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 a significant victory for insurers, the Washington Supreme Court interpreted the Insurance Fair Conduct Act (IFCA), RCW 48.30.015, for the first time and held that IFCA does not authorize an independent cause of action for policyholders to sue their insurers for mere procedural violations of insurance claims-handling regulations. The decision in Perez-Crisantos v. State Farm Fire & Casualty Co., – P.3d –, 2017 WL 448991 (Feb. 2, 2017), finally resolves a longstanding debate in Washington insurance law and narrows the types of claims available under IFCA.

In 2007, the Washington Legislature enacted and the voters ratified IFCA. The purpose of IFCA was to provide insureds with another legal resource against their insurer for wrongful denials. By its terms, IFCA allows a policyholder “who is unreasonably denied a claim for coverage or payment of benefits” to sue for his or her “actual damages.”  Unlike traditional bad faith claims, IFCA claims also offer the extra incentive of enhanced damages by allowing the court to award up to triple damages, as well as attorney’s fees and costs. An award of triple damages is conditioned on a finding that either the insurer acted unreasonably in denying a claim or benefits, or the insurer violated one or more of several listed insurance regulations. The risk of a triple damages award can dramatically expand an insurer’s exposure and gives policyholders leverage in coverage disputes.

The “vexing” question resolved in Perez-Crisantos asked whether IFCA permitted insureds to sue their insurers for violations of the listed insurance regulations even in the absence of an unreasonable denial of coverage or benefits. Since IFCA’s enactment, the Washington Supreme Court had never interpreted the statute, and the statutory language is not a model of clarity. Without guidance from the state’s highest court, Washington’s federal courts split on this question. On one side of the debate, the federal courts in Western Washington held that no cause of action existed for regulatory violations alone. See Cardenas v. Navigators Ins. Co., 2011 WL 6300253, at *6 (W.D. Wash. 2011). On the other side of the debate, several federal courts in Eastern Washington held that IFCA provides an implied cause of action for regulatory violations to serve the underlying intent of the statute. See Langley v. GEICO Gen. Ins. Co., 89 F. Supp. 3d 1083 (E.D. Wash. 2015).

This question had serious implications for insurers because it potentially opened the door to awards of triple damages and attorney’s fees for procedural regulatory violations, even in the absence of coverage. For example, one of the regulations listed in IFCA requires insurers to respond to pertinent communications within 10 days. Under the approach followed by Langley, an insurer who responded on Day 11 could potentially be exposed to liability under IFCA, regardless of the substantive coverage issues.

The Washington Supreme Court settled this debate in Perez-Crisantos.  In an opinion by Justice Steven C. González, the court reviewed IFCA’s statutory text and recognized that while it creates a cause of action for insureds who were unreasonably denied coverage or benefits, the text plainly did not state that it was creating an independent cause of action for regulatory violations. Next, the court turned to the legislative history to search for clues about the underlying intent. In particular, Justice González found that the voters pamphlet strongly suggested that IFCA exposure would arise only for unreasonable denials of coverage, and that voters would not have known they were authorizing a second type of claim. Finally, the court noted it was doubtful the legislature would have intended to create an independent claim for violations of certain of the listed regulations, many of which impose minor, technical requirements that one would not expect to give rise to litigation if an insured was not also unreasonably denied coverage or payment of benefits. Therefore, Perez-Crisantos concluded: “IFCA does not create an independent cause of action for regulatory violations.”

Perez-Crisantos provides important clarity to Washington insurance law and restricts the grounds upon which policyholders can attempt to assert claims under IFCA.

For more information about IFCA and insurance matters, please contact the Insurance Practice Group and London Insurance Group at Lane Powell.

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.

So how do you define “sedentary work”?  Can you define it by using a Functional Capacity Assessment?

Can you disregard the Dictionary of Occupational Titles (DOT) in your assessment? Probably not.

Here’s the case of Armani v. Northwestern Mutual Life Insurance Company, __ F.3d __ (9th Cir. November 4, 2016)(District Court erred by not considering the DOT definition of “sedentary work.”)

FACTS: Armani, a controller for Renaissance, injured his back. He could sit for two-four hours, and stand or walk for two hours, out of an 8 hour work-day.  Northwestern initially approved disability payments, and then discontinued them concluding he could perform sedentary work, based on a Functional Capacity Assessment.

Plaintiff refused to take Northwestern’s decision sitting down, however, and argued that the DOT defined sedentary work as “sitting most of the time, but may involve walking or standing for brief periods of time.”

DISTRICT COURT HELD: Northwestern properly concluded, based on a Functional Capacity Assessment and doctor reviews, that Plaintiff was not disabled from working “any occupation.”  Northwestern was not bound by the DOT definition of sedentary (requiring the ability to sit 6 out of 8 hours per workday) because the DOT is “limited to the Social Security [disability] context.”


  1. “[C]ourts evaluating ERISA claims and interpreting the DOT have consistently held that an employee who cannot sit for more than four hours in an eight-hour workday cannot perform work classified as ‘sedentary.’” Op. at 9.
  2. “Some… courts have further noted that ‘sedentary work’ generally requires the ability to sit for at least six hours.”  Op. at 9.
  3. The District Court erred by concluding that the DOT definition of “sedentary” was “limited to the Social Security context.”  Op. at 10.
  4. Note: The DOT was published by the Department of Labor until 1999. It was replaced by the Occupational Information Network, online database.

You know that courts can expect a claimant to establish “objective evidence of impairment” from a physical condition.

But does this apply to claims arising out of a mental condition?

Courts can require the claimant to establish objective impairment related to a diagnosable mental condition, too.

Here’s the case of Gailey v Life Insurance Company of North America,  2016 WL 6082112 ( M.D. Penn. October 17, 2016)(Disability based on diagnosable mental condition properly denied because, among other things, Claimant presented “no objective findings” of mental impairment, and yet did present “subjective complaints” supporting  the diagnosis of Major Depressive Disorder).

FACTS: Gailey was an office manager with anxiety and depression. She sought ERISA-governed disability benefits which had a 24 month limitation for mental/nervous disability, relying on a diagnosis from a Certified Nurse Practitioner. Life Insurance Company of North America (LINA) granted disability benefits while Gailey attended in-patient therapy, but denied continued benefits after release from in-patient therapy.

During Gailey’s administrative appeal, LINA had her claim reviewed by a psychiatrist who concluded Gailey had “no objective findings” of mental impairment, but did have “subjective complaints”  supporting  the diagnosis of Major Depressive Disorder. Mental examination findings indicated, however, Gailey was psychiatrically stable with no impairments. LINA affirmed the claim denial and Gailey filed suit.

ISSUE: Did LINA Properly Deny the Claim? 

HELD: YES—Court GRANTS LINA’s Motion for Summary Judgment Dismissing the Claim.


  1. The “Appointment of Claim Fiduciary” agreement “gave [LINA] ‘the authority, in its discretion….’ This delegation of discretionary power is exactly what the Supreme Court contemplated….”  Op.  at 4. (Emphasis in original).
  2. Even in a case with a conflict of interest, “courts reviewing the decisions of ERISA plan administrators or fiduciaries…should apply deferential abuse of discretion review across the board and consider any conflict of interest as one of several factors in considering whether the administrator or the fiduciary abused its discretion.” Op. at 4.
  3. LINA “cited to a multitude of evidence that it considered in finding that Gailey was not ‘disabled’ under the Plan…” Op. at 4. This included the board-certified psychiatrist report confirming there was no objective evidence of impairment from the diagnosable mental condition.

Are Social Security Administration disability determinations, issued after the final appeal decision, part of the ERISA administrative record? NO.

Plaintiffs often seek reversal of a denial of ERISA-governed disability benefits because the claim administrator failed to conduct an independent medical exam (IME).

But is the failure to conduct an IME fatal to a claim denial? NO. Check to see if the plan language expressly “reserved the right” to an IME.

Here’s the case of Folds v. Liberty Life Assur. Comp., 2016 WL 5661615 (N.D. Ohio September 30, 2016) (attached) that highlights these points, some other nice pearls of thought, too.

FACTS: Folds had “inflammation of the digestive tract” and sought ERISA-governed disability benefits administered by Liberty Life. Liberty provided disability benefits for ten months and then determined Folds was no longer disabled because there was no evidence he could not perform the essential functions of his desk job.

Folds could not stomach this decision and appealed. When multiple appeals were denied he filed suit, claiming Liberty’s decision was arbitrary because: (1) no IME had occurred; (2) Liberty did not give due weight or overlooked Plaintiff’s treating physician’s opinions and vocational assessment; and (3) Liberty’s decision differed from the Social Security (SSA) disability determination.

DISTRICT COURT HELD: Liberty’s decision to discontinue benefits AFFIRMED.

  1. Plaintiff claimed Liberty should have conducted an independent medical exam before claim denial because the medical record review made “credibility determinations” and in those situations an IME is required. However, the court determined no IME was required here because the “Plan [did not] explicitly reserve the right to mandate a physical examination.” Op. at 17.
  2. The SSA determination was NOT part of the administrative record and was excluded. Four days after Liberty had denied his appeal, the SSA issued a decision concluding Folds was disabled. “Because the SSA’s notice was issued after [Liberty’s final appeal decision], it was not part of the evidence considered…[and] is not part of the administrative record….” Op. at 13.
  3. The Court concluded Liberty “need only ‘provide an explanation for resolving conflicts between the treating physician and [Liberty’s] consulting physician.” Op. at 19.
  4. “’[I]t is entirely reasonable for an insurer to request objective evidence of a claimant’s functional capacity.’” Op. at 27.