Video surveillance can be an effective tool in assessing the level of activity of the disabled claimant. But make sure the video surveillance is performed correctly, and use it properly.

Here’s the case of Eaton v. Reliance Standard Life Insurance, 2018 WL 3639837 (W.D. Tennessee July 31, 2018)(claim denial affirmed where independent physician reviewed medical records and observed claimant’s physical activities in hours of video surveillance).

FACTS: Eaton sought and received ERISA-governed long term disability benefits for several years for orthopedic/neurological impairments. After a review of medical records and surveillance, Reliance Standard discontinued benefits and Eaton sued claiming, in part, that Reliance Standard had improperly relied on surveillance video. Eaton argued: (1) the video surveillance was “unauthorized”; (2) the video did not contradict Eaton’s claimed disability; and, (3) relying solely on the surveillance, without other evidence, was improper.

ISSUE:  Whether Reliance Standard improperly relied on surveillance video in the claim denial?

DISTRICT COURT HELD: The video was properly relied upon in denying the disability claim.

  1. A plan administrator is not “‘required to ignore the inconsistencies between [a plaintiff’s] assessment of her [or his] level of activity and the videotape of [those] activities.’” Op. at 13.
  2. For the video surveillance to be meaningful, inconsistencies between the plaintiff’s assessment and the actual level of activity “must be more than minor.” Op. at 13.
  3. “[T]he Sixth Circuit requires that the plan administrator not base its decision to terminate benefits solely on surveillance footage.” Op. at 13 (emph. added).
  4. Surveillance video lasting only 20 minutes, with the claimant’s activity recorded only a few minutes at a time over a period of two hours, may not be given much, if any, weight. Op. at 14.
  5. The video in this case was helpful because it “showed Plaintiff partaking in activities for hours at a time.” Op. at 14.
  6. An independent reviewing physician’s opinion may be given greater weight when relying on a medical record review and video surveillance. Op. at 22.

 

You know already that, under ERISA, “the court in its discretion may allow reasonable attorney fee’s and costs so long as the party achieves ‘some success on the merits.’”

But don’t give up yet and just pay the claimant’s attorney fees. Courts apply additional criteria to decide whether to award fees…and these criteria help frame arguments to oppose Plaintiff’s request for fees… even when they achieve “some success on the merits.”

Here’s the case of Guest-Marcotte v. Life Insurance of North America, 2018 WL 3436782 (E.D. Michigan July 17, 2018)(Sixth Circuit reversed dismissal of plaintiff’s ERISA disability claim and concluded denial of benefits was “arbitrary and capricious.” On remand, trial court denied Plaintiff’s requests for attorney fees because Plaintiff failed to establish criteria used to determine whether to award fees in ERISA cases.)

FACTS: Guest-Marcotte brought a lawsuit claiming her ERISA governed disability benefits were improperly denied. The district court dismissed the claim, but the Sixth Circuit reversed and remanded. Plaintiff then brought a motion for attorney fees claiming she had “some success on the merits” as a result of the Sixth Circuit decision which concluded Life Insurance of North America’s (LINA) denial of benefits was arbitrary and capricious.

ISSUE: Whether Plaintiff should recover attorney fees after the Sixth Circuit reversed the trial court’s dismissal of her claim?

DISTRICT COURT HELD: CLAIMANT ATTORNEY FEES DENIED.

  1. Under ERISA, “the court in its discretion may allow reasonable attorney fee’s and costs[.] The party seeking fees need not be a ‘prevailing party’ to be eligible [but] they must simply achieve ‘some success on the merits.’” Op. at 6.
  2. When determining to award fees in the Sixth Circuit, the court applies the five-factor King test: (a) degree of opposing party’s culpability; (b) ability to satisfy the attorney fee award; (c) deterrent effect of attorney fee award; (d) whether claimant sought to confer a common benefit for all participants of the ERISA plan; and (e) relative merits of each parties’ positions. Op. at 7.
  3. “Arbitrary and capricious” findings “do[] not necessarily indicate culpability or bad faith[.]’” Op. at 6 (emphasis in original).
  4. LINA’s decision not to conduct an Independent Medical Exam “does not, by itself, suggest a high level of culpability… ‘t]here is nothing inherently objectionable about a file review by a qualified physician in the context of a benefits determination.’” Op. at 8.
  5. LINA “provided reasoned, if mistaken, explanations for its determinations [and its conduct] was not sufficiently culpable [to award attorney fees.]” Op. at 10
  6. “‘[E]rroneous interpretation of certain plan terms…does not constitute culpable conduct for purposes of determining whether to award attorney fees.’” Op. at 10.
  7. “Having considered the [five] factors set forth in King in light of the entire record, the Court finds that, on balance, a fee award is not warranted.” Op. at 13.

Note: The Sixth Circuit King factors, used to determine whether attorney fees should be imposed in ERISA cases, are similar to tests applied by a majority of the other circuits. See, e.g., Hummell v S.E. Rykoff & Co., 634 F.2d 446, 452-3 (9th Cir. 1980); Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 872 (2nd Cir. 1987).

You know that employer disability policies define “disability” as the inability to perform each of the material duties of the employee’s “regular occupation.”

But what happens when the policy does not define the term “regular occupation”?

And…what if the employer’s job description is different from the Dictionary of Occupational Titles, which provides a generalized description of the job?

Here’s the case of Dahlka v. Unum Life Ins. Co. of Am., 2008 WL 2944518 (W.D. Wisconsin June 12, 2018)(Reasonable for an ERISA plan administrator to interpret “‘regular occupation’ as meaning a general occupation, rather than a particular position with a particular company.”)

FACTS. Dahlka sought ERISA-governed short term and long term disability benefits due to severe foot and ankle pain. The plan contained discretionary language.  After Unum issued multiple denials of long term disability benefits, Dahlka sued, claiming among other things: (1) Unum kept changing its reasons for denial, which constituted an unfair, arbitrary and capricious “moving target”; and (2) Unum improperly used the Dictionary of Occupational Titles job description, rather than the unique job description provided by the employer.

 TRIAL COURT HELD:

          1.  Moving Target Issue. Plaintiff contended Unum kept “moving the target” because Unum did not tell “him sooner that it found his medical evidence insufficient because it was based on self-reported symptoms.”

                   a. “The fact that Unum requested additional information and proof that plaintiff satisfied the elimination period after relying on information provided by plaintiff’s employer does not qualify as a moving target. Unum acted reasonably and rationally in relying on [information provided by the employer] and revisiting its decisions when plaintiff provided further evidence showing that his employer had not accurately or fully described his work attempts.”  Op. at 14 (emph. added).

                   b. “Unum also did not move the target by then analyzing plaintiff’s medical records and work restrictions after finally receiving a more complete description of plaintiff’s work history.” Op. at 14.

                  c. “Unum’s rejection of Dr. Floren’s retrospective restrictions because it was based on plaintiff’s self-reports of pain did not involve a ‘new’ expectation or requirement.”  Op. at 14.

          2.  Defining the Term “Regular Occupation.” Plaintiff contended Unum improperly used a general definition of his job from the Dictionary of Occupational Titles, rather than the job description provided by the employer.

                   a. “[M]any other federal courts have upheld as reasonable an ERISA plan administrator’s interpretation of ‘regular occupation’ as meaning a general occupation rather than a particular position with a particular company.” Op. at 16 (cases cited).

                   b. “[T]he Dictionary of Occupational Titles is an acceptable source for nationwide job descriptions and classifications.” Op. at 17.

 

 

You know that in ERISA claims where the court is applying the abuse of discretion standard, the court may allow “conflict discovery.” This might include discovery of claims manuals, for example.

But even if the court allows conflict discovery, the court likely may still prohibit Plaintiff from supplementing the administrative record with this discovery.

Here’s the case of Prohkorova v. Unum Life Ins. Co. of Am., 2018 WL 1913801 (D. Mass., April 23, 2018) (Plaintiff’s request to supplement the administrative record (with conflict discovery) rejected because Plaintiff “failed to identify a ‘serious claim of …procedural misconduct’ … that would ‘overcome the strong presumption’ [against supplementing the record]”).

This new case outlines arguments one can use to oppose Plaintiff’s moves to supplement the administrative record with “conflict discovery.”

FACTS: Plaintiff, a pediatrician, sought ERISA-governed disability benefits due to a disc herniation. Unum denied the claim because an MRI failed to show clinically significant nerve root impingement, and reviews confirmed there was no psychiatric cause of self-reported pain symptoms. The Court applied discretionary review, and allowed discovery into whether a structural conflict “morphed into an actual conflict.”

Plaintiff then sought to supplement the record with the conflict discovery the Court had allowed, including the Unum Claims Manual produced in discovery.

ISSUE: Whether the Court should allow supplementation of the administrative record to include the claims manual.

DISTRICT COURT HELD: Most conflict discovery obtained was NOT allowed to supplement the administrative record:

  1. Conflict discovery should be allowed only where there is a “serious claim of bias or procedural misconduct toward [the claimant]… [and there exists] ‘at least some very good reason…to overcome the strong presumption that the record on review is limited to the record before the administrator.’” Op. at 4.
  2. The issue for this court is whether Plaintiff has “shown some very good reason in the context of this case to overcome the strong presumption against supplementing the record….” Op. at 5.
  3. The Court rejected Plaintiff’s request to supplement the record with portions of Unum’s Claims Manual addressing procedures Unum uses to assess the claimant’s ability to perform her own occupation. Op. at 7-8. Unum’s vocational rehabilitation consultant properly relied upon the Dictionary of Occupational Titles. Plaintiff “failed to identify a ‘serious claim of …procedural misconduct’ in connection with Unum’s vocational assessment that would ‘overcome the strong presumption’ [against supplementing the record].” Op. at 7-8.
  4. The Court rejected Plaintiff’s request to supplement the record with requirements in Unum’s Claims Manual regarding how reviews by non-examining physicians employed by Unum must be performed. The manual required the Unum-employed physician to apply “critical scientific analysis.” The Court refused to supplement the record with this part of the Claims Manual because “[j]udicial review…should not be focused on the interpretation of a nonspecific provision in the Claims Manual.” Op. at 8.
  5. The Court rejected Plaintiff’s request to supplement the record with requirements in Unum’s Claims Manual that Unum “giv[e] deference to the opinion of the claimant’s [attending physician(s)].”  The Court excluded this from the record because that portion of the Unum’s Claims Manual is “‘contrary to binding precedent.’” Op. at 9 (citing Black & Decker v. Nord, 538 U.S. 822, 831 (2003).
  6. The Court allowed Plaintiff’s request to supplement the record with portions of Unum’s Claims Manual which addressed the process Unum is supposed to use to assess claims based on subjective complaints of pain. Op. at 10.
  7. The Court rejected Plaintiff’s request to discover Unum’s Quality Compliance Criteria because there is no evidence the criteria was was “relied on in making the benefit determination[]” or that the criteria was required to ensure a full and fair review. Op. at 11.
  8. The Court rejected Plaintiff’s request to supplement the record with new vocational resource material because this new material could have been submitted before the adverse benefit determination. Op. at 13.

As you know, on April 1, 2018 new regulations from the U.S. Department of Labor’s governing Employee Retirement Income Security Act of 1974 (ERISA) disability benefit claims became effective.

How will these new regulations affect litigation? New issues will develop new analysis, but in our continuing effort to flag new litigation issues, here are two quick ones:

1.  The new regulations may affect standard of review, but that may not be all bad.  As you know, many plans confer discretionary review, giving the claims decision-maker more deference in the claim decision. The new regulations allow for the court to substitute de novo review in cases where an insurer failed to strictly adhere to the regulations.

     A.  What’s the difference between “substantial compliance” and “strict adherence”?  Under the old rules, the court assessed whether the claims administrator failed to substantially comply with the ERISA procedural requirements. See, e.g., Hill v. Hartford Life Ins. Co., 527 F. Supp. 2d 495, 503 (W.D. Va. 2007).

Under the new regulations, “if a plan fails to strictly adhere to all the requirements…the claimant is deemed to have exhausted the administrative remedies.” Price v. Unum Life Ins. Co. of Am., 2018 WL 1352965, fn 12 (D. Maryland March 14, 2018).

So what is the difference? The Court in Price entered summary judgment in favor of the insurer despite procedural errors in handling the claim. Under the substantial compliance standard, the court looked to whether the record “creates a concern regarding the overall adequacy and integrity of the …decision making process.” Op. at 8.

The Court noted, however, that the new regulations call for “strict adherence,” leaving the impression that the new regulation, if applicable, might cause a different result. Id., at fn 12.

B.  Going de novo isn’t all bad.  There are several strategic advantages to agreeing to de novo review, depending on your administrative file.

First, some courts impose extra duties upon the insurer under discretionary review. For example, if abuse of discretion applies, some courts will expect the claim administrator to conduct a physical examination, rather than rely solely on medical record reviews. See, e.g., Helfman v. GE Grp. Life Assurance Co., 573 F.3d 383, 393 (6th Cir. 2009) (when abuse of discretion standard applies, the failure to conduct a physical examination, where the Plan document gave the plan administrator the right to do so, “raises questions about the thoroughness and accuracy of the benefits determination.”)

Second, de novo review can cut off expensive discovery, and may keep extrinsic evidence out of the record.

ERISA: Successfully Opposing Motions to Supplement the Record with Social Security Disability Determinations– the Advantage to De Novo Review

See, e.g., Reetz v. Hartford Life & Accident Ins. Co., No. C17-0084JLR, 2017 WL 5176705, at *3 (W.D. Wash. Nov. 8, 2017)).

2.  The new regulations narrow the “failure to exhaust administrative remedies” defense, so you may be in court sooner. The original Department of Labor regulations implementing ERISA provided that a claim or appeal was “deemed denied” if it was not decided within the specified time period. E.g., 29 C.F.R. § 2560.503-1(h)(4) (1998). The United States Supreme Court ruled that this “deemed denied” regulation merely permitted a claimant to commence a civil action without first exhausting his or her administrative remedies. Mass. Mat. Life Ins. Co. v. Russell, 473 U.S. 134, 144, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985).

Under the new regulations, if the claims administrator fails to adhere to the new claims regulations, the claimant does not have to exhaust administrative remedies unless, among other requirements, the error was minor and nonprejudicial.

If a claimant chooses to file suit, the regulations provide that the claimant’s claim or appeal is deemed denied on review “without the exercise of discretion by an appropriate fiduciary.” So, if the court determines the claims handling errors were not minor, then the de novo standard will apply.

If a claimant chooses to file suit, the insurer can argue the regulatory violation was “minor” and, in theory, the trial court could remand the matter for an appeal determination.

You know that ERISA requires the Summary Plan Description to explain eligibility clearly enough so that an “average plan participant” can understand it.

So, who is an “average plan participant” and what is the standard for compliance with ERISA disclosure requirements?

Here’s the recent case of Abrams v. Life Insurance Company of North America; UBS Financial Services, 2018 WL 1189181, __ Fed. Appx. __ (9th Cir. March 7, 2018). And…kudos to my friend Nicole Blohm and the team at Meserve for some nice work…

FACTS: Abrams claimed the claims administrator had improperly offset 50% of his earned wages from his ERISA-governed long term disability benefits. The plan contained a Work Incentive Benefit, described in the policy and the Summary Plan Description (SPD).  Abrams argued the policy and SPD failed ERISA disclosure requirements, and no offset should have been taken.

NINTH CIRCUIT HELD: The SPD and Plan satisfied ERISA disclosure requirements.

  1. ERISA mandates that a SPD ‘explain the circumstances which may result in disqualification, ineligibility, or denial or loss of benefits’ in a manner ‘calculated to be understood by the average plan participant,’ and that information must be ‘sufficiently accurate and comprehensive to reasonably apprise’ plan participants of their rights and obligations under the plan.”  Op. at 3.
  2. “The SPD clearly explains how Abrams’s monthly benefit would be impacted by money he earned while receiving benefits[.]”  Op. at 3.
  3. The SPD did not “‘minimize[], render[] obscure,’ or otherwise make the Work Incentive Benefit offset to be “unimportant.” Op. at 4.
  4. The SPD described the Benefit and its offset in “the same style, typeface, and type size as the rest of the SPD and are located ‘in close conjunction with’ the description of the plan’s benefits.” Op. at 4.
  5. ERISA does not require that the Benefit be given “special emphasis or [be] mentioned more than once in the SPD.” Op. at 5.

And for anyone watching the NCAA Basketball finals—GO GONZAGA

 

You already know that opinions by independent medical reviewers play a big role in the decision to grant or deny benefits.

The reasons why the independent medical reviewer came to the conclusions made are as important as the conclusion itself.

Don’t rely on the mere conclusions by the independent reviewer and inform your independent medical reviewer that the reasons for the conclusions are as important as the conclusions themselves.

That is because…your denial letter is only as good as the analysis/reasons stated in the IME report.

A case issued last week highlights the point: Westfall v. Liberty Life Assurance Company, __ F. Supp. 3d __ (N.D. Ohio March 1, 2018)(“Because Defendant’s denial letter relies on analysis [the independent medical reviewer] provided as to why his opinions controlled over the opinions of [two treating physicians], the Court will treat [the independent reviewer’s] analysis as Defendant’s purported reasons for relying on the review, rather than the opinions of Plaintiff’s treating physicians.”)

FACTS. In April 2015 Westfall’s son died at her place of work (Wal-Mart Distribution Center). Westfall then sought ERISA-governed long term disability benefits, stating she could not “bring herself to go back to that [work] site[.]” Liberty Life extended disability benefits from November 2, 2015-January 14, 2016. The plan vested discretion with Liberty Life. Liberty Life later discontinued benefits based upon an independent medical review that concluded that, while Westfall suffered from major depression, her records did not document “frequent and severe symptoms or corroborating mental status findings to support a finding of ongoing impairment.”  This lawsuit followed.

ISSUE:  Whether Liberty Life abused its discretion in discontinuing benefits?

DISTRICT COURT HELD: YES

  1. “[T[he Court may not overturn a plan administrator’s decision ‘if there is a reasonable explanation for the administrator’s decision denying benefits.””  Op. at 11.
  2. “Reliance on other physicians is reasonable so long as the administrator does not totally ignore the treating physician’s opinions.” Op. at 12.
  3. “Because Defendant’s denial letter relies on analysis [the independent medical reviewer] provided as to why his opinions controlled over the opinions of [two treating physicians], the Court will treat [the independent reviewer’s] analysis as Defendant’s purported reasons for relying on the review, rather than the opinions of Plaintiff’s treating physicians.”  Op. at 12.
  4. The independent medical review relied on for the denial failed to provide “sufficient reasons to show that Defendant’s analysis should have been preferred over the analyses of [two treating physicians].” Op. at 12.
  5. “‘[C]herry-picking symptoms…and then reverse engineering a diagnosis…is not the hallmark of a reasoned explanation.’”  Op. at 13.
  6. The independent medical reviewer ignored one treating physician’s express finding of “emotional lability”—which was not an accidental omission.  Op. at 13.
  7.  “Although evidence exists to support the conclusion that employment factors (i.e. working in the same place her son died) are central to Plaintiff’s impairment, the reasoning process Defendant used to deny Plaintiff benefits was flawed, as it ignored the emotional lability finding.” Op. at 14.

 

What happens when a claimant asserts totally disability… caused by subjective physical pain and mental illness?

For example, sometimes claimants allege total disability from the combined conditions of subjective pain complaints (with provable back abnormalities) and depression caused by the pain.

This is when you want to take a closer look at the impact of the 24 month Mental/Nervous limitation in the policy.

Here’s the case of Krash v. Reliance Standard Life Insurance Group, __ Fed. Appx. __ (3rd Cir. February 12, 2018) (“to remain eligible for benefits past the 24 month mark, ‘it was [Krash’s] burden to prove she was totally disabled from any occupation solely due to a physical condition.’”) And…kudos to some nice work by my friend Joshua Bachrach on this nice win…

FACTS: Krash sought ERISA-governed disability benefits due to subjective back pain. She also expressed that “tremors” were her primary complaint. The policy (with Reliance Standard) limited disability benefits to 24 months for disabilities “caused or contributed to by mental or nervous disorders.”

An Independent Medical Exam (IME) confirmed Krash had (1) degenerative disc disease with no atrophy “which indicates normal usage”; (2) only subjective pain complaints; and (3) body tremors that were “psychogenic in nature.” Reliance Standard discontinued benefits because Krash “suffered a mental or nervous condition that contributed to her alleged disability and…was not, in the absence of a mental or nervous condition, physically disabled.” Krash sued, and the abuse of discretion standard was applied.

ISSUE: Whether Krash established she was totally disabled (alleging both subjective complaints and mental conditions).

THIRD CIRCUIT COURT OF APPEALS HELD: AFFIRMED SUMMARY JUDGMENT FOR RELIANCE STANDARD

  1. Krash claimed her physical condition caused her depression, anxiety and psychogenic tremors. But the court noted: “to remain eligible for benefits past the 24 month mark, ‘it was [Krash’s] burden to prove she was totally disabled from any occupation solely due to a physical condition.’” Op. at 6-7 (emph. added).
  2. “‘[C]aused by or contributed to by’ in a mental disorders limitation clause [means] that benefits may be terminated when physical disability alone is insufficient to render a claimant totally disabled.”  Op. at 7 (emph added).
  3. “‘[T]he fact that the Plaintiff has been diagnosed with a condition does not equate to proof she is totally disabled from any occupation as a result of the condition….Under the policy Krash still had to prove that her condition prevented her from ‘perform[ing] the material duties of any occupation.’”  Op. at 7.
  4.  The Court determined the record did not support total disability, and she was able to perform sedentary work.

KEY TAKE AWAY: The Third Circuit is aligned with the Fifth, Sixth and Ninth Circuits in interpreting the phrase “caused or contributed to by” in a mental disorders limitation clause to mean that benefits may be terminated when physical disability alone is insufficient to render a claimant totally disabled.

Yesterday the United States Supreme Court allowed a Seventh Circuit decision to remain in effect that determined that a forum choice provision in an ERISA plan is enforceable, despite ERISA’s statement that suits “may be brought” in courts tied to the plan or plan beneficiary.

Here’s the case of George W. Mathias, Petitioner v. United States District Court for the Central District of Illinois, et al., 867 F. 3d 727 (7th Cir. 2016), pet. for review denied (January 16, 2017).

FACTS. Mathias worked for decades for Caterpillar in Pennsylvania and brought suit in the Eastern District of Pennsylvania when his ERISA-governed long term disability benefits were denied. The Caterpillar ERISA plan, however, required that suit be filed in the Central District of Illinois. Caterpillar sought transfer of the case to Illinois relying on this forum selection clause. When the Illinois judge denied Mathias’ motion to transfer the case back to Pennsylvania Mathias filed a writ of mandamus with the Seventh Circuit. The Seventh Circuit determined the forum selection clause in Caterpillar’s plan, that required all suits be filed before the Central District of Illinois, was valid and enforceable.

Mathias then petitioned the United States Supreme Court to review whether a contractual forum-selection clause that appears to override ERISA’s venue provision was valid and enforceable.

United States Supreme Court:  Allowed the Seventh Circuit decision to remain in effect when the petition for review was denied.

Rationale of the Seventh Circuit Decision (attached):

  1. Like the Sixth Circuit, the Seventh Circuit concluded the forum selection provision is enforceable.  Op. at 11.
  2. A “contractual choice of forum is now considered controlling ‘except in unusual cases.’ Op. at 12.
  3. Nothing in the text of [ERISA section 1132(e)(2)] precludes the parties from contractually channeling litigation to a particular federal district. Nor is contractual forum selection incompatible with ERISA’s policy goals more generally.” Op. at 12-13.

What this means for ERISA plans

In the Sixth and Seventh Circuit, ERISA plan venue provisions will likely be enforced if challenged in a litigated benefits dispute. Both decisions, however, involved dissenting opinions. Expect that other appellate courts could go the other way, and the Department of Labor historically has challenged the validity of forum selection clauses.

It’s that time of year again… when you may see ERISA plans amending policies or plans— during the time employees are receiving benefits. 

Employers have the right to amend long term disability plans at any time, and to apply the amended version even to employees receiving benefits under the original plan.

But which policy applies during a lawsuit? The policy in effect when the ERISA cause of action accrued.

And “accrual” can occur when the claims administrator fails to render an appeal decision by the deadline prescribed in the ERISA regulations.  

Here’s the case of Vaccaro v. Liberty Life Assurance Company of Boston, 2017 WL 5564910 (N.D. Cal. November 20, 2017)(“The ERISA cause of action accrued upon the expiration of Liberty’s June 8, 2016 deadline to issue an appeal decision.”)

FACTS:  Vaccaro sought ERISA governed long term disability benefits. Vacarro became disabled, with her last day of work as April 29, 2015. She submitted a claim July 2, 2015, which Liberty initially denied.  After Liberty failed to render an appeal decision by June 8, 2016,  Vaccarro sued Liberty on June 10, 2016. Liberty granted her appeal (on some but not all issues) on June 14, 2016. In December 2016, Liberty and the employer amended the 2015 policy, effective January 1, 2017.

ISSUE: Which Policy (the 2015 or the 2017 policy) governs?

DISTRICT COURT HELD:

  1. “[A]n employer has the right to amend its long term disability plan at any time and to apply the amended version even to employees receiving benefits under the original plan.”  Op. at 10.
  2. “The governing policy is the policy in effect when the ERISA cause of action accrued.”  Op. at 10.  
  3. In a situation in which one version of the disability policy is in effect when the claimant becomes disabled and begins receiving benefits, but an amended version of the policy is in effect when those benefits are terminated, the court would ordinarily look at the revised plan.  Op. at 10.
  4. “The ERISA cause of action accrued upon the expiration of Liberty’s June 8, 2016 deadline to issue an appeal decision.” Op. at 11.
  5. “[T]he Supreme Court has stated expressly that when a plan fails to resolve an internal appeal within the time provided under ERISA regulations, ‘the participant shall be deemed to have exhausted the administrative remedies’ and ‘is entitled to proceed immediately to judicial review.’” Op. at 11.
  6. “Policy amendments made after accrual of ERISA cause of action do not apply.” Op. at 14.