Concurrent Causation from "A Medley of Interesting Disability Cases"

Kruk v. Metropolitan Life Ins. Co.,2013 U.S. Dist. LEXIS 35637 (D. Conn. 2013)

Facts and holding: Rita Kruk (“Kruk”), a Human Resources Specialist, was a participant in an ERISA plan provided through her employment that provided disability benefits. Kruk’s Plan stated that if a disability was due to a mental or emotional disease, participants were entitled to monthly long term disability benefits for a maximum of 24 months. If the disability was due to physical injury or illness, then participants were entitled to benefits up to, at most, age 65. The Plan used an “any occupation” definition of total disability.

Kruk suffered from the combined effect of two co-morbid illnesses: one mental or emotional in nature (depression) and one physical in nature (lupus). In December 2000, she submitted a claim to Metropolitan Life Insurance Company (“MetLife”) for long term disability benefits. MetLife paid Kruk’s claim for the maximum 24-month duration pertaining to benefits for disability due to a mental or emotional illness. Kruk challenged this determination, claiming that she was disabled by lupus, a physical cause, entitling her to benefits until age 65. MetLife argued that Kruk’s disabling conditions were actually mental and emotional depression, and not the physical illness of lupus.

 

 

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Barger & Wolen and Hinshaw & Culbertson Announce Merger

Combined Firms Create Powerhouse Insurance Practice with 120 Attorneys Dedicated to Serving the Insurance Industry

  

Chicago and Los Angeles — September 2, 2014 — Barger & Wolen and Hinshaw & Culberston, a national law firm with 460 lawyers in 22 offices around the country, announced today they will combine forces. The merger creates one of the largest insurance law practices in the United States with 120 full-time attorneys dedicated to providing legal counsel to insurance companies and financial services firms that shape the insurance industry.

The partner votes took place on August 28, 2014, and the merger will become effective on October 1, 2014. The combined firm will keep the name Hinshaw & Culbertson and have over 500 attorneys in 11 states as well as London.

Click here for the full press release. For more information, contact Heather Morse.  

 

Burden of Proof: The "What Changed?" Argument from "A Medley of Interesting Disability Cases"

Hegger v. Unum Life Ins. Co. of America2013 U.S. Dist. LEXIS 28587 (N.D. Cal. 2013)

Facts and holding: Plaintiff Tami Hegger (“Hegger”) was employed as a medical device sales representative until she left work in December 2004 due to back and neck pain. Hegger was covered by her employer’s ERISA-governed, long term disability (“LTD”) plan , which was insured by Unum Life Insurance Company of America (“Unum”). In April 2005, Unum approved Hegger’s claim for LTD benefits. Unum continued to pay her LTD benefits for five years, and during this time, Unum periodically reviewed Hegger’s file and determined that she remained disabled.

In November 2010, Unum terminated Hegger’s disability benefits, stating that she was physically able to perform her own occupation as a field sales representative and that the occupation would provide her with a gainful wage as defined by the Plan. Unum’s termination letter relied on the medical information in Hegger’s file, as well as the results of vocational analyses, surveillance, and Hegger’s Social Security disability benefits denial. Hegger appealed, and Unum upheld its determination. Hegger then filed suit.

Applying a de novo standard of review, the Court ruled in favor of Unum after a bench trial, and held that Hegger was not disabled under the terms of the Plan.

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A Medley of Interesting Disability Cases: Reviewing 2013 Cases

Another year has passed, and what better way to celebrate than by taking a look at the various interesting disability cases that have been issued during that time. This year they are collected in the Medley.

In this booklet I have summarized a couple of dozen individual and group disability opinions that were issued by both state and federal courts primarily over the 2013 calendar year. As is the case with each of my yearly collections, the cases included are meant to be illustrative of how judges resolve various issues, but those cases are not necessarily the only recent cases pertinent to each issue discussed. I have included both DI and LTD cases, with a focus on substantive over procedural issues (though both are included).

The format of this year’s Medley is the same as that of past collections: I have summarized the pertinent facts of each case and set forth how the court ruled on certain of the issues raised. At the conclusion of each case summary, I have provided my personal thoughts in a “Lessons Learned” section.

For those keeping track, this sixth booklet is the latest in a series that includes: (1) the Potpourri (2008 cases); (2) the Cornucopia (2009 cases); (3) the Smorgasbord (2010 cases); (4) the Cavalcade (2011 cases); and (5) the Ensemble (2012 cases). I am hopeful that collectively they provide a gestalt-ish “feel” for how courts seem to be resolving the issues that we all face. I am also hopeful that these summaries provide helpful guidance to those in the industry, whether they be making the initial decisions (the examiners and others working for disability carriers and third party administrators), giving legal advice about those decisions (in house counsel), defending those decisions (outside counsel), or performing other functions. We can all learn from the experience of the litigants whose disputes were resolved in these cases.

I would like to thank very much Natalie Ferrall, who gave significant time and great insight in assisting me with this publication.

If you would like a copy of this year's publication, or any prior year, please email me here.

 

California Insurers Asked to Submit Diversity Information About Boards of Directors

by Robert Hogeboom & Samuel Sorich

The California Department of Insurance (“CDI”) has issued a notification to insurers with 2013 written premiums of $100 million or more in California to complete and submit the CDI’s Governing Board Diversity Survey.

Among other questions, the Survey asks the insurers to report on the number of directors who identify themselves as a man or a woman, how many are comprised from seven different ethnic group categories, and how many are a disabled veteran, lesbian, gay, bisexual, and/or transgender.

Completed surveys, including an affidavit on the data, are to be submitted to the CDI by August 12, 2014. All surveys will be posted on the CDI website by October 1, 2014. The notification advises that survey results will be posted on the CDI’s website and that “[f]ailure to submit a complete report or submit a report by the due date will be noted,” which we presume will be noted on the CDI website.

The Survey stems from a recommendation put forward by the CDI’s Diversity Task Force which was created shortly after the Commissioner office.

Several existing statutes require insurers to submit reports or respond to data calls on other somewhat related topics:

Insurance Code section 926.2 requires each insurer admitted in California to provide information on all its community development investments and community development infrastructure investments in California.

Insurance Code section 926.3 requires each admitted insurer writing $100 million or more in annual premiums in California to file policy statements expressing goals for community development investments and community development infrastructure investments.

Insurance Code section 927.2 requires each admitted insurer writing $100 million or more in annual premiums in California to submit reports on minority, women, and disabled veteran-owned business procurement efforts.

In contrast, there is no statute which specifically states a requirement to report on the diversity of insurance companies’ boards of directors. The department’s notification to insurers does not cite the statutory authority for the Survey.

For copies of the report or questions, please contact Robert W. Hogeboom at rhogeboom@bargerwolen.com or (213) 614-7304.

Originally posted to Barger & Wolen's Insurance Litigation & Regulatory Law blog.

Ninth Circuit Takes Narrow View of ERISA Surcharge Remedy

In Gabriel v. Alaska Electrical Pension Fund, the Ninth Circuit ruled that a pension plan participant could not be “made whole” by using the equitable remedy of surcharge to recover pension benefits he was erroneously told he would receive. 

As explained below, the Alaska Electrical opinion is significant because it clarifies and limits the reach of equitable remedies, such as surcharge, in ERISA cases under the Supreme Court’s 2011 decision in Cigna v. Amara. In doing so, the Ninth Circuit declined to follow decisions in the Fourth, Fifth and Seventh Circuits that suggested a broader application for equitable remedies under Amara

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MICRA's Big Deception

Michael Newman authored an op-ed for the May 29th edition of the Daily Journal to speak out against what he believes is an initiative that will deceive California voters this coming November.  

Newman writes that the primary purpose of the Troy and Alana Pack Patient Safety Act is to alter MICRA, the Medical Injury Compensation Reform Act of 1975. Currently, MICRA caps noneconomic damages in medical malpractice cases at $250,000.

The initiative slated for the November 2014 ballot, among other things, would seek to increase that limit to $1.1 million, which going forward will be adjusted to inflation.

Yet the official summary of the initiative, written by the office of Attorney General Kamala Harris, buries the MICRA reform provision.

The first three sentences of the summary describe provisions that would require drug testing for doctors. The fourth sentence refers to a provision that would require health care practitioners to consult a state prescription drug history database before prescribing certain controlled substances. A reader would need to get all the way to the fifth and final sentence to see that the initiative increases the cap on pain and suffering damages in medical negligence lawsuits.

This bit of deceptive presentation appears to be a deliberate attempt to sneak the measure past voters. As reported in an op-ed in the Los Angeles Times, The battle between doctors and trial lawyers grows more infantile, one of the law's primary advocates described the drug testing provision as "the ultimate sweetener," admitting that when the proposal was put before focus groups, "the only thing that made them light up was drug testing of doctors."

Newman also objects to the initiative the ballot measure's potential illegality. The state constitution provides that an "initiative measure embracing more than one subject may not be submitted to the electors or have any effect."

As the state Supreme Court has explained, one of the purposes of single-subject requirement was "to minimize the risk of voter confusion and deception." The initiative certainly violates the spirit, and perhaps the letter, of this law.    

The fundamental changes contained in the initiative deserve an honest and open debate, with Californians clearly understanding what they are voting for or against. The proponents, as evidenced their packaging, appear to lack confidence that they would win such a debate on its merits. If they would invoke the initiative process, proponents should show respect, not contempt, for voters' intelligence.

ERISA Long Term Disability Claim Barred By Failure to Exhaust Administrative Remedies

DRI members Martin E. Rosen and Jenny H. Wang, partners with Barger & Wolen LLP in Los Angeles and Newport Beach, California, respectively, recently obtained a summary judgment from the U.S. District Court for the Central District of California.  The court ruled that a plaintiff seeking long-term disability (LTD) benefits under an ERISA-governed employee welfare benefit plan cannot maintain his lawsuit without first exhausting the plan’s administrative remedies and that appeals for help to the Department of Insurance do not constitute the proper exhaustion of remedies.  On that basis, the court summarily dismissed the plaintiff’s lawsuit.

Defendant United of Omaha Life Insurance Company administered plaintiff Richard Carey’s claim for LTD benefits under an ERISA plan established by his employer.  Carey claimed that he was totally disabled as defined by the plan and thus entitled to benefits.  After investigation, United denied Carey’s claim.  In its denial letter, United told Carey that he had the right to administratively appeal the claim denial, as set forth in the plan, and that he had to submit any appeal within 180 days.  The letter also informed Carey of his right to contact the Department of Insurance (DOI) about United’s handling of his claim.

 

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Cost Caps on Medical Procedures Approved

Federal officials recently approved “reference pricing,” a new cost-control mechanism that allows insurers to put a dollar limit on the amount that health plans pay for some expensive medical procedures, such as knee and hip replacements. The decision affects most employer-based plans as well as plans purchased through the Affordable Care Act’s exchanges. Plans must use a “reasonable method” to ensure “adequate access to quality providers.” 

The following illustrates how reference pricing works:

Assume that a health plan sets a hard cap of $30,000 — known as the “reference price” — on what it will pay for hospital charges associated with a knee replacement surgery. The plan offers the insured a choice of hospitals within its provider network. If the insured chooses a hospital that charges $40,000 for the knee replacement, the insured could owe $10,000 to the hospital, in addition to the insured’s usual cost-sharing for the $30,000 covered by the plan. 

The extra $10,000 is treated as an out-of-network expense and does not count toward the plan’s annual limit on out-of-pocket costs. This is important because, under the Affordable Care Act, most plans have to pick up the entire cost of care after the patient reaches the annual out-of-pocket limit (currently $6,350 for single coverage and $12,700 for a family plan). Prior to the federal officials’ ruling, it was unclear whether reference pricing violated this provision.

CalPERS, the California agency that manages health and retirement benefits for public employees, began using reference pricing in 2011 with regard to knee and hip replacements by steering patients to hospitals that were approved for quality and charged $30,000 or less. CalPERS’ health benefits director said the program has been a success and that patients are able to choose from about fifty hospitals. 

However, reference pricing may be suitable only for a specific subset of medical care: frequently-performed procedures where the prices charged vary widely but the quality of results do not. This could include MRIs and other imaging tests, cataract surgeries, and colonoscopies. 

U.S. Supreme Court Rules on Attorneys Fees in Two Patent Cases

Attorney’s fees were the subjects of two U.S. Supreme Court decisions today in high profile patent cases. In Octane Fitness v. Icon Health and Highmark v. Allcare Health, the Court decided in "exceptional cases" reasonable attorneys fees may be awarded to a prevailing party.

Interestingly, the Court leaves it to the trial court to define which cases are exceptional. This is to be done in the court's exercise of its discretion on a case-by-case basis. This is a dramatic change. The prior standard used in these types of matters required a finding of "subjective bad faith" and/or "objectively baseless" conduct. 

Those standards were very high; making the circumstances where a fee award was granted to be rare.  The policy surrounding this decision appears to deter parties who have abused the patent system for their own financial gain.

Originally posted to Barger & Wolen's Litigation Management & Attorney Fee Analysis blog.