the administrative record and make a new determination. (more…)

Category: 8th, Conflict of Interest, MetLife v. Glenn, Standings | No Comments »
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Posted By Adam V. Russo on July 9, 2010

In light of the Supreme Court’s decision in Glenn, the Second Circuit has reassessed its standard of review governing cases that challenge an ERISA plan administrator’s decision to deny disability benefits in cases where the administrator has a conflict of interest because it has the discretionary authority to determine the validity of the employee’s claim and pays the benefits under the policy. In McCauley, the Second Circuit abandoned its prior standard of review, which allowed courts to review de novo the administrator’s decision when it is shown that a conflict of interest actually influenced that decision, and adopted the Glenn standard that such a conflict of interest is to be “weighed as a factor in determining whether there was an abuse of discretion.” (more…)

Category: 2nd, Claims Procedures, Claims Review, Conflict of Interest, MetLife v. Glenn | No Comments »
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Posted By Adam V. Russo on July 9, 2010

This unanimous decision resolved a split in the lower courts over a fact pattern regularly faced by administrators of ERISA plans when an employee and spouse are divorced, but the employee dies before changing the beneficiary designation for benefits. In Kennedy, the Supreme Court held that, notwithstanding the contrary terms of a divorce decree, the former spouse was entitled to receive payment from the plan because the divorce decree could not overcome the express terms of a plan document. (more…)

Category: ERISA, Preemption, Summary Plan Description, Supreme Court | No Comments »
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Posted By Adam V. Russo on July 9, 2010

By Joanne Wojcik of Business Insurance, www.businessinsurance.com

WASHINGTON—Until final mental health parity rules are issued, federal authorities will offer a temporary reprieve to employers that offer different levels of coverage for certain mental health outpatient services.

Because many employers use copayments for medical office visits and coinsurance for all other outpatient medical services, neither one of those types of cost-sharing would have met the “substantially all” test that had been set in the interim final rules that were issued in January and took effect for plan years beginning on or after July 1. (more…)

Category: Mental Health Parity | No Comments »
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Posted By Adam V. Russo on July 9, 2010

By Jerry Geisel of Business Insurance, www.businessinsurance.com

WASHINGTON—Employers that feared a $5 billion federal program to reimburse early retiree health care costs would run out of money before they could even file their application received good news last week.

Guidance issued by Department of Health and Human Services makes clear that eligibility for reimbursement through the Early Retiree Reinsurance Program will be based on when claims are filed and processed. Previously, many employers feared that the determination would be made based on when they filed an application to participate in the program. (more…)

Category: Health Care Legislation, Medicare | No Comments »
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Posted By Adam V. Russo on July 9, 2010

The Wall Street Journal below mirrors everything I have been saying at conferences across the country.  I guess I’m going to have to start calling the Mass health plan a “train wreck” too.

By Joseph Rago of The Wall Street Journal, www.wsj.com  

President Obama said earlier this year that the health-care bill that Congress passed three months ago is “essentially identical” to the Massachusetts universal coverage plan that then-Gov. Mitt Romney signed into law in 2006. No one but Mr. Romney disagrees. (more…)

Category: Health Care Legislation, Massachusetts | No Comments »
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Posted By Adam V. Russo on July 8, 2010

Yesterday I spoke about the legal impacts of health reform on plans, containing costs and protecting plan assets at HealthFirst’s client conference in Tyler, TX.  Click here to see my entire PowerPoint presentation.

Category: Health Care Legislation, Welfare Benefit Plans | No Comments »
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