No shame in struggling

He has a lot of people who love him and there's no shame in struggling because we all have, or will struggle eventually.

That's a response by Warden, EM, the brother of a man apparently (or at least potentially) pulled back from the brink of oblivion by the commenters over at Ace of Spades yesterday, as conveyed in turn by Warden. Their politics, as a rule, diverge from mine with some frequency, but that doesn't matter here. As a group they stepped up yesterday and tossed a lifeline.

As you might imagine, I see great deal of struggling in my law practice, dealing as I do with folks who've had critical insurance benefits denied when they needed them most. Disability benefit claimants and their families struggle to do without the financial lifeline they were led led to believe would be there. Health benefit claimants and their families struggle to persevere in the face of terrifying medical issues bereft of the peace of mind their insurance was supposed to provide. Pension claimants and their families face their dotage under the specter of impoverishment.

And some of them experience shame as a result of their struggles. In the main these are people who have worked hard for many years to earn -- earn -- the benefits which are ultimately denied to them. They are accustomed to, and have earned, self-sufficiency. And they are told when they seek the insurance benefits they have earned that they're goldbrickers, malingerers, frauds. And they must seek help, or suffer in silence.

There's no shortage of shame these days, albeit most often from things far from shame-worthy. Meanwhile there often seems to be no shame at all where it ought to be.

I'm looking at you, ERISA insurance industry.

I am proud of my ERISA clients, as they seek to recoup no more than what they have earned. They do not only help themselves: their struggles sometimes lead to tweaks in an unfair law which might ameliorate the suffering of others in the same way.

We make our meager efforts to help ERISA claimants get the benefit they've earned, and sometimes to facilitate their recoupment of the pride and peace of mind they've earned. Others struggle in a multitude of manners in other arenas. No one -- no one -- makes it through without struggling.

So whatever your struggles may be, there's no reason for shame on that account. Fight the good fight, whatever your fight may be.

Thanks to the folks at Ace of Spades, and to EM and Warden, who remind us all there's no shame in struggling.

BTW, the Ace of Spades Morons (their word, not mine) are very, very witty, and more entertaining commentary is nowhere to be found IMO. And yesterday they just might have saved a life.

"Many might be surprised to learn that defendant has no legal duty to make things right under those circumstances."

This was the observation of U.S. District Court Judge Barbara B. Crabb of the Western District of Wisconsin, in her decision in Kenseth v. Dean Health Plan,. Inc.:

Kenseth v. Dean Health Plans, Inc.

It comes as no surprise, of course, that "no legal duty" means "no duty under ERISA."

What are the circumstances Judge Crabb had in mind? Why, it's just an ERISA health insurer doing what ERISA insurers do: Dean "has refused to provide [Ms. Kenseth] any relief after lulling her into believing that she had coverage for an expensive operation, only to reverse course after the procedure was performed, leaving her with a stack of medical bills."

So Ms. Kenseth is told by Dean Health Care, before undergoing expensive surgery, that the surgery was a covered benefit of her ERISA health plan. Ms. Kenseth undergoes the surgery. Dean says oops! Did we say the surgery was covered? Our bad!

But, of course, not our problem.

Here's the skinny, as described by Judge Crabb:

In 1987, plaintiff had gastric bands placed around her stomach to help her lose weight. Years later she needed to have the bands removed after she began experiencing acid reflux that was damaging her esophagus. By that time, she had changed employers and had a different health plan through defendant. In 2005, she called defendant’s customer service number and was told that her health insurance would cover the procedure. However, after plaintiff underwent surgery, defendant denied plaintiff’s claim under a provision that precluded coverage for procedures related to obesity. The court of appeals concluded that these facts supported a claim for breach of fiduciary duty under ERISA:

The facts support a finding that Dean breached its fiduciary duty to Kenseth by providing her with a summary of her insurance benefits that was less than
clear as to coverage for her surgery, by inviting her to call its customer service
representative with questions about coverage but failing to inform her that whatever the customer service representative told her did not bind Dean, and by failing to advise her what alternative channel she could pursue in order to obtain a definitive determination of coverage in advance of her surgery.

So what Dean did was not only unfair and, to say the least, negligent, but its conduct also constituted a breach of the fiduciary duties an ERISA insurer is expected to fulfill. So what was the problem?

ERISA provides no remedy for the breach of fiduciary duty Dean committed, that's what. Judge Crabb describes the reasons for this finding at length in her opinion, and it is worth a read to see just how absurd the thicket is for those who have been defrauded by their ERISA insurance carriers.

I think Judge Crabb got it wrong, and there are arguments to be made that even under ERISA a remedy should have been available. But she's got plenty of company, probably the majority, in her evaluation of the issues. And I don't have "U.S. District Court Judge" in front of my name.

There's an old legal maxim that for every wrong there is a remedy. As with most other things the usual rules don't apply in an ERISA case. Sure, ERISA defines what Dean did as a wrong -- a breach of its fiduciary duty. But in the absence of any meaningful consequence what incentive does Dean have to live up to its fiduciary obligations?

None.

The Problem, redux

Around the first day of each month I'll be posting a reprise of the first post on this blog, which contains an overview of the Problem. It'll be updated and edited as we go along. But I'd like to have a summary of the Problem available frequently, hence the monthly repeat and update. So off we go...

ERISA is the Employee Retirement Income Security Act, and it is codified in Title 29 of the United States Code, starting with section 1001. It's federal law, enacted in 1974, and it was supposed to protect employees' rights in connection with their pension plans and welfare benefit plans (health, disability, life insurance, that sort of thing). But it doesn't. Quite the contrary.

Way, way to the contrary.

This blog is dedicated to the ERISA problem.

What is that problem? It mainly concerns those welfare benefit plans (ERISA is actually not a bad law with respect to pension plans). Pension plans is what they had in mind when they enacted it -- welfare benefit plans were an afterthought.

And it shows. If your insurance company wrongfully denies your claim, you might figure you can always take them to court. You can do that (usually), but when you get there you'll find things don't make any sense:

If you get your insurance coverage through your employment, then in virtually every case ERISA preempts state law (meaning it cancels it out, eradicates it, takes its place). But, having gutted state law relating to insurance disputes, it fails to provide any reasonable substitute. The remedies it provides (i.e. what you get if you win a lawsuit) are very, very stingy, and in the vast majority of cases a successful claimant is not made whole; not even close. And ERISA severely compromises your ability to secure even the scant remedies it does provide.

1. Remedies. ERISA limits the recovery you might get to the benefits which should have been provided in the first place, and an award on account of attorney fees in the court’s discretion. Example: you have your disability benefits wrongfully denied. As a result, you have no income, your credit rating is trashed, you lose your home and you are driven into bankruptcy. You file your ERISA suit and against the odds, you win. What do you get? The benefits they should have been paying you back when it might have done you some good. That's all (you might -- might -- get something on account of your attorney fees too).

The trashed credit, the lost home, the bankruptcy, the ruined life? Bupkis. ERISA does not allow for any recovery on account of these sorts of consequential damages -- none. And this applies even if the insurance company committed outright fraud when it denied your claim. I find it quite difficult to understand why the insurance industry, uniquely among all industries in America, needs to have immunity from liability for fraud if it is to offer its services at a reasonable price. Anyway, this concern goes beyond making people whole; it also directly impacts the behavior of insurance companies.

As of now we have a situation where the law tells insurers they face no meaningful consequences if they deny care improperly or even commit outright fraud. As one federal judge has commented, "if an HMO wrongly denies a participant's claim even in bad faith, the greatest cost it could face is being compelled to cover the procedure, the very cost it would have faced had it acted in good faith. Any rational HMO will recognize that if it acts in good faith, it will pay for far more procedures than if it acts otherwise, and punitive damages, which might otherwise guard against such profiteering, are no obstacle at all." Insurance companies, of course, are not charities, but corporations; their boards are subject to a fiduciary duty to maximize shareholder value. If it is possible to accomplish this by mistreating insureds, and ERISA says there is no meaningful consequence for that, then it follows that's what insurers will do.


2. Procedure. In ERISA litigation, courts have determined among other things that there is no right to a jury; that discovery (the pre-trial process where you obtain the other side's documents, take depositions and such) is to be significantly abridged; that the evidence which may be introduced at trial is generally limited to that which the insurer unilaterally decided to include within its claim file; and that, when the policy contains language vesting "discretion" in the insurer, if you prove the insurance company was wrong -- you lose. In order to win, you must prove the denial was "arbitrary and capricious" -- that is to say, ridiculous, absurd, unintelligible, crazy. And lo and behold, the insurance companies grant themselves "discretion" when they write their policies. In this way we treat insurance companies as if they were federal judges. But Learned Hand they are not.

The Republicans are gearing up to take a shot at repealing Obamacare. If that happens, then the least we could do is to ensure that those people who are fortunate enough to have insurance at least have some meaningful ability to enforce insurers' promises in court.

But never mind Obamacare; ERISA matters a lot anyway. If you get your insurance through your employment, then -- thanks to ERISA -- consider yourself to be uninsured. If by "insurance" you mean something like an enforceable promise by an insurance company that it will pay for what it says it will, what you have doesn't qualify. What you have is a piece of paper saying some company will pay your claim if it feels like it. You don't have insurance at all -- you only think you do.