Long Term Disability – Subjective Complaints

In cases where the claimant’s subjective complaints are the primary disabling impairment, an insurance company’s credibility findings concerning those complaints are not valid without conducting a medical examination.  If you have a claim against a long term disability insurance company, and your claim has been denied on the basis that your complaints are purely subjective, feel free to contact my office for a free consultation.

See: Shaw v. AT&T, 795 F.3d 538 (6th Cir. 2015); Godmar, (6th Cir. 2016).


What guides the Court’s decision?

In Shaw v. AT&T Umbrella Benefits Plan No. 1, 795 F.3d 538 (6th Cir. 2015), the 6th Circuit Court of Appeals outlined the standard of review as follows:

Under the arbitrary-and-capricious standard, we must uphold the plan administrator’s decision if it is “the result of a deliberate, principled reasoning process” and “supported by substantial evidence.” DeLisle v. Sun Life Assur. Co. of Canada, 558 F.3d 440, 444 (6th Cir. 2009) (quoting Glenn v. MetLife, 461 F.3d 660, 666 (6th Cir. 2006)). “When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.” Davis v. Ky. Fin. Cos. Ret. Plan, 887 F.2d 689, 693 (6th Cir. 1989) (internal quotation marks omitted). However, arbitrary-and-capricious review is not a “rubber stamp.” Cox v. Standard Ins. Co., 585 F.3d 295, 302 (6th Cir. 2009). “Several lodestars guide our decision: ‘the quality and quantity of the medical evidence’; the existence of any conflicts of interest; whether the administrator considered any disability finding by the Social Security Administration; and whether the administrator contracted with physicians to conduct a file review as opposed to a physical examination of the claimant.” Fura v. Fed. Express Corp. Long Term Disability Plan, 534 F. App’x 340, 342 (6th Cir. 2013) (quoting Bennett v. Kemper Nat’l Servs., Inc., 514 F.3d 547, 552-53 (6th Cir. 2008)).

Shaw v. AT&T Umbrella Benefit Plan No. 1, 795 F.3d 538, 2015 U.S. App. LEXIS 13194, 2015 FED App. 0171P (6th Cir.), 60 Employee Benefits Cas. (BNA) 1723 (6th Cir. Mich. 2015)

If your long term disability claim has been denied, contact The Hamilton Firm for a free consultation: 423 634 0871

Pre-existing Condition Exclusion

In Genoff v. United of Omaha Life Ins. Co., 2012 U.S. Dist. Lexis 124402 (E.D. Mich. Aug. 31, 2012), the plaintiff suffered a stroke a few weeks after becoming covered under his employer’s LTD plan.  His claim was denied by the defendant under the preexisting condition exclusion found in the Policy. The Policy defined preexisting condition as “any injury or sickness for which you received medical treatment, advice or consultation, care or services including diagnostic measures, or had drugs or medicines prescribed or taken in the the three months prior to the day you became insured under this policy.”  The Court reviewed the denial applying the de novo standard of review.

The Court noted that there was nothing in the record to indicate that the plaintiff had received any treatment for a stroke before the effective date of coverage:  “To the contrary, the symptoms for which Genoff sought treatment were determined to be caused by an ear infection. Thus, United’s denial of Genoff’s claim simply because he presented symptoms that could be associated with a later-diagnosed disease and consulted with a doctor during the look-back period in connection with those symptoms cannot stand.  Plaintiff’s treating physician did not diagnose or treat the specific disability that resulted in Plaintiff’s long term disability.”

ERISA Recovery of Overpayment

A reader of this blog brought to my attention an important case today on the subject of overpayment.  In Kapp v. Sedgwick CMS, 2013 U.S.Dist.Lexis 219 (S.D. Ohio Jan. 2, 2013), one of the issues was the claim of the LTD insurer for recovery of an overpayment. Apparently, the LTD carrier/insurer failed to offset the LTD benefits to account for the plaintiff’s receipt of SSDI benefits.  The overpayment took place over a period of more than 8 years.  The Court noted that “equitable principles may limit an ERISA fiduciary’s legal right” to recovery an overpayment.  The Court analyzed the issue under trust principles.  Generally, overpayments may be recouped; however, “such recovery is precluded if the beneficiary relies on the correctness of the amounts to his detriment.”  The Court employed a six factor analysis of the situation:

(1) the amount of time which has passed since the overpayment was made;

(2) The effect that recoupment would have on that income;

(3) the nature of the mistake by the administrator;

(4) the amount of the overpayment;

(5) the beneficiary’s total income; and,

(6) the beneficiary’s use of the money at issue.

In applying the above factors, the Court noted that the overpayments were made over a course of more than 8 years, and the Plaintiff had “repeatedly notified” the defendant of the SSDI award.  Moreover, the plaintiff had relied on the correctness of the amount of his LTD benefits and made financial decisions based on the amount of his LTD payments.  Considering all of the factors, the Court denied the Administrator’s claim for repayment of the $162,308.21


ERISA Reimbursement

On January 20, 2016, the United States Supreme Court decided the case of Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan.  The Court held as follows:  “When an ERISA-plan participant wholly dissipates a third party settlement on nontraceable items, the plan fiduciary may not bring suit under 502(a)(3) to attach the participant’s separate assets.”  The Court reasoned that Plan fiduciaries are limited per 502(a)(3) to “equitable relief.”  Montanile involved a individual (beneficiary) who was injured through the negligence of a third party.  The beneficiary was a participant in a health benefits plan governed by ERISA.  In other words, the injured beneficiary was covered by health insurance.  The health insurance plan paid for some of the injured beneficiary’s medical bills. The injured beneficiary was severely injured as the result of being struck by a vehicle operated by a drunk driver.  The medical expenses exceeded $120,000.00.

The injured beneficiary obtained a settlement totaling $500,000.00.  The lawyer fees were $200,000.00 (40%), and apparently said lawyers advanced about $60,000 in legal expenses.  The remaining balance of $240,000 was held in the attorney’s trust account while negotiations took place with the health insurer, who asserted a claim for reimbursement under the terms of the policy.

Eventually, the attorney for the injured beneficiary sent a letter to the health insurance plan advising that he was going to disburse the remaining funds to the client unless the plan objected within 14 days.  Receiving no response within 14 days, the attorney disbursed the remaining funds to his client.

Six months later, the plan brought suit in federal court against the plan beneficiary seeking over $120,000 for money spent on his medical care. The plan sought to enforce an “equitable lien upon any settlement funds” of the plan beneficiary.

The issue for the Court was simple: “whether an ERISA fiduciary can enforce an equitable lien against a defendant’s general assets under these circumstances.”  The Court answered in the negative: “We hold that it cannot, and accordingly reverse the judgment of the Eleventh Circuit and remand for further proceedings.”

The Montanile case will undoubtedly cause ERISA plans to be much more diligent in tracking and enforcing equitable liens. The Court made specific reference to the failure of the plan to object within 14 days of receiving the letter of the beneficiary’s lawyer, and also in failing to file suit until six months after the funds had been disbursed.


ERISA – LTD Standard of Review: 6th Circuit

“The arbitrary or capricious standard is the least demanding form of judicial review of administrative action.” Davis By and Through Farmers Bank and Capital Trust Co. of Frankfort, Ky. v. Ky. Fin. Cos. Retirement Plan, 887 F.2d 689, 693 (6th Cir. 1989) (quotingPokratz v. Jones Dairy Farm, 771 F.2d 206, 209 (7th Cir. 1985)). Under this standard, the determination of an administrator will be upheld if it is “rational in light of the plan’s provisions.” McClain v. Eaton Corp. Disability Plan, 740 F.3d 1059, 1064 (6th Cir. 2014)(citing Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 457 (6th Cir. 2003); Borda v. Hardy, Lewis, Pollard & Page, P.C., 138 F.3d 1062, 1066 (6th Cir. 1998)); Shelby Cnty. Health Care Corp. v. S. Council of Indus. Workers Health and Welfare Trust Fund, 203 F.3d 926, 933-34 (6th Cir. 2000) (citation omitted). Stated differently, a claim administrator’s decision is not arbitrary and capricious if it “is based on a reasonable interpretation of the plan.” Johnson v. Eaton Corp., 970 F.2d 1569, 1574 (6th Cir. 1992).

While this review is “not without some teeth, it is not all teeth.”McClain, 740 F.3d at 1064. “A decision reviewed according to the arbitrary and capricious standard must be upheld if it results from a deliberate principled reasoning process and is supported by substantial [37]  evidence.” Id. (citing Schwalm v. Guardian Life Ins. Co. of Am., 626 F.3d 299, 308 (6th Cir. 2010). “When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.” McClain, 740 F.3d at 1065 (citing Shields v. Reader’s Digest Ass’n, Inc., 331 F.3d 536, 541 (6th Cir. 2003)). Moreover, a court must accept an administrator’s rational decision, if it is not arbitrary or capricious, even in the face of an equally rational interpretation of a plan offered by a participant. Gismondi v. United Techs. Corp., 408 F.3d 295, 298 (6th Cir. 2005) (citingMorgan v. SKF USA, Inc., 385 F.3d 989, 992 (6th Cir. 2004)).

Ling v. Life Ins. Co. of N. Am., 2015 U.S. Dist. LEXIS 119865, *35-37 (M.D. Tenn. Sept. 9, 2015)

ERISA Preemption

In Dye v. Hartford Life & Accident Co., 2014 U.S. Dist. Lexis 47974 (M.D.GA. April 8, 2014), the plaintiff brought claims in state court for breach of contract, bad faith, etc., based on the denial of long term disability benefits by the Hartford.  Hartford removed the case to federal court and then filed a Motion to Dismiss based on ERISA preemption.  The facts in this case are unusual, and it seems quite likely the whole story is not in the record.  For example, the plaintiff’s claim was denied in 2006, but the lawsuit wasn’t filed until 2013.  After the case was removed to federal court, the plaintiff did not amend the complaint or move to remand the case to state court.  In fact, the plaintiff did not file an opposition to the Motion to Dismiss.  The District Court ultimately concluded that all of the plaintiff’s claims were preempted by federal law, and that because the lawsuit was based on state law, the case was dismissed.

The Court concludes all of the Plaintiff’s claims are preempted by ERISA. The ultimate inquiry is whether the Plaintiff must bring her claims pursuant to ERISA or not at all. Here, the Plaintiff has chosen to limit her complaint to state law claims, despite the Defendant’s removal to federal court based on ERISA preemption. Her counsel has not contested removal nor sought to amend the complaint. Thus, the claims must be dismissed.