Don’t forget that ….

judicial estoppel can require dismissal of a claimant’s suit for ERISA-governed long term disability (LTD) benefits if the claimant failed to list the “potential cause of action” in bankruptcy filings.

The key is to determine when the “potential cause of action” accrued. And a recent case says those claims “accrue” when the claimant receives the initial benefit denial letter.

Here’s the case of Byrd v. Wellpoint Flexible Benefit Plan and Anthem Life Insurance Co., 2017 WL 1633204 (E.D. Missouri May 2, 2017).

FACTS: Byrd worked for Anthem, and sued after her claim for ERISA-governed long term disability benefits was denied. Wellpoint and Anthem moved to dismiss the suit contending Byrd’s LTD claim had not been disclosed during her bankruptcy proceeding and was therefore barred by the equitable doctrine of judicial estoppel.

ISSUE: Whether Judicial Estoppel Barred Byrd’s LTD Claim Because She Failed to List the Potential Claim as an Asset in her Bankruptcy?

DISTRICT COURT HELD: No, because the LTD claim “accrued” after she filed for bankruptcy and therefore was a “post-petition asset.”


  1. When filing for bankruptcy, “all assets of the debtor, including potential causes of action, become assets of the bankruptcy estate.” Op. at 4.
  2. “[A] party ‘may be judicially estopped from asserting a cause of action not raised in a reorganization plan or otherwise mentioned in the debtor’s schedules or disclosure statements. A debtor’s failure to list a claim in the mandatory bankruptcy filings is tantamount to a representation that no such claim existed.’” Op. at 5.
  3. Plaintiff’s ERISA claim accrued when she received Anthem’s September 21, 2016 letter initially denying her application for LTD benefits. This took place more than three months after Byrd filed her bankruptcy petition, and two months after she filed her bankruptcy disclosures. Op. at 6.
  4. The Court denied the Motion to Dismiss, concluding the ERISA lawsuit “accrued” after her bankruptcy petition and was therefore a “post-petition asset of Plaintiff and not part of the [bankruptcy] estate.” Op at 7.

When does the “church plan exemption” apply?

You already know that under the “church plan” exemption, Church plans do not have to comply with ERISA, including the requirements to fund a plan and pay Pension Benefit Guaranty Corporation premiums. (Congress amended ERISA in 1980 to state that “a plan established and maintained for its employees…by a church…includes a plan maintained by an organization…controlled by or associated with a church.”)

Currently, there are many lawsuits against religiously affiliated hospitals alleging they improperly asserted the “church plan” exemption. Plaintiffs claim that over 300,000 hospital workers face a $4 billion pension shortfall because these hospitals have improperly designated the plans as exempt.

Now Before the US Supreme Court: Three religiously affiliated hospitals seek reversal of lower court rulings concluding that their pension plans are not church plans because they were not established or maintained by a church.

On Monday the U.S. Supreme Court heard oral argument on the ability of religiously affiliated hospitals to apply the “church plan” exemption.

BNA’s Joe Lustig’s provides a helpful summary of the issues presented.

BNA’s Jo-el Meyer provides a nice analysis on Monday’s oral argument and issues presented.

My friend, Stephen Rosenburg, also provides some insightful analysis and early odds on the outcome of the Supreme Court decision.

And, if you follow the NCAA Final Four…. Go Zags…

You already know that courts typically award attorney fees in ERISA cases when the Plaintiff/claimant achieves “some success on the merits.”

But does a mere remand constitute “some success on the merits”?  Probably yes.

And how many Plaintiff’s attorney billed hours are reasonable for an ERISA case? Maybe 80-85 hours if there was a summary judgment motion.

Here’s the case of Standish v. Federal Express Corp. LTD Plan and Aetna Life Ins. Co., 2017 WL874689 (W.D.N.Y. March 6, 2017) that highlights the point.

FACTS: Standish, a former FedEx employee, sought and was denied ERISA-governed long term disability benefits. Standish filed suit and the District Court reversed the denial of benefits and remanded the case back to Aetna, the claims administrator, for reconsideration.

Standish then sought attorney fees, claiming the Court’s remand order was “some success on the merits.” Plaintiff’s counsel sought attorney fees based on 189.6 total hours: (141.4 partner hours at $350 per hour; 6.5 associate hours at $200 per hour; 41.7 paralegal hours at $115 per hour). For the summary judgment motion alone, Plaintiff’s attorney billed a total of 163.2 combined hours: (116.2 partner hours, 6.2 associate hours, 40.5 paralegal hours).


  1. By issuing an order for remand, the Court “finds that Plaintiff here achieved some degree of success by obtaining a remand order, which ‘inherent[ly]’ entails ‘two positive outcomes…(1) a finding that the administrative assessment of the claim was in some way deficient, and (2) the plaintiff’s renewed opportunity to obtain benefits or compensation.’” Op. at 4.
  2. As to the amount of fees to award, “[i]f a court finds that claimed hours are ‘excessive, redundant, or otherwise unnecessary,’ it should exclude those hours in calculating the fee award.” Op. at 5.
  3. The Court reduced the hourly rates and approved the following rates: lead attorney — $300; associate attorney $175; paralegal $90 per hour.
  4. What other District Courts have deemed a “reasonable” number of hours for summary judgment motions:

Laser Lite Elec. Inc. v. United Welf. Fund Welfare & Sec. Divisions, 2015 WL 459412 (E.D.N.Y. February 3, 2015)(“80.60 hours…is reasonable for a case that proceeded to summary judgment”);

Trustees of Local 531 Pension Fund v. Flexwrap Corp., 818 F.Supp.2d 585, 591 (E.D.N.Y. 2011)(“82 hours of work to litigate an ERISA case through summary judgment”);

      5.  The Court reduced the number of hours worked on this ERISA case.

  • For the summary judgment motion and related pleadings alone, Plaintiff’s attorney billed a total of 163.2 combined hours: (116.2 partner hours, 6.2 associate hours, 40.5 paralegal hours).
  • “The Court finds that this is excessive in light of what other district courts have found reasonable for litigating a case through summary judgment.” Op. at 6.
  • “’[T]asks like serving, filing, and docketing papers…are ‘normally subsumed into an attorney’s overhead expenses’ and ‘not generally considered recoverable.’”. Op. at 7.
  • The Court allowed only 85 hours for the lead attorney’s time spent on the summary judgment, and excluded time spent by the associate and paralegal as duplicative.” Op. at 7.



Can an ERISA plan administrator tell an employer about an employee’s substance abuse?

Doesn’t that breach fiduciary duties to the employee/claimant? Probably not.

Check the employer’s employment policies because an ERISA plan administrator’s “[c]ompliance with [an employer’s drug/alcohol] policy cannot constitute breach of fiduciary duty.”

This new case highlights the point. Williams v. FedEx Corp. Service and Aetna Ins. Co., __ F.3d __ (10th Cir. February 24, 2017)(Aetna did not breach fiduciary duty by disclosing substance abuse to employer because FedEx’s workplace policy required such disclosure and “[c]ompliance with FedEx’s policy cannot constitute breach of fiduciary duty.”)

FACTS: Williams, a FedEx employee, sought Family Medical Leave from his employer, claiming “work related stress.”  But Williams then sought ERISA-governed disability benefits related to substance abuse. (The plan provides up to 13 weeks of benefits for disabilities related to “Chemical Dependency.”) The plan conferred discretion to Aetna, which administered the plan.

Aetna informed FedEx that Williams had sought disability benefits for “alcohol or substance abuse.” FedEx then required Williams to submit to return-to-duty-testing, and follow up testing for five (5) years, pursuant to company policy.

Williams claimed Aetna breached fiduciary duties by disclosing his chemical dependency to FedEx.

ISSUE: Did Aetna “breach fiduciary duty” when it reported to Fed Ex that Williams had a substance abuse problem?


  1. Medical records submitted to Aetna documented symptoms related to the “habitual and addictive use of Suboxone.” Op. at 24.
  2. The FedEx Alcohol/Drug Free Workplace Policy provides: “[t]he disability vendor [Aetna] will notify [FedEx] when an employee seeks benefits for substance abuse.” Op. at 25.
  3. Aetna “had a duty under [FedEx’s policy] to report his condition to FedEx. Compliance with FedEx’s policy cannot constitute breach of fiduciary duty.” Op. at 25.

You know that to apply an exclusion in a policy, the claims administrator must show that the claimant received the policy.

But what happens when the claimant submits a declaration disputing your proof that she received the policy? Doesn’t that “dispute of fact” defeat summary judgment?

Maybe not.

Here’s the case of Sliwa v. Lincoln National/Allied Home Mortgage Capital Corporation, 2017 WL 536827 (D. Nev. February 8, 2017)(“[A]n ERISA claims administrator ‘is not a court [and] is not bound by the rules of evidence.’” Lincoln National wins because it submitted proof of policy delivery into the administrative record and, accordingly, the court applied the “abuse of discretion” standard, rather than the Rule 56 “genuine dispute of fact” standard, which would have required the court to construe disputes of facts in favor of the nonmoving party).

FACTS: Sliwa enrolled in an ERISA-governed Long Term Disability Plan with a pre-existing condition exclusion. The plan conferred discretion with Lincoln National, the claims administrator. Lincoln National determined Sliwa’s disability was excluded by the pre-existing condition exclusion.

Sliwa filed suit and claimed the pre-existing exclusion should not apply because she never received a copy of the “official disability policy.” Cross-motions for summary judgment were filed.

ISSUE: Whether the pre-existing exclusion applies where Claimant alleges she never received a copy of the “official disability policy”?

DISTRICT COURT HELD: Summary Judgment Granted for ERISA Plan.


  1. The Ninth Circuit applies the “reasonable expectations” doctrine. Courts “require claims administrators to either ensure policyholders received a copy of the policy or are otherwise put on notice of its provisions before claims administrators can apply an exclusion.” Op. at 6.
  2. Lincoln National properly exercised discretion in concluding Sliwa had received the policy (and notice of the exclusion).
  3. To prove delivery of the policy (from four years earlier), Lincoln National included in the administrative record a declaration outlining the delivery practices for this type of policy. Op. at 6-7 and fn 2.
  4. Sliwa claimed Lincoln National failed to offer a sworn declaration proving delivery. But the Court explained that “an ERISA claims administrator ‘is not a court [and] is not bound by the rules of evidence.’” Op. at 7.
  5. Including the declaration in the administrative record was a winning strategy because the court applied the “abuse of discretion” standard, rather than a Rule 56 “genuine dispute of fact” standard, where dispute of facts would have to be construed in favor of the nonmoving party. Op. at 6-7, fn 2.
  6. Lincoln National did not “abuse its discretion” in viewing Sliwa’s statement as “self-serving and unverifiable.” Op. at 7.

You already know that discovery in ERISA cases is generally limited because of the “significant ERISA policy interests of minimizing costs of claim disputes and ensuring prompt claims-resolution procedures.”

Various circuits have different tests on when additional discovery may be taken beyond the administrative record.

And, if limited discovery is allowed, then what discovery is allowed?

The recent case of Aitken v. Aetna Life Insurance Company, 2017 WL 455547 (S. D. N. Y. January 19, 2017)(PDF) highlights the point.

FACTS: Aitken, a Chief Financial Officer, sought ERISA-governed long term disability benefits as a result of coronary artery disease. Aetna, which administered the claim and is liable to pay the benefit, had an in-house vocational assessment and a physician from Professional Disability Associates (PDA) evaluate the claim. After an exchange of reports and replies to Aitken’s physicians, Aetna denied the claim and the subsequent appeal.

During the lawsuit, Plaintiff alleged Aetna had a structural conflict of interest and sought discovery outside the administrative record. Plaintiff alleged PDA “serves only insurance companies,” PDA has a financial incentive to give favorable opinions “to preserve Aetna as a client,” and PDA and Aetna ignored his physicians’ opinions on disability.

DISTRICT COURT HELD: Limited Discovery Outside the Administrative Record Allowed.

  1. “Discovery in ERISA cases is generally limited because of the ‘significant ERISA policy interests of minimizing costs of claim disputes and ensuring prompt claims-resolution procedures.’” Op. at 10.
  2. “Generally, discovery is limited to the actual evidence that was before the claims administrator when the decision was made.” Op. at 6.
  3. “It is unnecessary to determine the standard of review before deciding on the scope of discovery.” Op. at 4, fn 2.
  4. The Court denied Plaintiff’s request to seek discovery into the “reasoning/actions undertaken by Aetna in the evaluation of Plaintiff’s claim.” “Unless it is shown that there is a reasonable chance that the requested discovery will satisfy the good cause requirement, a plaintiff is limited to the administrative record.” Op. at 6-7.
  5. A procedural irregularity arises when the claim review “does not take into account all comments, documents, records or other information submitted by the claimant….” Op. at 8.
  6. The record presented evidence of “some procedural irregularities” which justified “at least some discovery….” Op. at 10.
  7. Limited Discovery Defined: “[P]laintiff may propound document requests and interrogatories limited to the issue of whether, during the determination of benefits, Aetna disregarded his doctors and experts or his own complaints.” Op. at 11.

Fibromyalgia cases often are difficult to assess in determining eligibility for benefits.

But the mere diagnosis of a condition (like fibromyalgia) is not enough to qualify for disability benefits under most policy definitions.

The recent case of Decovich v. Venetian Casino Resort, 2017 WL 388819 (D. Nevada January 26, 2017) highlights the point.

FACTS: Decovich, a card dealer with fibromyalgia, sought ERISA-governed disability benefits. The claim was denied because Plaintiff’s treating physician had not provided any restrictions or limitations, and Decovich had kept working for one year after receiving the fibromyalgia diagnosis.

Unhappy with the cards she had been dealt, Decovich brought suit.

ISSUE: Applying de novo review, whether Plaintiff’s medical diagnosis of fibromyalgia established disability?


  1. Applying de novo review, even though peer reviewers agreed with the fibromyalgia diagnosis, “the diagnosis is not the automatic equivalent to a finding of disability.” Op. at 7.
  2. “Although plaintiff may suffer from fibromyalgia, there is insufficient evidence on the record to conclude that plaintiff is ‘disabled’ as that term is defined in the underlying policy.” Op. at 7.
  3. It was a problem that the treating physician “diagnosed plaintiff with fibromyalgia [but] did not indicate whether she would be able to return to work or if her condition would be permanent.” Op. at 7.
  4. Even though a peer reviewer indicated that plaintiff may be “impaired,” the meaning of “impaired” is unclear and “does not necessarily mean that plaintiff is unable to perform the ‘Essential Functions of [her] Regular Occupation,” as required by the policy’s definition of ‘disability.’”   Op. at 7-8.

In the back and forth of the disability claims process, decisions on whether someone is disabled can change. Claims administrators are “entitled to seek and consider new information and, in appropriate cases, to change its mind.” In fact, a record showing that the claims administrator changed its decision over time can help disprove allegations that a “conflict of interest” played a role in the claims decision.

The recent case of Geiger v. Aetna Life Ins. Co., __ F.3d __ (7th Cir. January 6, 2017)  highlights the point, and explains four ways to inoculate claims from allegations that a conflict of interest affected the claims decision.

FACTS: Geiger had back and ankle problems and sought ERISA-governed disability benefits in 2009. The plan vested discretion with Aetna. Aetna concluded Geiger could not perform her “own occupation” as an account executive. After 24 months Aetna assessed whether Geiger could perform “any occupation.” Aetna initially concluded Geiger also could not perform “any occupation”.

But then new surveillance, medical reviews and a transferable skills analysis resulted in Aetna changing its decision and determining Geiger could perform a sedentary job. After benefits were discontinued, Geiger sued claiming Aetna’s conflict of interest (because it funded the benefit and determined eligibility) affected the decision.

DISTRICT COURT: GRANTED Aetna’s Motion for Summary Judgment, concluding Aetna properly exercised discretion.


  1. “[N]ew surveillance evidence supported [independent peer review report] and refuted [Geiger’s physician report]. …Aetna was ‘entitled to seek and consider new information and, in appropriate cases, to change its mind.’” Op. at 4.
  1. “Aetna minimized any conflict of interest by implementing multiple safeguards. First, Aetna obtained numerous independent physician peer reviews. Second, Aetna and the independent physicians reached out to Geiger’s own physicians and addressed their concerns. Third, Aetna sent the surveillance video to Geiger’s physicians to ensure the video was assessed objectively. Finally, Aetna previously reversed its own decision and reinstated her benefits.” Op. at 5. (Bold print added).

Have a great week…

The Department of Labor’s Employee Benefits Security Administration just published final regulations that change the ERISA disability claims and appeals process.

Here are 10 things you should know about these new regulations.

  1. These new regulations apply to all claims for disability benefits filed on or after January 1, 2018. (Many of the changes were initially proposed in 2015.) So, give some thought now about putting in place new processes to address these upcoming changes.
  2. There should be no incentives to deny claims. Bonuses based on the number of claim denials are not allowed.
  3. Review the factors used to select a medical expert. Basing your selection on the physician’s reputation for outcomes in contested cases should be reassessed.
  4. Denial letters must include an explanation stating why the opinions offered by the claimant’s health care provider or vocational expert were rejected (or agreed with).
  5. Denial letters must explain why disability determinations made by the Social Security Administration were rejected.
  6. Denial letters must inform the claimant about the right to obtain the claim file, and other relevant documents. The denial letter should state any internal rules or guidelines the claims administrator relied upon in deciding the claim. If no such internal rule or guideline exists, the letter should disclose this as well.
  7. Denial letters must include a discussion about translation services under certain circumstances. When a claimant’s address is located in a county where 10% or more of the population is literate only in the same non-English language, the denial letter must include a notice in that non-English language about the availability of translation services. A copy of this letter (containing the notice of non-English translation services) must be provided upon request. Oral translation services must be provided.
  8. During an appeal, the claimant must be given notice and a fair opportunity to respond if the appeal denial is based on new or additional rationales or evidence.
  9. The appeal denial letter must specify plan imposed deadlines for filing a lawsuit, and the date the limitations period expires.
  10. Generally, if the claims administrator fails to follow its own claims procedures, then a claimant can sue without exhausting administrative remedies.

Some of these new provisions have been adopted already by claims administrators to address certain judicial decisions. There also is some chance that these regulations, attached in the link above, could be changed.  But it is good to know now how you might be expected to handle claims starting about one year from now…

Happy New Year!

What happens when an employer provides a disabled employee continued regular wages, paid out of general employer assets? This is known as a “payroll practice”… and ERISA may not apply.

A new case that highlights the point is Foster v. Sedgwick Claims Management Services, Inc. and Sun Trust Bank Short Term and Long Term Disability Plans, __ F.3d __ (D.C. Cir. November 29, 2016).

Also notable from this case:

(1) This is the D. C. appellate court’s newest application of the abuse of discretion standard in ERISA cases;

(2) Even post Amara, a Summary Plan Description “may ‘be examined to determine the appropriate standard of review.’” Op. at 16.

FACTS: Foster sought short term and long term disability benefits under ERISA plans adopted by her employer. Her claims were denied because she failed to provide “objective medical documentation” of disability. She brought suit under ERISA claiming both her short term and long term disability benefits were improperly denied.

HELD: Plaintiff’s claim for short term disability benefits under ERISA DISMISSED.


  1. “The Department of Labor exempts from ERISA certain ‘payroll practices,’ including: ‘[p]ayment of employee’s normal compensation, out of the employer’s general assets, on account of periods of time during which the employee is physically or mentally unable to perform his or her duties, or is otherwise absent for medical reasons.” Op. at 4 (citing 29 C.F.R. Section 2510.3-1(b)(2)).
  2. “[T]he employer’s short-term disability benefit plan was a payroll practice because it was paid from [the employer’s] general assets and was ‘entirely separate’ from [the employers] ERISA-covered Employee Benefit Plan. Op. at 6.
  3. Here’s the “trifold” test to establish the short term disability benefit is exempt from ERISA as a “payroll practice”: (a) “paying normal wages, (b) from [the employer’s] general assets, (c) on account of work missed due to medical reasons.” Op. at 12.
  4. Plaintiff argued (belatedly) on appeal that eligibility under the short term and long term disability is “intertwined” and therefore ERISA should also govern the short term disability claim. The Court rejected this argument because “‘eligibility for [short-term] benefits is not at all affected by the [long- term plan….]” Op. at 24.
  5. Even post Amara, a Summary Plan Description “may ‘be examined to determine the appropriate standard of review.’” Op. at 16.