tag:blogger.com,1999:blog-6949672159786443812024-03-05T17:42:33.203-08:00The Problem is ERISA<p>Proudly published by the <a href="http://www.ERISAClaimsAttorney.com">Johnston Law Office</a>.</p>
<p>ERISA is the federal law governing employee benefits, like your health insurance. If you get your insurance through your employment, and if you think "insurance" is an enforceable contract that the insurer will cover what it says it will, then you don't have insurance at all -- you only think you do.</p>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.comBlogger112125tag:blogger.com,1999:blog-694967215978644381.post-75829299999004627282016-12-31T14:11:00.000-08:002016-12-31T14:11:02.428-08:00A whole year's worth in one postSo the break from blogging has extended far longer than originally planned. Lest an entire calendar year pass without a post, let me lust say on New Year's Eve that ERISA remains a problem for those who have insurance and pension claims wrongfully denied. The good news is that things are marginally, slightly better than they used to be, thanks to things such as advances in legal doctrine and state prohibitions of discretionary clauses. And, most of all, the tireless work of my colleagues across the country, and their clients who are willing to fight back and try to set things right for themselves and others who find themselves caught in ERISA’s snares.<br />
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I am going to get back in the saddle too with this little blog, and get caught up in 2017. The things that have kept me away are starting to resolve, and as always I shall try to make the future better than the past.<br />
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Happy New Year to all.<br />
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Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com1tag:blogger.com,1999:blog-694967215978644381.post-2985838697271639502015-01-12T11:13:00.000-08:002015-01-16T12:13:16.562-08:00ERISA insurers subject to punitive damages? Yes, says New York federal court<div class="tr_bq">
<span style="font-family: Georgia, Times New Roman, serif;">Not much time today, and I'll follow up on this later on, but this is a potentially big deal (indeed it will be a <i>very </i>big deal if it catches on).</span></div>
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Back in 2011 the Supreme Court <a href="http://problemiserisa.blogspot.com/2011/05/news-claimants-prevail-before-supreme.html">opened the door</a> to the possibility of aggrieved ERISA claimants seeking "make-whole" relief for breaches of duty by their ERISA "insurers," as compared to the regime in place up to that time, which allowed for <a href="http://problemiserisa.blogspot.com/2009/08/theres-no-remedy-if-your-insurance.html">extraordinary stingy recoveries</a> which <a href="http://problemiserisa.blogspot.com/2009/09/erisa-wants-your-claim-to-be-denied_03.html">didn't impact the insurers' behavior</a> in the least.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">We've slowly been making inroads here, and recently in a case of mine the U.S. District Court for the Northern District of California held a compensatory, consequential-damages recovery, <a href="http://scholar.google.com/scholar_case?case=10044437255585760239&q=Zisk+Gannett&hl=en&as_sdt=4,323">a "surcharge" in ERISA parlance</a>, might be available in an appropriate case.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Then, the day after Christmas, the Eastern District of New York issued a decision which, with any luck, will be the first in a series of cases to hold that, at long last, punitive damages might be available against "insurers" who commit fraud as part of their business plan. <a href="http://scholar.google.com/scholar_case?case=2141836777846988419&q=D%27Iorio&hl=en&as_sdt=4,349">This</a> is from <i>D'iorio v.</i> <i><span style="background-color: white; color: #222222; text-align: -webkit-center;">Winebow, Inc.</span></i></span>:<br />
<i><span style="background-color: white; color: #222222; text-align: -webkit-center;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></i>
<br />
<blockquote style="background-color: white; color: #222222; font-size: 15.4545450210571px; line-height: 20.4545440673828px; position: relative;">
<span style="font-family: Georgia, Times New Roman, serif;">However, the Supreme Court in Cigna suggested that "surcharge" was a remedy intended to provide all manner of compensatory damages to a plaintiff at equity and was not, as the Defendant contends, limited to a "make-whole remedy" — "[e]quity courts possessed the power to provide relief in the form of monetary `compensation' for a loss resulting from a trustee's breach of duty, or to prevent the trustee's unjust enrichment." <a href="http://scholar.google.com/scholar_case?case=7729142518451217686&q=D%27Iorio&hl=en&as_sdt=4,349" style="color: #660099;"><i>CIGNA Corp. v. Amara,</i> 131 S. Ct. 1866, 1880, 179 L. Ed. 2d 843 (2011)</a> (citation omitted). Indeed, the sources relied on by the Supreme Court also suggest that equity courts awarded compensatory damages to plaintiffs for losses that may have occurred beyond restitution. For example the Restatement (Third) of Trusts, which the Supreme Court relied on, states, "[i]f a breach of trust causes a loss . . . the beneficiaries are entitled to restitution and may have the trustee surcharged for the amount necessary to compensate fully for the consequences of the breach." Restatement (Third) of Trusts § 95 (2012) (emphasis added); see also G. Bogert & G. Bogert, Trusts and Trustees § 862 ("In suits to collect money from a trustee for breach of trust, the direct damages will usually be measured by the difference between the value of the beneficiary's rights to principal and income before and after the breach, but consequential damages may also be awarded, and exemplary or punitive damages may be awarded where malice or fraud is involved.") (emphasis added); John H. Langbein, <i>What ERISA Means by "Equitable": The Supreme Court's Trail of Error in Russell, Mertens, and Great-West,</i> 103 Colum. L. Rev. 1317, 1337 (2003) ("Cases awarding money damages for consequential injury, either to the trust or to the beneficiary, exist in profusion in trust remedy law.").</span></blockquote>
<blockquote class="tr_bq">
<span style="background-color: white; color: #222222; font-family: Georgia, 'Times New Roman', serif; font-size: 15.4545450210571px; line-height: 20.4545440673828px;">Therefore, the Court concludes that, as a matter of law, the Plaintiff is entitled under a surcharge theory to consequential damages, exemplary, or punitive damages in limited circumstances where malice or fraud is involved. Cf.</span><span style="background-color: white; color: #222222; font-family: Georgia, 'Times New Roman', serif; font-size: 15.4545450210571px; line-height: 20.4545440673828px;"> </span><a href="http://scholar.google.com/scholar_case?case=12394750249118400454&q=D%27Iorio&hl=en&as_sdt=4,349" style="background-color: white; color: #660099; font-family: Georgia, 'Times New Roman', serif; font-size: 15.4545450210571px; line-height: 20.4545440673828px;"><i>McCravy v. Metro. Life Ins. Co., 690 F.3d 176, 181 (4th Cir. 2012)</i></a><span style="background-color: white; color: #222222; font-family: Georgia, 'Times New Roman', serif; font-size: 15.4545450210571px; line-height: 20.4545440673828px;"> </span><span style="background-color: white; color: #222222; font-family: Georgia, 'Times New Roman', serif; font-size: 15.4545450210571px; line-height: 20.4545440673828px;">("We therefore agree with [the plaintiff] that her potential recovery in this case is not limited, as a matter of law, to a premium refund.").</span></blockquote>
<br />
Punitive damages in an ERISA case? We have not dared to even dream of such things. If this takes hold then at long last ERISA "insurers" will have to start behaving themselves -- or face some real consequences if they don't.<br />
<br />
<object data="https://clients4.google.com/voice/embed/webCallButton" height="85" type="application/x-shockwave-flash" width="230"><param name="movie" value="https://clients4.google.com/voice/embed/webCallButton" /><param name="wmode" value="transparent" /><param name="FlashVars" value="id=57d91c5713fb8479b79fec7bf570dc9a75836890&style=0" /></object>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com1tag:blogger.com,1999:blog-694967215978644381.post-924821967109024582014-08-29T10:14:00.003-07:002014-08-29T11:58:12.344-07:00Baby Steps: Two Recent Court of Appeal Decisions Move Deferential Judicial Analysis in the Right Direction<h3 class="post-title entry-title">
<span style="font-weight: normal;"><span style="font-family: Georgia, Times New Roman, serif; font-size: small;">
I used to tell clients that, if their case is subject to ERISA’s absurd
abuse-of-discretion, insurer-can’t-lose burden of proof (I refuse to call it
“standard of review” as many do, ‘cause that’s <a href="http://problemiserisa.blogspot.com/2009/09/how-we-got-here-abuse-of-discretion_15.html">bogus
IMO</a>) they need to win the ball game 10-0; if they only win 9-1 then they
lose. That’s because many courts effectively held that no matter how strongly
the evidence supported the claimant, if the insurer could point to even one
flimsy piece of evidence in its favor, that’s good enough for the insurer to
prevail.</span></span><br />
<span style="font-weight: normal;"><span style="font-family: Georgia, Times New Roman, serif; font-size: small;"><br /></span></span>
<span style="font-weight: normal;"><span style="font-family: Georgia, Times New Roman, serif; font-size: small;">
Which is, of course, <a href="http://problemiserisa.blogspot.com/2009/08/your-new-car.html">absurd</a>.</span></span><br />
<span style="font-weight: normal;"><span style="font-family: Georgia, Times New Roman, serif; font-size: small;"><br />
Two courts of appeal, however, have now issued opinions which indicate that,
maybe just maybe, my clients will only need to win the game 9-1 (or, dare I
hope, maybe even 8-2) in order to overcome the abuse-of-discretion burden.</span></span><br />
<span style="font-weight: normal;"><span style="font-family: Georgia, Times New Roman, serif; font-size: small;"><br />
First, the Ninth Circuit, in <em><a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2014/08/20/12-55210.pdf">Pacific
Shores Hospital v. United Behavioral Health et al.</a></em>, addressed the
canard that an insurer’s decision just has to be upheld if it supported by
<em>any</em> reasonable basis, and said that no longer holds water:</span></span></h3>
<div>
<blockquote class="tr_bq">
We wrote twenty-three years ago in <i>Horan v. Kaiser Steel </i><i>Retirement Plan,</i> 947 F.2d 1412 (9th Cir. 1991), that we will uphold a plan administrator’s decision if it is grounded in “<i>any</i> reasonable basis.” <i>Id.</i> at 1417 (internal quotation marks omitted); see also <i>Sznewajs v. U.S. Bancorp Amended & </i><i>Restated Supplemental Benefits Plan,</i> 572 F.3d 727, 734–35 (9th Cir. 2009). This language in <i>Horan</i> could be read to mean that we should make an “any reasonable basis” determination without looking at all the circumstances of the case. To take a simple example, factors favoring discharge from the hospital might provide reasonable bases if considered in isolation. A patient might be eating well, have proper blood sugar levels, have no infections, and have a supportive family. Those factors, considered in isolation, would support discharge. But if the reason for the patient’s hospitalization is severe congestive heart failure, those factors would not be reasonable bases to support discharge. In the wake of <i>Glenn,</i> we have recognized that this unrealistic reading of the any-reasonable-basis test is not “good law when . . . an administrator operates under a structural conflict of interest.” <i>Salomaa v. Honda Long Term Disability Plan, </i>642 F.3d 666, 674 (9th Cir. 2011). It is also not “good law” even when an administrator is not operating under a conflict of interest and we are performing a “straightforward abuse of discretion analysis.” See <i>Abatie,</i> 458 F.3d at 968; <i>cf. Conkright v. Frommert,</i> 559 U.S. 506, 521 (2010) (“Applying a deferential standard of review does not mean that the plan administrator will prevail on the merits. It means only that the plan administrator’s interpretation will not be disturbed if reasonable.” (internal quotation marks omitted)). In all abuse-of-discretion review, whether or not an administrator’s conflict of interest is a factor, a reviewing court should consider “all the circumstances before it,” <i>Abatie,</i> 458 F.3d at 968, in assessing a denial of benefits under an ERISA plan.</blockquote>
</div>
<span style="font-family: Georgia, Times New Roman, serif; font-size: small;">That’s better, at least a little bit better.</span><br />
<span style="font-family: Georgia, Times New Roman, serif; font-size: small;"><br />
Then, the Sixth Circuit issued <a href="http://www.ca6.uscourts.gov/opinions.pdf/14a0200p-06.pdf"><em>Butler v.
United Healthcare</em></a>, and addressed United’s argument, which we see all
the time, that its denial of benefits could not possibly have been an abuse of
discretion because it had <a href="http://problemiserisa.blogspot.com/2009/11/independent-medical-exams-and.html">paid
several doctors</a> to opine that the medical care in question wasn’t medically
necessary. The court held that just because you can gin up a few pieces of
evidence by paying some doctor to say what you want them to say, you might still
lose:</span><br />
<div>
<blockquote class="tr_bq">
United adds that the decision to deny benefits cannot be arbitrary and capricious because five reviewing physicians agreed with it. That reviewing physicians paid by or contracted with the insurer agree with its decision, though, does not prove that the insurer reached a reasoned decision supported by substantial evidence. The physicians’ opinions carry weight only to the extent they provide a fair opinion applying the standard for granting benefits to the facts of the case. <i>Elliott,</i> 473 F.3d at 619. The reviewing physicians did not do that. They misstated or omitted the key fact of Janie’s prior failed outpatient treatment and ignored United’s guideline<br />
that allowed residential rehabilitation where outpatient treatment had not worked in the past. This argument, too, proves too much. If a decision to deny benefits could never be arbitrary and<br />
capricious when backed by the insurer’s reviewing physicians, court review would be for naught. The insurer would invariably prevail so long as the insurer had physicians on its staff willing to confirm its coverage rulings. That also does not make sense.</blockquote>
</div>
<div>
<span style="font-family: Georgia, Times New Roman, serif; font-size: small;">Again, baby steps. But they represent a movement from insurer-can’t-lose to
insurer-might-just-possibly-lose-once-in-awhile, and that’s a good thing. Of
course, that still doesn’t explain why an insurer shouldn’t lose if it’s just,
you know, <a href="http://problemiserisa.blogspot.com/2009/09/basic-primer-on-denovo-versus-abuse-of.html">wrong</a>.</span></div>
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<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-70215857682249089192014-07-21T12:17:00.001-07:002014-07-21T12:17:23.653-07:00Eighth Circuit: “Discretion” means insurers can retroactively change policy terms to defeat coverage<span style="font-family: Georgia, Times New Roman, serif;">The Eighth Circuit today issued <a href="http://media.ca8.uscourts.gov/opndir/14/07/132559P.pdf">Kutten v. Sun Life Assurance Co. of Canada,</a>an ERISA disability case about whether a pre-existing-condition exclusion in Sun Life’s disability policy precluded Mr. Kutten from receiving benefits he would otherwise have realized. Under the Sun LIfe policy, Mr. Kutten was eligible for the benefits. Under the <strike>re-writing</strike> interpretation offered by Sun Life and approved by the Eighth Circuit, not so much.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Mr. Kutten was diagnosed with <a href="http://http//www.ncbi.nlm.nih.gov/pubmedhealth/PMH0002024/">retinitis pigmentosa</a> (RP) in 1994, and at his doctor’s suggestion took a <a href="http://www.nlm.nih.gov/medlineplus/ency/article/002400.htm">Vitamin A</a> supplement, over-the-counter, no prescription required, which, it was thought,might slow the disease’s progression. The RP eventually forced him to stop working in September 2010. Sun Life’s ERISA “insurance” policy, which had become effective starting in June 2010, had an exclusion for pre-existing conditions, contractually defined as “during the 3 months prior to the Employee’s Effective Date of Insurance the Employee received medical treatment, care or services, including diagnostic measures, or took prescribed drugs or medicines for the disabling condition.”</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">The only thing Mr. Kutten did for his RP in the three months prior to his Effective Date of Insurance was to take these vitamin A supplements. Sun Life, of course, said this so-called “medical treatment” meant his condition was pre-existing.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Sun Life had a problem here, though. The contract said a pre-existing condition was one for which “medical treatment” <em>or</em> “drugs or medicines” were received during the critical three-month period. But a <a href="http://http//www.quackwatch.org/02ConsumerProtection/kessler.html">stinking vitamin supplement</a> isn’t a drug or medicine, and if it’s going to count as “medical treatment” then, necessarily, so would any actual drug or medicine, and that interpretation means the entirely distinct reference to “drugs or medicines” is utterly meaningless. The court described the argument thusly:</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<blockquote class="tr_bq">
<span style="font-family: Georgia, Times New Roman, serif;">Kutten urges us to adopt the district court’s rationale, that because the Pre-Existing Condition clause separates “medical treatment” from “prescribed drugs or medicines” with the conjunction “or,” Sun Life intended to exclude all “drugs or medicines” from the phrase “medical treatment.” Kutten argues if “prescribed drugs or medicines” are excluded from the phrase “medical treatment,” then vitamin A supplements must be excluded from the phrase as well because vitamin supplements require even less medical intervention than “prescribed drugs or medicines.” To construe the phrase “medical treatment” to include vitamin supplements but exclude “prescribed drugs or medicines” would create an internal inconsistency in the Pre-Existing Condition clause, and to construe the phrase “medical treatment” as broad enough to encompass both “prescribed drugs or medicines” and vitamin supplements would render the phrase “prescribed drugs or medicines” meaningless.</span></blockquote>
<span style="font-family: Georgia, Times New Roman, serif;">That’s pretty persuasive stuff; one of the most basic rules if you’re interpreting a contract is that you don’t adopt an interpretation which would render one or more words or phrases meaningless – if at all possible every word should have some meaning and some effect.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Unfortunately for Mr. Kutten, Sun Life had <a href="http://problemiserisa.blogspot.com/2009/09/how-we-got-here-abuse-of-discretion_15.html">conferred discretion upon itself</a> when it issued its policy, and we know what that means. As the Eight Circuit allowed, the exclusion did not “neatly fit Kutten’s course of treatment,” but hey, where an ERISA “insurer” has “offered a reasonable interpretation of disputed provisions, courts may not replace it with an interpretation of their own.” (Internal punctuation and citations omitted). We certainly can’t have courts interpreting contracts, after all.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">
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<br />Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com2tag:blogger.com,1999:blog-694967215978644381.post-45208745195950374842014-06-25T12:31:00.000-07:002014-06-25T12:31:06.021-07:00Score one for our side: Supremes get it right in Fifth Third Bancorp<span style="font-family: Georgia, Times New Roman, serif;">It’s not very often we get a favorable decision from the Supreme Court these days, particularly a unanimous one, but that happened today in <a href="http://www.supremecourt.gov/opinions/13pdf/12-751_d18e.pdf"><i>Fifth Third Bancorp v. Dudenhoffer</i></a>. This ERISA pension case involved ESOPs – Employee Stock Ownership Programs – and something called a “presumption of prudence” a lot of courts were invoking. Not unlike the <a href="http://problemiserisa.blogspot.com/search/label/Abuse%20of%20Discretion">absurd deferential level of analysis</a> applied in the majority of ERISA benefits cases, the presumption was a big thumb on the scale in favor of pension plan administrators who bought and held stock in their own company while it went down in flames, gutting the retirement security of the company’s pensioners.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">In a nutshell (if it isn’t already too late for that) ERISA imposes a duty of prudence on all ERISA administrators, which essentially requires that they behave like a reasonably prudent person would under the circumstances. The “presumption of prudence” posited that, in buying and holding their own company’s stock for their ESOP plans, administrators were presumed to act prudently, and you had to move heaven and earth to overcome the presumption. The Supremes today said that the ERISA statute requires prudence, and just because an ESOP is involved doesn’t mean we change the rules. The ruling, however, promises to have effects on all sorts of ERISA claims and ERISA fiduciaries, as suggested by this:</span><br />
<blockquote>
<span style="font-family: Georgia, Times New Roman, serif;">Consider the statute’s requirement that fiduciaries act “in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this subchapter.” [Citation omitted]. This provision makes clear that the duty of prudence trumps the instructions of a plan document such as an instruction to invest exclusively in employer stock even if financial goals demand the contrary. See also §1110(a) (With irrelevant exceptions, “any provision in an agreement or instrument which purports to relieve a fiduciary from responsibility . . . for any . . . duty under this part shall be void as against public policy”). This rule would make little sense if, as petitioners argue, the duty of prudence is defined by the aims of the particular plan as set out in the plan documents, since in that case the duty of prudence could never conflict with a plan document.</span></blockquote>
<span style="font-family: Georgia, Times New Roman, serif;">And this: </span><br />
<blockquote>
<span style="font-family: Georgia, Times New Roman, serif;">[Fifth Third’s] argument fails, however, in light of this Court’s holding that, by contrast to the rule at common law, “trust documents cannot excuse trustees from their duties under ERISA.” <em><a href="http://scholar.google.com/scholar_case?q=472+U.S.+559&hl=en&as_sdt=4,60&case=16392182180312055176&scilh=0">Central States, Southeast & Southwest Areas Pension Fund</a>,</em> 472 U. S., at 568; see also 29 U. S. C. §§1104(a)(1)(D), 1110(a).</span></blockquote>
<span style="font-family: Georgia, Times New Roman, serif;">Now, in English: the ERISA statute applies to all ERISA fiduciaries, and they are required to comply with it, and they can’t get around that with some phoney-baloney provision in a plan document (which they themselves usually draft in the first place) providing otherwise. It’s a rather sad commentary that a Supreme Court decision requiring these people to, you know, obey the law seems so earthshaking, but there you go. </span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">We’ll see how this one plays out.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
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Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-32354253002555681952014-06-24T16:01:00.000-07:002014-06-24T16:07:30.622-07:00Judge Acker: the hits just keep on coming<span style="font-family: Georgia, Times New Roman, serif;">Somewhere in judicial heaven there has to be an abundant bounty set aside for U.S. District Judge William M. Acker, Jr., whose work we've enjoyed <a href="http://problemiserisa.blogspot.com/2013/08/more-on-remands-and-another-selection.html">many,</a> <a href="http://problemiserisa.blogspot.com/2010/09/rising-judicial-chorus-goes-to.html">many,</a> times before. His latest single to go platinum for the <a href="http://problemiserisa.blogspot.com/search/label/Judicial%20Chorus">Rising Judicial Chorus</a> is a little number we like to call <a href="http://scholar.google.com/scholar_case?case=8334669184164330112&hl=en&as_sdt=2006">Criss v. Union Security Insurance Company</a>, released just this year. Time to stand aside and let the lead singer have the stage:</span><br />
<div class="co_paragraph" style="border: 0px; color: #252525; line-height: 20.99250030517578px; margin: 0px; padding: 0px;">
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<span style="font-size: x-small;">This court devoutly wishes that the Supreme Court of the United States had not blindly stumbled off on the wrong foot and in the wrong direction when it handed down <em><a href="http://scholar.google.com/scholar_case?q=489+U.S.+101&hl=en&as_sdt=2006&case=9179563281887824402&scilh=0">Firestone Tire & Rubber Co. v. Bruch</a>,</em> 49 U.S. 101 (1989), the case in which it invented a strange quasi-administrative regime for court review of denials of ERISA benefits claims. It inexplicably substituted a procedure borrowed from administrative law for the clear congressional mandate that the filing of a “civil action” (a simple, straight-forward, garden-variety suit for breach of contract) is the only means for challenging such denial decisions. In the <em>amicus curiae</em> brief filed by the Solicitor General in <em>Bruch,</em>he did his best to keep the Supreme Court from wandering off track and ignoring Congress. The Solicitor General, who was representing both Congress and the persons whom Congress intended to benefit from ERISA, failed to talk the Supreme Court out of its misguided step, a misstep that has led to a series of further judicial glosses, distillations, penumbras, and emanations, eventuating in the sad state of affairs now faced by ERISA claimants and by the courts who have to deal with ERISA benefits claims.</span></blockquote>
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<span style="font-size: x-small;">If Congress itself had enacted the weird scheme created by the <em>Bruch</em> court out of whole cloth, ERISA would have been promptly and successfully attacked for its patent unconstitutionality as a violation of “due process”. A quick application of the universally recognized legal maxim, <em>nemo judex in causa sua,</em> would have kept any such statute off the statute books. Chief Justice Sir Edward Coke in <em><a href="http://oll.libertyfund.org/titles/911#lf0462-01_head_091">Dr. Bonham's Case</a>,</em> 8 Co. Rep. 107a, 77 Eng. Rep. 638 (C.P.1610), carved in granite for all time this fundamental jurisprudential principle when he said, using the vernacular: “No man should be a judge in his own case.”</span></blockquote>
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<span style="font-size: x-small;">The justices of the Supreme Court, including some who decided <em>Bruch,</em> routinely recuse themselves when there is even the slightest hint of any possible self-interest by the recusing justice. And yet, today, clearly conflicted ERISA plan administrators and insurers, when granted by the plan document that they drafted full discretion to interpret their plans and to decide the ultimate issue of entitlement, are routinely allowed, even required, to rule on their own cases. Not surprisingly, this court has not found a single case in which an insurance company has recused itself in an ERISA case under the rule of <em>nemo judex in causa sua.</em> There is no scheme remotely like the one created by<em>Bruch</em> in the annals of Anglo–American jurisprudence. Chief Justice Coke is uncomfortable in his crypt.</span></blockquote>
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<span style="font-family: Georgia, Times New Roman, serif;">Justice Coke <a href="http://problemiserisa.blogspot.com/2010/10/buy-vowel-ersa-nsurers-le-cheat-and.html">ain't the only one</a>. Thanks, Judge Acker.</span><span style="font-family: georgia, serif; font-size: 14px;"> </span></div>
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</p>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-77244063713746325312014-06-24T15:24:00.000-07:002014-06-24T16:05:32.737-07:00Three things to add to Market Intelligence Center’s Guide to Understanding Long-Term Disability Insurance<a href="https://www.linkedin.com/pub/joseph-m-favorito-cfp%C2%AE/9/264/b8a">Joseph Favorito,</a> a Certified Financial Planner, has an article up over at Market Intelligence Center entitled <a href="http://www.marketintelligencecenter.com/articles/536940">A guide to understanding long-term disability insurance.</a> I think it's a quite decent overview, and Mr. Favorito certainly does touch on the obstacles ERISA imposes on folks who are trying to secure long-term disability benefits under a group plan with their employer. There are, however, a few things to add in order to make the story complete.<br />
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First, Mr. Favorito indicates "a large number of employers provide LTD insurance for free as a benefit for their employees." If you ask me, no employer anywhere provides anything to any employee free; everything you get from your employer, from wages to fringe benefits to insurance coverage to <a href="http://usatoday30.usatoday.com/tech/news/2007-05-10-google-perks_N.htm">haircuts</a> is something you earn with your labor. None of this stuff falls out of the sky for "free"; it is provided only after you contribute your own blood, sweat and tears to maximize your employer’s profits. There's absolutely nothing wrong with that, but it is simply inaccurate to say that LTD insurance, or any other benefit of employment, is provided for "free." And, because these are things you have <em>earned,</em> the courts should not treat LTD these benefits as some sort of windfall.<br />
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Apropos of that, Mr. Favorito also provides a generally accurate account of what you have to go through once an ERISA "insurer" denies your claim; he discusses the fact you have 180 days to file an internal appeal with the <i>same insurance company who just denied your claim,</i> so that they can determine whether they want to pay benefits, and <a href="http://problemiserisa.blogspot.com/2009/09/rising-judicial-chorus-judge-karlton.html">thus reduce their profits</a> (spoiler alert unnecessary). And he indicates the insurance company can then wait another 90 days to respond, and while this process plays out, "you are potentially without income as you are unable to work." This apparent 90-day time limit supposedly imposed on these "insurers," however, is most often a completely toothless requirement: they can blow through that deadline with <a href="http://problemiserisa.blogspot.com/2009/08/goofus-wins.html">no meaningful consequence whatsoever.</a> You, on the other hand, who are given 180 days to submit this "appeal," are going to be held to very strict compliance, to the point where if you are so much as one day late your claim is foreclosed for all time. On top of that, the information you submit along with this "appeal" is, in all likelihood, the <a href="http://problemiserisa.blogspot.com/2011/05/problem-redux.html">only information a court would ever consider</a> if you end up in litigation over your claim. Most folks do not realize, and the "insurance" companies certainly do not go out of their way to tell them, that when they are submitting an informal, internal “appeal,” they are actually assembling all the evidence they will ever be able to admit in court – and all too often without the assistance of a knowledgeable attorney.<br />
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Finally, Mr. Favorito notes accurately that a long-term disability plan is not the only potential source of benefits. As he says, you can certainly apply for Social Security Disability Insurance (SSDI) benefits, and see if you can get a claim (<a href="http://bipolar.about.com/od/disability/a/disability_when.htm">eventually</a>) approved that way. Mr. Favorito notes that "should you qualify for SSDI, you can be almost assured that your claim against a long-term disability policy will be approved."<br />
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Would that it were true. While the law has changed favorably in recent years, and ERISA "insurance" carriers are generally required to pretend to consider what the Social Security Administration might have had to say about a claimant’s disability, the fact remains they are in no sense required to <i>follow</i> the determination by the Social Security Administration, and in a great many cases choose simply to ignore it (more about the impact of SSDI decisions on ERISA claims here soon, so you have that going for you). And, of course, in cases where ERISA applies, they all too often get away with it.<br />
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None of this is intended to criticize Mr. Favorito’s article, which provides a quite accurate overview of the issues surrounding long-term disability insurance and the impact ERISA has on your rights. As with all things pertaining to ERISA, however, what might appear to be the case on the surface very often obscures the ugly truth hidden underneath this most unjust of laws.<br />
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</p>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-81403585734696526332013-09-26T12:49:00.000-07:002013-09-26T12:55:06.555-07:00ChangeERISA.com -- a site by someone who's dealt with ERISA's injustices firsthandLuciana Baker had disability coverage, issued by Hartford, through her employment with Bloomberg news.<br />
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Luciana Baker became disabled.<br />
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ERISA <a href="http://www.changeerisa.com/2013/01/21/share-your-story/">allowed Hartford to cheat her out of promised benefits</a> with impunity.<br />
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So Ms. Baker has <a href="http://www.changeerisa.com/">started a website,</a> trying to motivate us to agitate for a change in ERISA.<br />
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Congratulations to Ms. Baker. This is the sort of advocacy we need to effect change, and her site deserves your attention and support.
Well done.
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Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com1tag:blogger.com,1999:blog-694967215978644381.post-86612153757624525042013-08-29T14:23:00.000-07:002014-06-25T12:32:22.311-07:00What’s the big deal about time limits? I mean, how long can it take to bend over?<br />
As we’ve discussed the Supreme Court will soon consider whether ERISA “insurers” can get away with <a href="http://problemiserisa.blogspot.com/2013/08/the-erisa-time-machine-when-your-claim.html">unilaterally imposing time limits</a> on your ability to start a lawsuit against them when they deny your benefit claim. If you want an example of their breathtaking arrogance, get a load of one of their arguments. <br />
Thanks to the "insurers'" efforts over the years, and the courts’ unfortunate acceptance of their pitches, ERISA claimants <a href="http://problemiserisa.blogspot.com/2011/05/problem-redux.html">have the deck stacked against them</a> when they go to court. As relevant here, their ability to <a href="http://problemiserisa.blogspot.com/2009/08/how-they-hide-ball-story-of-compounding.html">conduct discovery and present their case</a> to a court using the usual sorts of evidence and arguments has been vastly limited if not destroyed. In a word claimants’ rights in that connection have been gutted. <br />
And now ERISA “insurers” are arguing to the Supreme Court that, those rights having been thusly gutted, claimants really don’t need much time at all to get their case into court once their claim has been denied. The American Council of Life Insurers, America’s Health Insurance Plans, and the U.S. Chamber of Commerce, for example, <a href="http://www.chamberlitigation.com/sites/default/files/scotus/files/United%20Policyholders%20Amicus%20Brief%20--%20Heimeshoff%20v.%20Hartford%20Life%20(U.S.%20Supreme%20Court).pdf">submitted a brief</a> to the Court arguing: <br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ511kPRTWOSxGIbjJnOL8AbLW8w_uLZIjXFhZUMdBpZOfDO73W6CP6D1BDR5fgFmkcKw2_hWegY6igasLTyOc7H8P1J-AoE_ic6fYTWoA11Ot_45YgAgxkLtFNH5Zd3XMPbqJxmM3cFuq/s1600-h/image%25255B8%25255D.png"><img alt="image" border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMtmdZ5Dkwg2UFX8GyvBaqCCQVqqcSZPrvf47J8b3biTcfnU_9q4FLelzHcq4yctymiURpy_XpXysKZNNjgaYhnvrtIqf6uNnybmrPmFG972VAkAGn5DqqCEAgi3rReqt5An6ZkzbxcAV7/?imgmax=800" height="242" style="background-image: none; border-bottom: 0px; border-left: 0px; border-right: 0px; border-top: 0px; display: inline; padding-left: 0px; padding-right: 0px; padding-top: 0px;" title="image" width="296" /></a> <br />
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And the <a href="http://www.dri.org/">Defense Research Institute</a> similarly <a href="http://legalnewsline.com/news/243913-defense-bar-files-brief-to-u-s-sc-in-support-of-insurer">argued to the Court:</a> <br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiiLkJD-YdzCIl77bHS10rzi4O5YFZqPDoV4L2zwPH5tqc2zP0p9niS6r3wJ4IZ1LQjAHVKHNwpEMYscZkRQ5J9QgXqs08Gjp5ZAPVPd-CB4FO3vJqrfcKhQvLJjtmlffSQ1Z3Xvf-_hhl/s1600-h/image%25255B7%25255D.png"><img alt="image" border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBoehXaFegu8ewy0lS7Hg0LOwxX182zh8u5BTGDyA5Xf8pviU85uSWFkdzSLzdtbFlcIymbn81VI8MegpQPe8aZl1SXZx2_hcdYkuo4Q8D83pLRGzGVBRWLDV8l19SzF9nmSdzfJmBZ3QD/?imgmax=800" height="165" style="background-image: none; border-bottom: 0px; border-left: 0px; border-right: 0px; border-top: 0px; display: inline; padding-left: 0px; padding-right: 0px; padding-top: 0px;" title="image" width="296" /></a> <br />
<br />These guys certainly do not lack for chutzpah. Their argument here amounts to: since we've gutted the claimant's ability to conduct discovery or investigation, and reduced their day in court to a judicial rubber stamp, claimants don't need much time at all to don their blindfolds and line up against the wall.<br />
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Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-23415300127607628142013-08-27T12:16:00.000-07:002013-08-27T12:16:42.466-07:00The ERISA time machine: when your claim is denied the clock is ticking faster than you know<p>ERISA, in addition to <a href="http://problemiserisa.blogspot.com/2009/08/rising-judicial-chorus-judge-becker.html">drastically limiting the remedies</a> you might secure in the <a href="http://problemiserisa.blogspot.com/2011/05/problem-redux.html">unlikely event</a> you are able to prevail on a benefits claim in court, imposes strict deadlines for you to act in response to a denied claim. If you fail to keep careful track of the calendar, your claim — regardless of how strong it may be on the merits — could very well perish simply because of the passage of time. <p>You’ll need to be careful in at least two respects: the time limit for submitting an internal appeal to the ERISA “insurer” who just denied your claim, and the time limit for filing you complaint in court after that. Blow either deadline and you’re out of luck. <p> <h4>1. You must submit the internal appeal within either 60 or 180 days of claim denial</h4> <p><a href="http://www.harp.org/29cfr2560-503-1.htm">Federal regulations</a> require that ERISA “insurers” give you at least 60 days (in the case of non-health or disability claims, e.g., life or accidental death insurance) or 180 days (in the case of health or disability claims) after a denial to submit an internal appeal — a reconsideration by the “insurer” as to whether it should continue to pay benefits, and <a href="http://problemiserisa.blogspot.com/2009/09/rising-judicial-chorus-judge-karlton.html">thus reduce its profits.</a> Humanitarians that they are, ERISA "insurers" always do <a href="http://www.quickmeme.com/meme/3szv1a/">the bare minimum,</a> and so the 60- or 180-day minimums are effectively the maximums as well. So, unless your benefit plan is exceedingly rare, you’ll have either 60 or 180 days to get that appeal in. <p>As we’ve seen, the “insurer” has its own deadlines to respond once your appeal is submitted, with one big difference: if you blow your deadline, you are out of luck, but if the “insurer” blows its deadline … well, everybody makes mistakes, right? Bottom line: the “insurer” <a href="http://problemiserisa.blogspot.com/2009/08/goofus-wins.html">can miss its deadline with no meaningful consequence,</a> but if you miss your deadline, game over. So be careful with that deadline. <p> <h4>2. You must file your lawsuit within the statute of limitations – whenever that is</h4> <p>ERISA, model of clarity that it is, doesn’t impose a deadline for filing a lawsuit to try to recover the meager remedies it allows. So, no worries, right? <p>Wrong. Just because ERISA doesn’t have a deadline doesn’t mean we can’t come up with one anyway, so that claimants who wait too long to file their lawsuit can be unceremoniously ejected from court. So, at the behest of ERISA “insurers,” courts have decided to <a href="http://www.insidecounsel.com/2013/08/12/labor-an-erisa-plan-for-litigation-part-ii">just borrow a time limit from state law,</a> and apply that, never mind that ERISA doesn’t have a time limit of its own. <p>OK, so at least we can just check the law of our state to figure out what the deadline is, and then at least we’ll know. <p>Wrong again. ERISA “insurers” insert time limits into their “insurance” policies, and <a href="http://about.bloomberglaw.com/practitioner-contributions/limiting-erisas-limitations-period/">the courts generally allow this,</a> so your deadline to file your lawsuit is … whatever the “insurer” says it is. <p>A pending Supreme Court case, <em><a href="http://www.scotusblog.com/case-files/cases/heimeshoff-v-hartford-life-accident-insurance-co-and-wal-mart-stores-inc/">Heimeshoff v. Hartford,</a></em> will decide what the outer limits are on an “insurer’s” ability to just impose its own deadline on your ability to pursue remedies in the federal courts your tax dollars pay for. So we’ll know a bit more about that before too long. <p>One thing you can count on is that if you miss the deadline, whatever it is, for filing your lawsuit, you are out of luck from the get-go. It’s a <a href="http://www.urbandictionary.com/define.php?term=deal+breaker">deal-breaker.</a> A <a href="http://www.merriam-webster.com/dictionary/death%20knell">death-knell.</a> The <a href="http://www.worldwidewords.org/qa/qa-ita1.htm">fat lady singing.</a> <p>So, it’s important in an ERISA case to pay very close attention to time limits. Miss one by even a day and your claim is over before it starts. Indeed, it never really starts at all.</p>
<object data="https://clients4.google.com/voice/embed/webCallButton" height="85" type="application/x-shockwave-flash" width="230"><param name="movie" value="https://clients4.google.com/voice/embed/webCallButton" /><param name="wmode" value="transparent" /><param name="FlashVars" value="id=57d91c5713fb8479b79fec7bf570dc9a75836890&style=0" /></object>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-49877195516817903052013-08-16T13:43:00.003-07:002013-08-29T14:39:40.212-07:00Location, location, location: Your legal rights under ERISA depend on where your case isERISA is a <s>mess of a</s> <a href="http://www.erisaclaimdefense.com/opening-day/">complex and reticulated</a> statute, and so it gets interpreted differently by different courts. <br />
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One example I have some familiarity with is what we clever lawyers call “post hoc rationales,” which is what normal people would call “First time I’ve heard of that” or more appropriately “WTF?” It arises when an ERISA “insurer” denies your claim, and then after you sue them, realizes its denial was a big fat lie. So now, finding itself in court, it comes up with another reason, which it never mentioned before you served your lawsuit, why your claim should be denied anyway. <br />
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One problem with that: it’s illegal. ERISA itself requires that when an “insurer” denies a claim, it ““shall” provide notice describing “the specific reasons” the claim was denied. Under Labor Department regulations as well, it “shall” provide not only “the specific reason or reasons” for a denial, but “the specific plan provisions on which the determination is based.” The Supreme Court says ERISA “insurers” “must” describe in writing “the specific reasons” for a claim denial. <i><a href="http://scholar.google.com/scholar_case?case=13940252888625606483&hl=en&as_sdt=2&as_vis=1&oi=scholarr">Black & Decker Disability Plan v. Nord,</a></i> 538 U.S. 822, 830 (2003). <br />
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Seems pretty straightforward, no? <br />
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Well, it all depends on where you live. The United States Courts of Appeals are <a href="http://en.wikipedia.org/wiki/United_States_courts_of_appeals">divided geographically into circuits,</a> and each circuit applies the law in its own way, pending the Supreme Court coming along and deciding for everyone how it’s to be done. Here, despite the fact the law requires “insurers” to provide “the reasons” and “the specific policy provisions” involved when they deny claims, in many parts of the country that so-called law is simply not enforced. <br />
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I had a case where the Eleventh Circuit ruled against my client based on a rationale the “insurer” never mentioned until we were already in court (the reason it cited at the time it denied the claim was, shall we say, not supported by the evidence). So the “insurer’s” utter failure to provide “specific reasons” and “specific policy provisions” when it denied my client’s claim, illegal though it was, made no difference whatsoever: the “insurer” still won. <br />
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Had this case been in any number of other circuits, the result would have been precisely opposite. The “insurer” would have been stuck with the reason it provided in the first place, and based on that it would have lost. <br />
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So I have asked the Supreme Court to step in and fix this, and establish one rule for the whole country about these after-the-fact rationales. The overwhelming odds are that it will decline to review the case, since that’s what it does <a href="http://supremecourt.c-span.org/Video/JusticeOwnWords.aspx">in something like 98% of cases presented to it</a>. But you never know. <br />
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<a href="http://www.docstoc.com/docs/160390286/2013-05-28cert-petition-filed">Here’s</a> the petition for certiorari, discussing how the different circuits apply the rule, and asking for Supreme Court review. Enjoy! /sarcasm <br />
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In the meantime, as noted had the Eleventh Circuit applied the rule other circuits apply, the result would have been the opposite. Like George Costanza, the Eleventh Circuit should … <br />
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…stick to the opposite. <br />
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<object data="https://clients4.google.com/voice/embed/webCallButton" height="85" type="application/x-shockwave-flash" width="230"><param name="movie" value="https://clients4.google.com/voice/embed/webCallButton" /><param name="wmode" value="transparent" /><param name="FlashVars" value="id=57d91c5713fb8479b79fec7bf570dc9a75836890&style=0" /></object>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-55011359286240027472013-08-14T10:45:00.000-07:002013-08-14T10:45:27.709-07:00More on remands, and another selection from the Rising Judicial Chorus’ greatest hits<a href="http://problemiserisa.blogspot.com/2013/08/risible-remands-erisa-insurers-get.html">Yesterday</a> we touched on the troubling practice of federal courts remanding ERISA claims to “insurers” for a second try after they had already ruled against them. It’s yet another example of how, when ERISA “insurers” lose in court, they don’t actually lose in court. If their decision is found by a judge to have been incorrect, which you’d think would result in them losing, they win anyway unless the judge goers further to determine their decision was <a href="http://problemiserisa.blogspot.com/2009/09/how-we-got-here-abuse-of-discretion.html">not only wrong but patently absurd</a>. And, in the case of remands, even if the judge decides that they don’t actually lose; they get another bite at the apple to try to come up with a claim denial that’s easier to defend in court next time around. <br />
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Lest you think that last comment is some sort of hyperbole, let’s take a look at what Judge William M. Acker of the Northern District of Alabama, probably the <a href="http://problemiserisa.blogspot.com/2010/09/rising-judicial-chorus-goes-to.html">lead singer</a> in the <a href="http://problemiserisa.blogspot.com/search/label/Judicial%20Chorus">Rising Judicial Chorus,</a> had to say about remands in his recent decision in <i>May v. AT&T Integrated Disability</i> (case no. 11-AR-1923-S, 2013 WL 3879895) (July 26, 2013): <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir6stmPlqr9suOAbvBPLcENq16eDvisoirgJgzfoYNJZaJ5MmAEF1qATuuqOO1K214kD_bEcbkQiyT-lpsZB4SfsqjRTatFEqSs1jhc3BT50wGWWkfTF6yTEnEE1kKUCwth9Q7-gfGcmIu/s1600-h/clip_image002%25255B4%25255D.png"><img alt="clip_image002" border="0" height="211" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVeaO-G12oxPeh-o9RIwXQYJtw1MnjbsbJS4Wt4N_8q71GMsQee8MmHdJLlbf5jiYIkPPtVnqzJCiJg1lQDL2aLeAzzzkamAi-b6HA9-JnwEyXRzWK-_g-qigrB9zixez6EIkO5y2-H7LT/?imgmax=800" style="background-image: none; border-bottom: 0px; border-left: 0px; border-right: 0px; border-top: 0px; display: inline; padding-left: 0px; padding-right: 0px; padding-top: 0px;" title="clip_image002" width="460" /></a> <br />
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“Sophistic,” by that way, is sufficiently applicable to ERISA “insurers” that it ought to be part of their corporate name, something like “Sophistic Mutual ‘Insurance’ Company”: it means <a href="http://www.merriam-webster.com/dictionary/sophistic">“plausible but fallacious,”</a> which is pretty damn close to the high standard required for an “insurer’s” decision to pass inspection under a <a href="http://problemiserisa.blogspot.com/2009/09/basic-primer-on-denovo-versus-abuse-of.html">so-called “abuse of discretion”</a> analysis. <br />
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Judge Acker had quite a few other choice remarks about the Sophistic Mutuals of the world and the way the law renders them bulletproof. Here’s a taste: <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuZbkmbPREXXvKOG2Fr4r6rStLkO0W_Vtdeyey6Y0ZGSLGltbkdlVBvIEQJkYNXGz1okemOJiwEbXO_QOCIKkw9jJ9QS2WJRfJMfmFxrvNJDN4wodBsIx_Hmh4ShYZKLU_ktAz1jpXhvM7/s1600-h/clip_image004%25255B6%25255D.png"><img alt="clip_image004" border="0" height="301" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIJIGth2D9pEC_gQRcCVNUtpmBjRvHB-AcjrciWioXhF8w9G4VcyXrA6nAwoWpXBGpgsFYPMpSHDWqNUdIGdhN38zxP0S3d9oU_mWCORqpkKlYTbWzMWh8k6HxHjz8GbUV27kBYSIrlv90/?imgmax=800" style="background-image: none; border-bottom: 0px; border-left: 0px; border-right: 0px; border-top: 0px; display: inline; padding-left: 0px; padding-right: 0px; padding-top: 0px;" title="clip_image004" width="472" /></a> <br />
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Or this, discussing how the Eleventh Circuit essentially discounts the very significant <a href="http://problemiserisa.blogspot.com/2011/07/eleventh-circuit-metlife-saves-itself.html">conflict of interest</a> under which ERISA “insurers” operate: <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMmfLQmkIRlA6a7LOG8lrc0x1afx8LrYlh_95blx4lUtMxsCJW7928PgcoBly8ebu-11BcvkmID5leYS4XcMpbJkyZeaU6FOhEt5PbY8IePuTw2xWcCP__jf104JnTnTXVEg1iJOU4a-xS/s1600-h/clip_image006%25255B4%25255D.png"><img alt="clip_image006" border="0" height="232" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpisaOYW0VPWBadT666T1rxf9sWpvMI626EW8qjamRohPlhO6hcIYSuPbtxhRMtcYvjgtOl-D1Iev9lj7WhYYrfUO18g00bXFE_D3QOiFIxnHJx0WBDdhz8Sa5079IHJyP2h03ZX0X4hhd/?imgmax=800" style="background-image: none; border-bottom: 0px; border-left: 0px; border-right: 0px; border-top: 0px; display: inline; padding-left: 0px; padding-right: 0px; padding-top: 0px;" title="clip_image006" width="484" /></a> <br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0JEIgCy8Imu0omagO3qARD0i-FMHe8TaJL2KTrj6K2BlI3kODoyaRA0kdgEWnnSVRvahEG70kYjVP-X8gflQqkJNBgRBzLBeSe8VATSko2bbM1xment_weWHqQb7XJSMI9BaQOaMcCW9C/s1600-h/clip_image008%25255B6%25255D.png"><img alt="clip_image008" border="0" height="379" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiV-3r_8YJyp_ojhdIcaqa6tCuzx475osE2bx236lvj_LBIYse7g7YEg7iT6OYP3mCAO5yF8VJtDfYXBtVzvVxlS5pi5nygarVBPGmSA1KwEr8Fs42zRkKu5oDdS0BDJXVhczX4fmIfuQ0O/?imgmax=800" style="background-image: none; border-bottom: 0px; border-left: 0px; border-right: 0px; border-top: 0px; display: inline; padding-left: 0px; padding-right: 0px; padding-top: 0px;" title="clip_image008" width="481" /></a> <br />
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And finally, a few choice words about the “abuse of discretion” rule as applied to ERISA “insurers”: <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjV-YnIEpM-o5m_KAU8m8dC96_YC4cxeCRqBUqEXUYxAWr7rGxHDVNGWi-PbKXmIUWzna3JGaYu3YdoHzc-b4tDypDZ7ZZTQDYB9tES3x45CSZ9Y2o3cRHVAyWaP-lvJdD_20sn1_Yn4OF7/s1600-h/clip_image010%25255B4%25255D.png"><img alt="clip_image010" border="0" height="249" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhMSsr-XaSdO6K7HgdO6S8S48C7cL5AzDAgibxnsqzK01t87Ff3iUn4IcQP1NgJtE4XoVIxlIPJRupI08se4Ql7VnoySXN1Ux6j6x0hEn0a0O-3YLUvvKj9kiDmbLw1wkjp1I2ARajlqKd/?imgmax=800" style="background-image: none; border-bottom: 0px; border-left: 0px; border-right: 0px; border-top: 0px; display: inline; padding-left: 0px; padding-right: 0px; padding-top: 0px;" title="clip_image010" width="494" /></a> <br />
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<em>Bruch,</em> you may recall, was the case where the Supreme Court <a href="http://problemiserisa.blogspot.com/2009/09/how-we-got-here-abuse-of-discretion_15.html">first established</a> this grant-of-discretion / abuse-of-discretion rule, a rule repeatedly abused by “insurers” in the manner described by Judge Acker. And he is quite correct about the <a href="http://problemiserisa.blogspot.com/2011/01/you-know-i-dont-even-think-its.html">due process</a> implications — if only a court would ever take a serious look at them. <br />
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Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-38731159846786326422013-08-13T10:18:00.001-07:002013-08-14T11:02:38.889-07:00Risible remands: ERISA “insurers” get a second bite at the appleSo I blog once a year whether I need to or not. <br />
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A recurring aspect of ERISA’s malignance is the judicial practice of “remanding” a claim to an ERISA “insurer.” <br />
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What is a remand? It’s when a judge, after concluding the plaintiff is right and the “insurer” is wrong, sends a claim back to the “insurer” it just got done ruling against for another try — instead of ruling in favor of the claimant, whom he just … ruled in favor of. <br />
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I’d sure like that sort of leeway from judges. After (once again) hearing something like this: <br />
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It’d be great for a judge to say “so go back and try it again.”<br />
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Doesn’t happen. Unless you’re an ERISA “insurer.” <br />
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Why on earth would a court, having rejected a party’s legal position, not just issue a judgment based on that ruling, and instead give the <em>losing</em> party a second bite at the apple? <br />
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Here’s an explanation (of sorts) from the Sixth Circuit’s recent decision in <i>Fura</i><em> v. Federal Express Corp. Long Term Disability Plan,</em> (Case no. 12-2062, August 6, 2013) after it discussed at length that Aetna, the ERISA “insurer,” had issued a decision that was so absurd as to be <a href="http://problemiserisa.blogspot.com/2009/09/basic-primer-on-denovo-versus-abuse-of.html">arbitrary and capricious</a>: <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZMBUmtZZNuvv9XypSysHB5u_Y8AvD37X-wjI7W85vDmzSuEZiSIQrSGSR8FIKGKSyPE77iIX7CMyiJCQm_JBCB1L0tRK-LAKYBqYLb97qLoX5JOoeDGHdFzpRwXMg_gdLE1FKpqGWBUtE/s1600-h/clip_image002%25255B5%25255D.png"><img alt="clip_image002" border="0" height="239" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXcKGiSdTKjI-BKsfmz2IspIYVg3o2isbp2sDMM16AhER7c358EgGTV10tFWzr4EADSony8a50qbTHGfpirfTxBtoYLzwI-1dbSq6s43Y3oGqC6OrHkg9PcmIUP5IEnvlhbuKeLXVDDmXx/?imgmax=800" style="background-image: none; border-bottom: 0px; border-left: 0px; border-right: 0px; border-top: 0px; display: inline; padding-left: 0px; padding-right: 0px; padding-top: 0px;" title="clip_image002" width="503" /></a> <br />
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Unreasoned explanation? Arbitrary and capricious decision? Utter lack of rationality and good faith in the decision-making process? <br />
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No problem! Everyone deserves a second chance! <br />
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Except ERISA claimants. <br />
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More soon… <br />
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<br />Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-24909149008606283282012-09-12T12:12:00.001-07:002012-09-12T12:12:28.590-07:00Ninth Circuit: ERISA insurer “relied on ERISA’s deferential standard of review to avoid detection and liability”<p>The Ninth Circuit today issued its opinion in <a href="http://www.ca9.uscourts.gov/datastore/opinions/2012/09/12/10-16840.pdf">Stephan v. UNUM</a>, reversing a summary judgment in UNUM’s favor and sending the case back to the district court for further proceedings. Along the way the court described the sort of conduct UNUM has been engaging in, and the manner in which ERISA enables this unlawful behavior:</p> <blockquote> <p>Numerous courts, including ours, have commented on<br>Unum’s history “ ‘of erroneous and arbitrary benefits denials,<br>bad faith contract misinterpretations, and other unscrupulous<br>tactics,’ ” <em>McCauley v. First Unum Life Ins. Co.,</em> 551 F.3d<br>126, 137 (2d Cir. 2008) (quoting <em>Radford Trust v. First Unum<br>Life Ins. Co.,</em> 321 F. Supp. 2d 226, 247 (D. Mass. 2004), rev’d<br>on other grounds, 491 F.3d 21, 25 (1st Cir. 2007)). Indeed, in<br><em>Saffon,</em> we attributed the trend of state prohibitions on discretionary<br>provisions in insurance contracts to “the cupidity of<br>one particular insurer, Unum-Provident Corp., which boosted<br>its profits by repeatedly denying benefits claims it knew to be<br>valid. Unum-Provident’s internal memos revealed that the<br>company’s senior officers relied on ERISA’s deferential standard<br>of review to avoid detection and liability.” 522 F.3d at<br>867; <em>see also Radford Trust,</em> 321 F. Supp. 2d at 247 n.20 (collecting<br>cases). Moreover, the CSA [California Settlement Agreement] notes that Unum was subject to “a multistate targeted examination” of its “claims handling practices,” which resulted in a settlement agreement similar to the CSA. And the CSA was the product of investigations by the State of California into Unum’s claims handling<br>practices.</p></blockquote> <p>Erroneous and arbitrary benefits denials. Bad faith contract interpretations. Other unscrupulous tactics. Boosting profits by repeatedly denying claims it knew to be valid. All the while relying on ERISA’s <a href="http://problemiserisa.blogspot.com/2010/03/of-judicial-deference-and-impartial.html">deferential standard of review</a> to avoid detection and liability. And these are the people we are supposed to trust because, after all, they are <a href="http://problemiserisa.blogspot.com/2011/04/high-and-mighty-fiduciary-duty-response.html">fiduciaries</a>.</p> Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-58275516933518681622012-05-24T10:03:00.000-07:002012-05-24T10:03:21.418-07:00Back from a brief discretionary hiatus...<br />
Well, it’s been about ten months since I posted something here. I offer no excuses. Indeed, what do I have to apologize for? After all, I have granted myself discretion to decide if or when to post something.<br />
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Anyway, to get this thing fired up again, herewith a slightly updated reprise of the Problem:<br />
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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.<br />
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Way, way to the contrary.<br />
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This blog is dedicated to the ERISA problem.<br />
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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.<br />
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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:<br />
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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) <a href="http://problemiserisa.blogspot.com/2009/08/theres-no-remedy-if-your-insurance.html">are very, very stingy</a>, 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.<br />
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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 Supreme Court gives us <a href="http://problemiserisa.blogspot.com/2011/05/news-claimants-prevail-before-supreme.html">some reason to hope for improvement</a> here, but there's a long way to go. <br />
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Punitive or exemplary damages? Bupkis. ERISA <a href="http://problemiserisa.blogspot.com/2009/08/rising-judicial-chorus-judge-pickering.html">does not allow for any recovery</a> on account of these sorts of 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 <i>fraud</i> 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. <br />
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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 <a href="http://problemiserisa.blogspot.com/2009/08/rising-judicial-chorus-judge-becker.html">one federal judge has commented</a>, "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.<br />
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2. Procedure. In ERISA litigation, courts have determined among other things that there is no right to a jury; that <a href="http://problemiserisa.blogspot.com/2009/08/how-they-hide-ball-story-of-compounding.html">discovery (the pre-trial process where you obtain the other side's documents, take depositions and such) is to be significantly abridged</a>; 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 <a href="http://problemiserisa.blogspot.com/2009/08/discretion-and-its-many-abuses-part-i.html">"arbitrary and capricious"</a> -- that is to say, ridiculous, absurd, unintelligible, crazy. And lo and behold, the <a href="http://problemiserisa.blogspot.com/2009/09/how-we-got-here-abuse-of-discretion_15.html">insurance companies grant themselves "discretion" when they write their policies</a>. In this way we treat insurance companies as if they were federal judges. But Learned Hand they are not.<br />
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The Supreme Court appears poised to strike down the Affordable Care Act. 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. <br />
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But never mind the ACA; 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.<br />
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<span class="Apple-tab-span" style="white-space: pre;"> </span><br />Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com2tag:blogger.com,1999:blog-694967215978644381.post-40318198089813347802011-07-28T12:25:00.000-07:002011-07-28T12:25:07.574-07:00The right to a trial by jury is (usually) precious and inviolateGot summoned to jury service yesterday. Because no one wants a lawyer on their jury, I was unceremoniously dismissed during jury selection. <br />
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Along the way the good folks at Sonoma County Superior Court told all the prospective jurors what a valuable service they were providing. They stressed, for example, that the denial of a right to a jury trial was <a href="http://voices.injuryboard.com/medical-malpractice/the-declaration-of-independence-on-civil-trials-by-jury.aspx?googleid=291896">one of the grievances</a> listed in the Declaration of Independence as a reason to separate from Britain. And they told us Thomas Jefferson stressed <a href="http://sonoma.courts.ca.gov/info/jury-service">how important a right to a jury</a> was:<br />
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<blockquote>"I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution"</blockquote><br />
Compare and contrast:<br />
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<blockquote>Additionally, all eleven Circuit Courts that have reviewed the issue of whether there is a right to a jury trial under § 502(a) of ERISA have concluded that there is no such right. <i>See Hampers v. W.R. Grace & Co., Inc.</i>, 202 F.3d 44, 54 (1st Cir.2000); <i>Sullivan v. LTV Aerospace and Defense Co.</i>, 82 F.3d 1251, 1258 (2nd Cir.1996); <i>Pane v. RCA Corp.</i>, 868 F.2d 631, 636 (3rd Cir.1989); <i>Berry v. CIBA–GEIGY Corp.</i>, 761 F.2d 1003, 1007 (4th Cir.1985); <i>Borst v. Chevron Corp.</i>, 36 F.3d 1308, 1323–24 (5th Cir.1994); <i>Bittinger v. Tecumseh Prod. Co.</i>, 123 F.3d 877, 883 (6th Cir.1997); <i>Wardle v. Central States, S.E. and S. W. Areas Pension Fund,</i> 627 F.2d 820, 829 (7th Cir.1980); <i>In re Vorpahl,</i> 695 F.2d 318, 322 (8th Cir.1982); <i>Thomas v. Oregon Fruit Prod. Co.,</i> 228 F.3d 991, 996 (9th Cir.2000); <i>Adams v. Cyprus AMAX Minerals Co.,</i> 149 F.3d 1156, 1161–62 (10th Cir.1998); <i>Blake v. UnionMutual Stock Life Ins. Co. of Am.,</i> 906 F.2d 1525, 1526 (11th Cir.1990).</blockquote><br />
<i><a href="http://scholar.google.com/scholar_case?q=Zuckerman+Omaha&hl=en&as_sdt=2,5&case=6067672357559754538&scilh=0">Zuckerman v. United of Omaha Life Ins. Co.</a></i>, 09-CV-4819, 2011 WL 2173629 (N.D. Ill. May 31, 2011)<br />
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<object type="application/x-shockwave-flash" data="https://clients4.google.com/voice/embed/webCallButton" width="230" height="85"><param name="movie" value="https://clients4.google.com/voice/embed/webCallButton" /><param name="wmode" value="transparent" /><param name="FlashVars" value="id=57d91c5713fb8479b79fec7bf570dc9a75836890&style=0" /></object>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-81766137510100469692011-07-01T13:38:00.000-07:002011-07-01T13:38:28.659-07:00Eleventh Circuit: MetLife saves itself half a million dollars by exercising its "discretion" in its own favor. No problem.I’ve <a href="http://problemiserisa.blogspot.com/2009/09/basic-primer-on-denovo-versus-abuse-of.html">discussed before</a> the absurdity of allowing an ERISA “insurer” to be judge and jury about its own contractual obligation to, well, provide insurance. Recently we took a look at <a href="http://problemiserisa.blogspot.com/2011/04/high-and-mighty-fiduciary-duty-response.html">one judge’s opinion</a> it’s not such a problem after all, because ERISA imposes supposedly sky-high fiduciary duties protecting beneficiaries from insurer abuse. <br />
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Would that it worked that way. That it doesn’t is demonstrated by this week’s <a href="http://www.ca11.uscourts.gov/opinions/ops/201010717.pdf">Eleventh Circuit opinion</a> in <i>Blankenship v. MetLife</i>. <i>Blankenship</i> illustrates perfectly how allowing ERISA “insurers” to exercise “discretion” over their own contractual obligations leads to disaster for claimants who deserve better.<br />
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Frank Blankenship was diagnosed with coronary artery disease, and suffered a heart attack, in 2003. Because his job as manager of a Sears Roebuck store was so stressful, and because his physicians concluded stress would very likely exacerbate his coronary condition, Mr, Blankenship submitted a disability claim to Sears’ ERISA disability “insurer,” MetLife. MetLife paid benefits for a time, and then cut them off, based on opinions it commissioned from its paid physician consultants (none of whom, by the way, ever so much as met Mr. Blankenship).<br />
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The trial judge, William M. Acker, Jr. (whose work <a href="http://problemiserisa.blogspot.com/2010/09/rising-judicial-chorus-goes-to.html">we have enjoyed before</a> on this blog), issued an <a href="http://tinyurl.com/3ol5mkz">order in January 2010</a> overturning MetLife’s termination of benefits. MetLife appealed, leading to the Eleventh Circuit debacle this week.<br />
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Why did the Eleventh Circuit reverse Judge Acker’s conclusion MetLife had been not only incorrect but absurdly incorrect in terminating benefits? Because MetLife had granted itself discretion in its “insurance” policy, and therefore mere federal judges could not question the decision of the MetLife Oracle:<br />
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<blockquote>We see nothing in the record that would lead us to conclude that MetLife did not act reasonably in relying on the independent medical opinions or in crediting those opinions over the opinions of Blankenship’s doctors.</blockquote><br />
Never mind that Mr. Blankenship’s physicians had, you know, seen him on occasion and had, you know, examined him personally. The Eleventh Circuit then moved on to conclude MetLife had no meaningful conflict of interest when it saved itself over $500,000 by terminating Mr. Blankenship’s claim:<br />
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<blockquote>Even if the potential claim at issue “involves over $510,000, not including future benefits,” as the district court stated, Blankenship, 686 F. Supp. 2d at 1236, the size of the award is not enough to be the dispositive factor in this case. Even half a million dollars -- a large sum, to be sure -- is a relative amount when the plan administrator is a global, Fortune 100 company with annual revenues exceeding $50 billion.</blockquote><br />
Wow. Looks like it would take a hell of a claim to convince the Eleventh Circuit MetLife operated under a meaningful conflict of interest. Of course any one claim is just a rounding error, if that, on MetLife’s books. But it is undeniable that ERISA “insurers” like MetLife spare themselves very significant costs through denying and terminating valid claims in general; this particular claim was an example of that. By requiring that the stakes in an individual claim be high enough, by themselves, to directly impact a “Fortune 100 company with annual revenues exceeding $50 billion,” the Eleventh Circuit has effectively eliminated any real impact a conflict of interest might otherwise have – and it is supposed to have an impact, as the Supreme Court has <a href="http://tinyurl.com/3qchbyb">quite distinctly directed</a>.<br />
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Read Judge Acker’s discussion of the facts, and then read the Eleventh Circuit’s views on just how flimsy a claim denial can be and still qualify as “reasonable.” And then ask yourself whether ERISA’s supposed fiduciary duties offer any real protection at all.<br />
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<object type="application/x-shockwave-flash" data="https://clients4.google.com/voice/embed/webCallButton" width="230" height="85"><param name="movie" value="https://clients4.google.com/voice/embed/webCallButton" /><param name="wmode" value="transparent" /><param name="FlashVars" value="id=57d91c5713fb8479b79fec7bf570dc9a75836890&style=0" /></object>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com1tag:blogger.com,1999:blog-694967215978644381.post-91983575838447602522011-05-16T19:25:00.001-07:002011-05-17T12:53:21.897-07:00News: Claimants prevail before Supreme Court. Not news: "insurance" industry spins big loss as big winSee update below!<br />
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The Supremes issued a very, very nice opinion today in <a target="_blank" href="http://www.law.cornell.edu/supct/html/09-804.ZO.html"><i>CIGNA Corp. v. Amara</i></a>. CIGNA had played fast and loose with its workers' pensions, unilaterally changing its pension plan to shortchange the workers without telling them about the negative effects of the change. This all gets pretty arcane, because the claimants had prevailed before the Second Circuit, and the Supremes reversed, which is what CIGNA wanted. <br />
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But CIGNA should be careful what it asks for, because the reason they reversed was nothing but bad news for CIGNA and good news for the claimants.<br />
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The claimants had based their case on <a target="_blank" href="http://www.law.cornell.edu/uscode/html/uscode29/usc_sec_29_00001132----000-.html">29 USC section 1132(a)(1)(B)</a>, which allows courts to award aggrieved claimants the benefits due under the terms of their benefit plan. The trouble has been that <a target="_blank" href="http://problemiserisa.blogspot.com/2011/05/problem-redux.html">no recovery beyond that has been available,</a> other than -- maybe -- something on account of attorney fees. To get there the lower courts, based on CIGNA's lies about the terms of the replacement pension plan, ordered that the plan be "reformed": that it be amended so that it reads consistently with what CIGNA's promises to its workers had been. And then based on the terms of the plan as the court had amended it, an award of benefits to the claimants followed.<br />
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So CIGNA appealed to the Supreme Court. The Supreme Court agreed today with CIGNA that the lower courts had incorrectly used section (a)(1)(B) to reform CIGNA's benefit plan. So CIGNA won that battle.<br />
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But CIGNA lost the war, because the Court went on to hold the plan could be reformed under a different subsection of the same statute, subsection (a)(3). AND... under section (a)(3) it said a court could do a lot of other stuff too, most notably imposing a surcharge against CIGNA.<br />
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This surcharge concept is very important, because up until now the remedies available under ERISA have been severely limited. A surcharge, though, allows claimants to recover for any actual out-of-pocket losses an ERISA insurer's bad acts cause, not limited to the amount of benefits due. So, after the <i>Amara</i> opinion, if an ERISA insurer denies your disability benefits and causes, for example, damage to your credit rating because you can't pay your bills, and that means your cost of credit is all of a sudden higher than it had been, you can be made whole (what a concept!) for that. If an ERISA health insurer wrongfully denies your claim and you have to foot the medical bill in question, now you can probably recover for that. The precise parameters will be determined through future cases, but at long, long last the absolute bar to any compensation beyond the amount of benefits in question has been significantly weakened. <br />
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So that's a big win for claimants no matter how you look at it.<br />
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Unless you're a flak for the ERISA "insurance" industry. Let's take a look at how industry rag National Underwriter reports on the decision, in a piece remarkably entitled <a target="_blank" href="http://www.lifeandhealthinsurancenews.com/News/2011/5/Pages/Supreme-Court-Favors-CIGNA-in-Summary-Plan-Description-Case.aspx">"Supreme Court Favors CIGNA in Summary Plan Description Case"</a>:<br />
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<blockquote>WASHINGTON BUREAU -- The U.S. Supreme Court has significantly narrowed the grounds an employee can use to sue for additional pension benefits based on errors in a plan’s summary plan description (SPD).<br />
The court ruled 8-0 in favor of the plan sponsor, CIGNA Corp., Philadelphia (NYSE:CI), in CIGNA Corp. v. Amara, No. 09-804, a 2001 class-action case triggered by CIGNA's move to turn a traditional defined benefit pension plan into a cash balance plan in 1998.<br />
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Yeah, they significantly narrowed the grounds all right -- it narrows down to "CIGNA loses."<br />
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As you might expect the insurance industry will immediately start misrepresenting the meaning of the <i>Amara</i> case to courts all over the map, and they may well succeed in persuading some judges that <i>Amara</i> doesn't stand for what I say it does. But those on my side will be working equally hard to make sure <i>Amara</i> has the effect it should.<br />
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This is a very good day for workers, retirees, and the disabled and sick. It's a bad day for fraud and bad faith. But we need to keep working so we'll have more good days in the future, because <i>Amara</i> is really the first small step on a long, long road back to achieving anything approaching justice in ERISA world.<br />
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UPDATE: Roy Harmon III has posted <a href="http://www.healthplanlaw.com/?p=2194">a good discussion</a> at his Health Plan Law blog. <br />
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UPDATE 2: My colleague Joe Creitz also weighs in with <a href="http://erisalaw.blogspot.com/2011/05/cigna-v-amara-supreme-court-recognizes.html">an informative post</a>.<br />
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- Posted using BlogPress from my iPadRichhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-35220980439797604052011-05-05T12:11:00.000-07:002011-05-05T12:11:01.693-07:00The Problem, reduxAround 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...<br />
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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.<br />
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Way, way to the contrary.<br />
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This blog is dedicated to the ERISA problem.<br />
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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.<br />
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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:<br />
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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) <a href="http://problemiserisa.blogspot.com/2009/08/theres-no-remedy-if-your-insurance.html">are very, very stingy</a>, 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.<br />
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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). <br />
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The trashed credit, the lost home, the bankruptcy, the ruined life? Bupkis. ERISA <a href="http://problemiserisa.blogspot.com/2009/08/rising-judicial-chorus-judge-pickering.html">does not allow for any recovery</a> 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 <i>fraud</i> 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. <br />
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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 <a href="http://problemiserisa.blogspot.com/2009/08/rising-judicial-chorus-judge-becker.html">one federal judge has commented</a>, "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.<br />
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2. Procedure. In ERISA litigation, courts have determined among other things that there is no right to a jury; that <a href="http://problemiserisa.blogspot.com/2009/08/how-they-hide-ball-story-of-compounding.html">discovery (the pre-trial process where you obtain the other side's documents, take depositions and such) is to be significantly abridged</a>; 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 <a href="http://problemiserisa.blogspot.com/2009/08/discretion-and-its-many-abuses-part-i.html">"arbitrary and capricious"</a> -- that is to say, ridiculous, absurd, unintelligible, crazy. And lo and behold, the <a href="http://problemiserisa.blogspot.com/2009/09/how-we-got-here-abuse-of-discretion_15.html">insurance companies grant themselves "discretion" when they write their policies</a>. In this way we treat insurance companies as if they were federal judges. But Learned Hand they are not.<br />
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The Republicans are gearing up to take a shot at <a href="http://www.washingtonpost.com/wp-dyn/content/article/2011/01/03/AR2011010303781.html">repealing Obamacare</a>. 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. <br />
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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.<br />
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<object type="application/x-shockwave-flash" data="https://clients4.google.com/voice/embed/webCallButton" width="230" height="85"><param name="movie" value="https://clients4.google.com/voice/embed/webCallButton" /><param name="wmode" value="transparent" /><param name="FlashVars" value="id=57d91c5713fb8479b79fec7bf570dc9a75836890&style=0" /></object>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-47750271785992512822011-04-29T10:47:00.001-07:002011-04-29T11:16:30.861-07:00The high and mighty fiduciary duty: a response to Judge FernandezThere's a Ninth Circuit case familiar to all ERISA litigators: <a target="_blank" href="http://scholar.google.com/scholar_case?case=13174755277951359569&q=Kearney+v.+Standard&hl=en&as_sdt=2,5"><i>Kearney v. Standard Insurance Company</i></a>. Indeed it's quite interesting if you're an ERISA litigator; otherwise not so much. <br />
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I bring it up today to focus on a dissent in that case, written by Judge <a target="_blank" href="http://en.wikipedia.org/wiki/Ferdinand_Francis_Fernandez">Ferdinand Fernandez</a>, who is among other things very very smart, so I am being either brave or foolhardy because I am about to disagree with him. His <i>Kearney</i> dissent touches on one of the most basic dilemmas about ERISA insurers: why should we treat them as something they are not -- impartial trustees -- instead of what they are -- insurance companies looking out for their own bottom line?<br />
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Judge Fernandez thinks I am all worked up over very little:<br />
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<blockquote>While I see no particular point in disputing the majority's determination that this case must be remanded to the district court, I do not concur with its rationale, reasoning or result. Hence I dissent because, as I see it, the keystone of the approach favored of the majority is undue caution about treating administrator authority under an ERISA plan different from insurance company authority in the non-ERISA insurance world. However, because that keystone is defective, the whole arch of the opinion must collapse. There are two major fractures in that most important voussoir.<br />
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The first fracture exists because there is no need for such great caution. This case does not involve a mere contract; it involves an ERISA plan. The difference is exceedingly important and imposes both benefits and burdens upon any entity which is acting as an administrator of a plan. For Standard, and for all other similarly situated companies, the fiduciary nature of the duties can be a double-edged sword to say the least.</blockquote><br />
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The double-edged sword Judge Fernandez percieves is that, whereas insurers under state law are allowed to pursue their own selfish interests so long as they keep to the terms of the contract, under ERISA it's different:<br />
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<blockquote>When it comes to ERISA, however, we cannot simply apply the same premises, even when an insurance company is involved. The whole arrangement is quite different when a company undertakes to act as a plan administrator. It, then, is not a mere contracting party; it is a fiduciary. See 29 U.S.C. §§ 1002(16)(A), 1002(21)(A). In effect, the entity creating the plan is a trustor, the administering company is a trustee, and the claimant is a beneficiary of that trust. Therefore, even though it does insure a benefit, an insurance company must act as a fiduciary must act. That actually imposes a higher duty upon it than it would undertake were it in a mere contractual relationship. It cannot simply act as a self-interested party that need only avoid violating the legal floor created by the covenant of good faith and fair dealing. It must reach much higher; it must act with the very punctilio of fairness. 1102*1102 See 29 U.S.C. § 1104(a)(1) ("[A] fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries. . . ."); NLRB v. Amax Coal Co., 453 U.S. 322, 329, 101 S.Ct. 2789, 2794, 69 L.Ed.2d 672 (1981) ("[A] trustee bears an unwavering duty of complete loyalty to the beneficiary of the trust, to the exclusion of the interests of all other parties."); Blau v. Del Monte Corp., 748 F.2d 1348, 1353 (9th Cir.1984) ("The administrator of an employee welfare benefit plan . . . has no discretion . . . to flout the . . . fiduciary obligations imposed by ERISA, or to deny benefits in contravention of the plan's plain terms."); Restatement (Second) of Trusts § 170(1)(1959) ("The trustee is under a duty to the beneficiary to administer the trust solely in the interest of the beneficiary."); Restatement (Second) of Trusts § 183 (1959) ("When there are two or more beneficiaries of a trust, the trustee is under a duty to deal impartially with them."); cf. Howard v. Shay, 100 F.3d 1484, 1488 (9th Cir.1996) (The administrator's "duties are the `highest known to the law.'").</blockquote><br />
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And, adds Judge Fernandez, the principles of trust law are there to protect us:<br />
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<blockquote>...while it might seem a bit jarring to interpret ordinary contract language in a way that confers discretion, where one party must depend on the mere good faith of the other, it is not at all surprising to find discretionary language in an ERISA plan, where the beneficiary can insist on fiduciary behavior. In the former case, the conferral of discretion may seem downright scary; in the latter, the principles of trust law act as an anodyne for undue fears. It is true that when there is discretion courts will only review the administrator's actions for an abuse of that discretion. See Restatement (Second) of Trusts § 187 (1959). However, the high principles and standards of trust law do protect the beneficiary. No fiduciary, not even an insurance company, can draw much comfort from the fact that discretion is conferred upon it, if it acts in a lax, conflicted, arbitrary, capricious, or abusive manner toward the beneficiary.</blockquote><br />
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The problem with this is that these high standards of behavior we supposedly expect from ERISA insurers have no teeth. Under ordinary insurance law an insurer may -- conceptually -- have a greater ability to look out for its own selfish interests, but if it does cross the line there can be <a target="_blank" href="http://scholar.google.com/scholar_case?case=1498561262845223101&q=24+cal.+3d+809&hl=en&as_sdt=2,5">hell to pay</a>. If an ERISA insurer acts as Judge Fernandez supposes -- in a lax, conflicted, arbitrary, capricious, or abusive manner -- we may well wag our finger, but <a target="_blank" href="http://problemiserisa.blogspot.com/2009/10/erisa-to-insurance-companies-its-ok-to.html">there are no real-world, meaningful consequences</a> imposed on it. It's just business as usual.<br />
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Judge Fernandez would be quite correct, IMO, if there were consequences. <br />
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Or even the possibility of consequences.<br />
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- Posted using BlogPress from my iPadRichhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-38100777924629625272011-04-15T10:56:00.000-07:002011-04-15T10:56:50.912-07:00A claimant speaks -- Part 2 (turns out he reads too)Wendell Potter, former mouthpiece for the insurance industry, let his conscience be his guide, and <a href="http://problemiserisa.blogspot.com/2010/06/word-from-industry-insider-makes-case.html">became one of our heroes</a>. Mr. Potter has now authored a must-read book, <a href="http://www.amazon.com/Deadly-Spin-ebook/dp/B0049195R0/ref=dp_kinw_strp_1?ie=UTF8&m=AG56TWVU5XWC2">Deadly Spin</a>. Our contributor-claimant read the book and, with our thanks, offers this review:<br />
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<center><h2>Deadly Spin: A Review</h2></center><br />
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After reading Wendell Potter's book, “Deadly Spin”, I am struck at how hard it is to suppress my anger and resentment towards the man and focus on the message. This may be proof of its accuracy. There is no other way to put it. Wendell Potter willingly led an evil life. We all have to make choices about how far we are willing to go to earn our living and pay our mortgages.<br />
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The book does a solid job of explaining the problems with our for profit insurance system. It could be characterized as required reading for anyone with or without health insurance. Mr. Potter describes the problems of the system and lack of regulation. I felt he did not write enough about his “soul searching” and decision to leave Cigna. He devotes two pages and a few sentences about alcohol which could easily be expanded. I think it is important for society to understand the mind-set of those who believe they deserve power and profits at the expense of others. <br />
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I hope he is a changed person. We all deserve a chance to redeem ourselves. Welcome back to humanity, Wendell. I hope you make a difference.<br />
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I found the value of this book in its ability to educate the layperson on the tricks, tactics and manipulation techniques of the PR industry. The book provides a guide to alert the consumer when PR is negatively influencing, manipulating them.<br />
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(Disclaimer- this is a review intended to present many of the ideas in the book. As such, ideas and concepts come directly from the book. )<br />
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PR- A definition<br />
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Believe it or not, the PR industry has a Code of Ethics! It has a perverse value system but worth learning in order to recognize when you are being influenced by someone’s agenda.<br />
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Wendell Potter defines PR as "the management function that establishes and maintains mutually beneficial relationships between an organization and the public on whom its success or failure depends.” That definition emphasizes the two-way nature of PR. It is in direct opposition to the one-way communication that characterizes both propaganda and advertising. While it’s a nice definition, it’s deliberately misleading.<br />
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PR- In Action<br />
Mr. Potter writes that good PR is intentionally subtle and hard to spot. It's about controlling what is said and thought about the client. PR firms know how and where to place their message to reach their target audiences.<br />
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In a high stakes fight, PR firms routinely create subversive front groups. They attack and discredit opponents, spread false information, lie, distort the truth and instill fear. In fact, PR firms can be so effective that they have convinced a large segment of the population to vote contrary to their own best interests. Those among us who suffer the most are voting to continue the very system, which hurts them.<br />
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The Tools of PR Industry<br />
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Knowledge remains power. If we learn to recognize the tactics and dirty tricks, we can fight back. The following is a list of tactics regularly used by the PR industry. It's worth committing them to memory. They will alert you to the fact you are being manipulated!<br />
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1. Fear<br />
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Organizations with the most to lose are most likely to resort to fear mongering. Their information may mention the loss of jobs, a threat to public health, or general decline in social values, standard of living, or individual rights. It may also vilify a specific cause or even a specific person in order to create the desired point of view.<br />
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2. Glittering generalities<br />
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This approach arouses strong positive emotions by using words and phrases like "democracy," "patriotism," "American way of life." The tactic is used to either support a cause or destroy an individuals or groups reputation.<br />
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3. Testimonials<br />
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Celebrities or recognized “experts” are frequently recruited and hired to provide testimonials about a product, cause, company, organization, or candidate.<br />
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4. Name-calling<br />
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Blatant insults are a proven, effective public-relations tool. The goal is to associate the target of the insults with a negative for unpopular cause or person. Defending against name-calling can be difficult. Negative terms tend to stick, even if they are undeserved.<br />
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5. Plain folks<br />
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Any time a business executive or politician or other individual poses with rank-and-file employees or customers, he or she is claiming to be "of the people". Being identified with"" plain folks is both good business and good politics. Do you really a billionaire is just like you and I?<br />
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6. Euphemisms<br />
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PR practitioners often select words that obscure the real meaning of actions or concepts. The tactic is sometimes called to "doublespeak"," Weasel words," or "Spin." For instance, an employee may be "transitioned" rather than fired and a lie may be called a "misunderstanding or misinterpretation."<br />
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7. Bandwagon<br />
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The bandwagon message is that everyone else is doing or supporting the process. And, you should, too. Opinion polls are created to show a large percentage of people are on the bandwagon, but polls are carefully designed and managed. Polls are shaped in advance by structuring questions to elicit specific responses.<br />
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8. Transfer<br />
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Similar to testimonials, the transfer of approach involves using the approval of a respected individual or organization. This can be used as a device by which a PR campaign can utilize the authority, sanction, and prestige of something we respect and revere in order to influence our opinion. They can also include trusted members of society such as teachers, firefighters or activists.<br />
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Protecting Yourself: How to recognize SPIN<br />
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The book gives some sound advice on how to spot the SPIN and telltale signs of a PR firm.<br />
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1) If the message sounds too good to be true, it is. Some examples include: The oil company that wants to reduce dependence on oil. The Health insurance company that wants to keep you healthy or the finance company that wants to help you make money. This is a sign of PR at work.<br />
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2) In public debate recognize when PR firm is reframing the debate in order to shift the focus away from their client. They will use misleading information to redirect blame or create controversy. <br />
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3) Recognize the affect of PR in advertising. Be wary of any ad that promotes the virtues of a corporation and its contribution to society. This includes advertising that carries a message that a company or industry is making your life better. Be wary of the use of philanthropy to counter negative publicity and questionable behavior.<br />
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4) Recognize the affect of PR firms and the use of third-party front groups. For example, the Center for Consumer Freedom is funded by tobacco companies to "protect the rights" of people to smoke in restaurants. Front groups are used to avoid revealing their funding sources. To verify true purpose of a third-party group use <a href="http://www.sourcewatch.org">Sourcewatch</a>.<br />
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Lastly, don’t forget to check out <a href="http://www.prwatch.org/">Center for Media and Democracy</a> for validating information.Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-73216382269540942222011-04-02T12:23:00.001-07:002011-05-05T12:09:28.407-07:00The Problem, reduxAround 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...<br /><br />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.<br /><br />Way, way to the contrary.<br /><br />This blog is dedicated to the ERISA problem.<br /><br />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.<br /><br />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:<br /><br />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) <a href="http://problemiserisa.blogspot.com/2009/08/theres-no-remedy-if-your-insurance.html">are very, very stingy</a>, 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.<br /><br />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). <br /><br />The trashed credit, the lost home, the bankruptcy, the ruined life? Bupkis. ERISA <a href="http://problemiserisa.blogspot.com/2009/08/rising-judicial-chorus-judge-pickering.html">does not allow for any recovery</a> 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 <i>fraud</i> 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. <br /><br />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 <a href="http://problemiserisa.blogspot.com/2009/08/rising-judicial-chorus-judge-becker.html">one federal judge has commented</a>, "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.<br /><br /><br />2. Procedure. In ERISA litigation, courts have determined among other things that there is no right to a jury; that <a href="http://problemiserisa.blogspot.com/2009/08/how-they-hide-ball-story-of-compounding.html">discovery (the pre-trial process where you obtain the other side's documents, take depositions and such) is to be significantly abridged</a>; 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 <a href="http://problemiserisa.blogspot.com/2009/08/discretion-and-its-many-abuses-part-i.html">"arbitrary and capricious"</a> -- that is to say, ridiculous, absurd, unintelligible, crazy. And lo and behold, the <a href="http://problemiserisa.blogspot.com/2009/09/how-we-got-here-abuse-of-discretion_15.html">insurance companies grant themselves "discretion" when they write their policies</a>. In this way we treat insurance companies as if they were federal judges. But Learned Hand they are not.<br /><br />The Republicans are gearing up to take a shot at <a href="http://www.washingtonpost.com/wp-dyn/content/article/2011/01/03/AR2011010303781.html">repealing Obamacare</a>. 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. <br /><br />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.<br /><br /><object type="application/x-shockwave-flash" data="https://clients4.google.com/voice/embed/webCallButton" width="230" height="85"><param name="movie" value="https://clients4.google.com/voice/embed/webCallButton" /><param name="wmode" value="transparent" /><param name="FlashVars" value="id=57d91c5713fb8479b79fec7bf570dc9a75836890&style=0" /></object><br />Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-90149521921501863992011-03-09T13:45:00.000-08:002011-03-09T13:45:59.847-08:00A claimant speaks -- Part 1From the front lines of ERISA abuses comes the following by a claimant who's just been through the ringer of an ERISA dispute. Not gonna name him; he's an interested reader who has offered to share his experiences. If you've perused this blog at all nothing he says will surprise you. But it's yet another indication that ERISA affects real lives in very bad ways.<br />
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The claimant in question has contributed a significant amount of material, so this'll be a series, of which the first installment is here:<br />
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<h2>Canceled: “ERISA is Everyone’s Problem”</h2><br />
Disclaimer: The story is true. Certain facts have been changed to prevent any legal issues and protect the privacy of individuals. This account was written using a voice to text translation program, therefore, the writing style and syntax may be affected.<br />
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My decision to post on this blog is to highlight the risk posed by ERISA. The laws no longer protect the individual or society as originally intended. A modern society cannot prosper without a well functioning health system. Health Insurance is not a right or a luxury. It is a necessity. We all get sick and need to access health services throughout our life. It is also important to realize that some industries are more important than others. They play a critical role in society and are worth protecting. Two obvious examples: Health Insurance is more important than chewing gum or perfume.<br />
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This not a story arguing the merits of free markets or government controlled health care. This is a warning of what happens when industries cross a line and become dangerous to society. Throughout U.S. history, there have been movements to limit and reform predatory industries. ( Example: Theodore Roosevelt dismantling the large Trusts and Oligopolies)<br />
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Today, insurance companies have amassed so much money and power that they operate by their own set of rules. The normal checks and balances of the free market system are no longer sufficient. To use a term from economic textbooks, these companies become “predatory” to both the individual and society. We saw this recently in the banking crisis and housing bubble. Wall Street banks operated, according to their own dictates, outside of the norms of free market system. The current legislation and the free markets failed to regulate and protect society from these predators. <br />
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Free Markets vs. Predatory Markets<br />
In economics, they make a distinction between free market competition and predatory competition. In a free market system, companies create net wealth to society through jobs, taxes and profits. In a predatory system, companies take the wealth produced and distribute the profits to a select group. For society, it’s a difference between wealth creation and wealth destruction.<br />
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In a predatory system the balance of power is squarely with the company. They have enormous power to write laws, terminate employees and operate almost without recourse. <br />
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Recent history provides many examples from Tyco to Enron. Executives pay themselves large packages regardless of operating results and profits. Management runs these companies are run as if they are the property a select few to take wealth and value from the communities that produce them.<br />
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Identifying Predators <br />
It is not always easy to identify a predatory business. However, it’s easy to identify three important indicators: <br />
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1) High Executives compensation. They are high relative to other industries or average employee salaries and are paid regardless of economic cycles. <br />
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2) Limited Employee rights. In a free market, employees retain a measure of protection and job security for performance. Under a predatory system, operating performance, profits and high productivity do not protect employees. <br />
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3) Culture or business model. In a predatory system, you are not an employee. You are never an asset. You are a liability. You are not part of wealth creation process.<br />
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Risk to Free Market System <br />
Historically, the self-regulation of the free market has failed to keep predators from taking control of key industries. Wherever there are markets, there is unfortunately a need for regulation. Our free market system was never intended to let the interests of a few dominate the rights of all. <br />
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My ERISA story. <br />
For 14 years, I worked for a large, profitable medical equipment supplier *<br />
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I was injured on the job and underwent two neck surgeries. I returned to work for a ten-month period but ended up aggravating my injury. In 2005 I had to stop working. Two additional surgeries later, I found myself 43 years old, disabled, in constant pain and unable to care for myself. <br />
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However, I never lost hope. I had excellent doctors, medical insurance and the support of good friends. My treating physicians were among the best in the country. They were authorities in their fields and had authored medical textbooks.<br />
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Financially, I was surviving. I thought that as long as my former employer was financially strong, my benefits would continue. My injury was well documented and I made sure to respond to all requests for medical information. I believed any attempt to challenge my case would be a waste of time and resources for any insurance company. <br />
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In retrospect, I was naive. <br />
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Health Insurance: It’s about money <br />
Health Insurance is a misnomer. It is not about protecting your health. It is about return on investment. <br />
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When you are paying premiums, the industry is happy to have you as a customer. However, once you start collecting on a claim, you have become a liability. Unfortunately, the more you need the payments, the bigger the liability you become. If you have the misfortune to have cancer or become disabled, you often become a priority target. <br />
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Insurance companies pay a sizeable portion of their staff to deny coverage or cancel coverage. These are not the official job titles, but its what they are paid to do. To save their jobs, they must do their jobs. They must cancel policies. It’s a vicious circle.<br />
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Storm Signals<br />
In 2008, as the stock market bust and housing bubbles ripped through the economy, No less than Warren Buffet, whose company owns GEICO insurance, started to predict tougher times ahead for the insurance industry. <br />
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A quick check revealed that, despite the economic downturn, my disability carrier Inco (not real name) was profitable. The CEO had been among the top three earning insurance company executives for the decade. Additionally, the industry continued to do well. The U.S. Department of Health and Human Services reported that profits for the 10 largest U.S. insurance companies jumped 250% between 2000 and 2009 while millions of Americans have lost coverage. <br />
In 2009, the trend continued. Inco executives continued to pay themselves enormous salaries. This could only be done by large scale cost cutting. I started to get nervous.<br />
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I did not know, as early as 2009, Inco had already decided to terminate my benefits. They were in the process of constructing a paper trail. After all, ERISA has been gutted. For Inco, there was no risk in trying.<br />
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Cancellation: Actions without consequences<br />
The outline below describes a series of deliberate actions by Inco in flagrant violation of good faith and proper procedure. They are examples of Inco, deliberately withholding information, omitting material facts and misleading treating physicians. <br />
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Violation #1: <br />
In violation of due procedure, Inco called my lawyer to inform him my benefits had been terminated retroactively at the end of the prior month. <br />
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Violation #2: <br />
Inco did not send an explanation letter until three weeks post termination. The letter did not correspond to the reasons cited in the phone conversation. <br />
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Violation #3: <br />
For cause of termination, Inco stated, failure to supply medical information. Yet, in the same termination letter, they referenced the information they claimed to be missing. Inco refused attempts to clear up any misunderstandings.<br />
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Violation #4<br />
The Inco medical report and termination letter deliberately omitted basic information including: Diagnosis, number and types of surgeries, results of surgeries, use and indication for medications, daily functional state and ability to perform work. <br />
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Violation #5<br />
Inco deliberately misrepresented the opinion of treating physicians. Several attempts by the physician and my attorney to rectify the situation were ignored.<br />
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Violation #6<br />
In a request for medical information, Inco deliberately misled a treating physician. Several attempts to clear up the matter were ignored.<br />
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In the end, I was lucky. Inco had so clearly violated good faith and misrepresented the facts that benefits were eventually reinstalled. I suffered financial damages and was nearly forced to sell my condo. Under ERISA I am not entitled to recover any financial losses. I can only wonder how many others were cancelled and unable to reinstall benefits either due to lack of financial resources, lack of legal representation or failure to keep documentation. <br />
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ERISA is the Problem<br />
As noted in the blog, the insurance industry has changed the ERISA laws to exempt themselves against wrongful termination as well as losses and damages inflicted on improperly or illegally terminated policies. There is nothing to stop an insurance company from withholding benefits and waiting you out to see if you have the financial resources, education, and legal skills to regain your benefits. <br />
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What to do:<br />
There are several steps to take to educate and protect yourself. I’ve outlined a few below.<br />
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1) Be proactive: Understand it can happen to you<br />
2) Support reform: It is the right thing<br />
3) Take care of your health.<br />
4) Educate yourself on your health plan and benefits providers.<br />
5) Keep records of all communication with insurance companies.<br />
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<object type="application/x-shockwave-flash" data="https://clients4.google.com/voice/embed/webCallButton" width="230" height="85"><param name="movie" value="https://clients4.google.com/voice/embed/webCallButton" /><param name="wmode" value="transparent" /><param name="FlashVars" value="id=57d91c5713fb8479b79fec7bf570dc9a75836890&style=0" /></object>Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-28780847928280828212011-03-01T10:57:00.000-08:002011-03-01T10:57:29.870-08:00"Insurers can make erroneous arguments with near impunity when it comes to the 112.8 million life and accidental death policies provided by companies and associations to their employees and members. That’s because of loopholes in a federal law intended to protect worker benefits."That's a quote from a <a href="http://www.bloomberg.com/news/2011-03-01/accidental-death-becomes-suicide-when-insurers-dodge-paying-life-benefits.html">Bloomberg article</a> about insurance company abuses of claimants under Accidental Death and Dismemberment insurance policies.<br />
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And what is the federal law in question?<br />
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Three guesses.<br />
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Read the whole thing.Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0tag:blogger.com,1999:blog-694967215978644381.post-6956845857976706482011-02-22T10:04:00.000-08:002011-02-22T11:38:30.218-08:00No shame in struggling<blockquote>He has a lot of people who love him and there's no shame in struggling because we all have, or will struggle eventually.</blockquote><br />
That's a response by <strike>Warden,</strike> EM, the brother of a man apparently (or at least potentially) <a href="http://minx.cc/?post=312356">pulled back from the brink of oblivion</a> 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.<br />
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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.<br />
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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 -- <i>earn</i> -- the benefits which are ultimately denied to them. They are accustomed to, and have <i>earned,</i> self-sufficiency. And they are told when they seek the insurance benefits they have <i>earned</i> that they're goldbrickers, malingerers, frauds. And they must seek help, or suffer in silence.<br />
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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.<br />
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I'm looking at you, ERISA insurance industry.<br />
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I am proud of my ERISA clients, as they seek to recoup no more than what they have <i>earned.</i> 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.<br />
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We make our meager efforts to help ERISA claimants get the benefit they've <i>earned,</i> and sometimes to facilitate their recoupment of the pride and peace of mind they've <i>earned.</i> Others struggle in a multitude of manners in other arenas. No one -- no one -- makes it through without struggling.<br />
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So whatever your struggles may be, there's no reason for shame on that account. Fight the good fight, whatever your fight may be.<br />
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Thanks to the folks at Ace of Spades, and to EM and Warden, who remind us all there's no shame in struggling.<br />
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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.Richhttp://www.blogger.com/profile/12169789652349221427noreply@blogger.com0