A common battle ground in ERISA claims involves the argument that ambiguous terms should be construed against the party that drafted the document.  This is known as the doctrine of contra proferentem.  See generally E. Erlich, [How to] Conquer Your Enemies and Impress Your Friends with Everyday Latin (2010).

But when the ERISA Plan has vested discretionary authority to the plan administrator to determine eligibility and construe plan terms, should the court construe ambiguous terms against the plan administrator?  NO.

To highlight this point, here is the case of Holzman v. Hartford Life and Accident Ins. Co., ___F. Supp. 3d __, 2019 WL 181527 (D. Mass. January 14, 2019). (Kudos to some nice work by my friend Byrne Decker at Ogletree…)

FACTS: Holzman sought ERISA-governed disability benefits for facial paralysis. Hartford, the claim administrator, denied the claim under the Pre-Existing Condition provision. Holzman claimed Hartford “failed to define pre-existing condition adequately or to specify what constitutes “nonspecific symptomology.”  Holzman argued that this ambiguity should be resolved in his favor under the doctrine of contra proferentem (which construes vague terms against the insurer).

ISSUE: Whether ambiguous terms should be construed against the disability insurer under the contra proferentem doctrine?


  1.  “[C]ontra proferentem does not apply because…the Group Policy grants full discretionary authority to the Hartford to determine eligibility for benefits and to construe and interpret all terms and provisions in the Policy.”  Op. at 6.
  2.  Where the policy does not contain discretionary language, you should expect the court to apply contra proferentem and to construe vague terms against the drafter or insurer.  Op. at 7.

You already know that discovery is usually limited in appeals of the denial of ERISA-governed benefits. This is especially true when there is de novo review. 

But watch out if a breach of fiduciary duty claim is asserted. That same rule (prohibiting discovery) does not apply when a party seeks discovery into purported breaches of fiduciary duty under 29 USC 1132(a)(3).

Here’s the case of Friemon v. National Carriers’ Conference Committee and Union Pacific Railroad Company,  2018 WL 6171439 ( E.D. Missouri November 26, 2018).

FACTS: Friemon sought ERISA-governed Supplemental Sickness Benefits after sustaining injuries in a head-on auto accident. After Aetna denied the claim, Plaintiff brought suit claiming his benefits were: (1)  wrongly denied, and that (2) the employer breached a fiduciary duty under 29 USC 1132(a)(3) essentially by failing “to provide the necessary paperwork to apply” for the benefits. 

Even though there was no evidence the employer was even a fiduciary of the plan, Plaintiff sought discovery on the breach of fiduciary duty claim.

ISSUE: Is discovery allowed with regard to a breach of fiduciary duty claim under 29 USC 1132(a)(3)?


  1. “The Court finds it would be premature to determine [the employer’s] fiduciary status at this early stage of the proceeding.”  Op. at 4.
  2. “‘[T]he general rule is that review is limited to evidence that was before the administrator.’”  Op. at 3.
  3. “This limitation on discovery does not apply, however ‘to claims involving ERISA plans when the claims are for equitable relief under 1132(a)(3) or for equitable estoppel. …This is so because these types of actions ‘do not benefit from the administrative process.’”  Op. at 3.


Many states have banned discretionary clauses in life and disability policies. But remember to look closely at the language… to see if the ban actually applies to the policy at issue.

Here’s the case of Brian H and Alex H v. Blue Shield of California, 2018 WL 5778318 (N.D. Cal. November 1, 2018)(California’s ban on discretionary language did not apply to health insurance).

FACTS: Plaintiff sued contending certain medical treatments were “medically necessary”. The initial claims denial was made by Blue Shield’s Mental Health Administrator, which had not been expressly granted discretionary authority to make claims determinations. The final claim decision, however, was made by Blue Shield, which did have discretionary authority under the ERISA Plan.

Plaintiff argued that: (1) that California’s ban on discretionary clauses in life and disability policies applied to health insurance policies; (2) that de novo review should apply because the claims administrator was not granted discretionary authority, and (3) a conflict (Blue Shield made claim decisions and would pay the claim) required “heightened skepticism” during the court’s review.

DISTRICT COURT HELD: Abuse of Discretion Standard of Review Applies

  1. California’s regulation banning discretionary clauses in a “‘policy…that provides or funds life or disability insurance coverage’ is not applicable, as the Plan provides health insurance.”  Op. at 1
  2. “[N]othing in the [ERISA] Plan precludes Blue Shield from applying the ‘Magellan Medical Necessity Criteria Guidelines’ in determining whether services are ‘medically necessary’ under the Plan.” Op. at 2.
  3. With regard to whether a structural conflict requires review by the Court under “heightened skepticism,” “courts need not accord such factor signficant weight in the absence of evidence of bias.”  Op. at 2

Most ERISA plans contain provisions limiting benefits for disabilities “which are primarily based on self-reported symptoms” or “mental illness.” (Emphasis added).

So, what does “primarily” mean? And what evidence in the medical records justifies the conclusion that the diagnosis is primarily based on self-reported symptoms?

Here’s a new case that highlights that the limitation still applies even when there might be some weak evidence in the medical records verifying the diagnosis. That’s because the diagnosis rested “primarily” on self-reported symptoms. Floerke v. SSM Health Care Plan and Unum Life Ins. Co., 2018 WL 5045770 (W.D. Wisc. October 17, 2018)(Relying on nurse reviews, Unum properly discontinued benefits after concluding the diagnosis of headaches was primarily based on self-reported symptoms and discontinued benefits).

FACTS: Floerke sought ERISA-governed disability benefits as a result of “chronic daily persistent headaches” and anxiety. UNUM, vested with discretion in making the claim determination, discontinued benefits after 12 months under the “self-reported symptoms” limitation, which applies to disabilities “which are primarily based on self-reported symptoms” or “mental illness.” (Italics added). Floerke sued alleging wrongful denial of benefits.

ISSUES: Whether Plaintiff’s chronic migraine diagnosis was primarily based on medical records, tests and physical exams which sufficiently verified her condition?

DISTRICT COURT HELD: NO. Unum did not abuse its discretion in discontinuing benefits.

  1. Plaintiff argued the self-reported symptoms limitation should not apply because the diagnosis was primarily based on her medical history, physical exam, and “a process of exclusion diagnosed through standard clinical practice.” This medical information included “evidence of increased spinal pressure,” and muscle tenderness and range of motion limitations. Op. at 17.
  2. “[T]he self-reported limitation applies only to the method used to diagnose the sickness or injury that [led] to the disability, and not the symptoms of the claimed disability itself.” Op. at 17.
  3. Floerke’s clinical migraine diagnosis was based primarily on self-reported symptoms. Op. at 18.
  4. Evidence of “increased spinal fluid pressure” was not verifiable evidence confirming the headaches because the medical records did not consistently establish she had increased spinal fluid pressure, or that it was the cause of the headaches. Op. at 19.
  5. Unum properly relied on nurses’ analyses concluding that the medical records failed to verify Floerke’s headaches. Op. at 23.

You already know that many ERISA plans contain discretionary language, which calls for a court to review the ERISA claim denial under an abuse of discretion standard.

But many times a structural “conflict of interest” can occur where the plan administrator has the “dual role” of administering and funding the plan benefit. Courts typically look for evidence that the structural conflict actually affected the claim handling, which can affect the scrutiny of review.

One well-known and easy way to inoculate the effect of structural conflicts of interest is to use “independent peer reviewers.”

Here’s the case of Green v. Life Insurance Company of North America (LINA), ___ Fed. Appx. __ (10th Cir. September 26, 2018) that highlights the point.

FACTS: In December 2014, Green, a tractor-trailer operator experienced “cloudy and foggy vision” and sought medical treatment. Three unsuccessful surgeries resulted in permanent loss of vision, rendering him unable to work as a truck driver. Green sought ERISA-governed disability benefits, administered and funded by LINA. The ERISA plan contained discretionary language.

LINA denied the claim, concluding Green’s condition was a pre-existing condition: the posterior vitreous detachment Green experienced in December 2014 likely caused a retinal tear and eventual detachment in 2015. Green sued to recover benefits.

ISSUE: Whether the structural conflict of interest affected the claim?

HELD: The structural conflict of interest was properly addressed by LINA.

  1. “LINA properly dealt with its conflict of interest in its dual capacity role by twice referring Mr. Green’s case to independent medical reviewers.” Op. at 6.
  2. LINA made a reasonable and good faith determination that Mr. Green had a pre-existing condition…that caused or substantially contributed to his vision loss….LINA relied on five doctors’ opinions, two of whom were Mr. Green’s own doctors, and all of whom agreed….” Op. at 7.

ERISA plans and related disability or health policies contain language granting the right to reimbursement of overpayments made to the claimant. Overpayments usually occur when the claimant receives lump sum Social Security benefits, or the claimant receives a tort settlement.

Can the claimant oppose repaying the overpayment by asserting equitable defenses? Maybe.

Here’s the case of Jalali v. Unum Life Insurance Company of America, 2018 WL 4468207 (S.D. Ohio September 18, 2018).

FACTS: Jalali was severely injured in a 2007 car accident. She sought and received ERISA-governed disability benefits from Unum. Before Jalali settled her tort claim with the adverse car driver, Unum twice sent Jalali a form asking her to certify that she would notify Unum of any tort settlement. Jalali never returned the form, and then settled her tort claim for $631,530 after attorney fees and costs. Jalali then paid off $260,000 in mortgages and $110,000 in student loans.

Unum discontinued benefits, determining she was no longer disabled. Jalali sued Unum, and during that suit Unum did not seek reimbursement of the tort settlement proceeds and the Court ordered Unum to pay disability benefits ($2400 per month). After the Court ordered Unum to resume $2400 per month disability payments, Unum sought repayment from the tort settlement by reducing disability benefits to zero for 102 consecutive months, until it recouped the overpayment. Jalali sought equitable relief, claiming the offset was inequitable.

ISSUE: Whether equitable arguments may defeat efforts to enforce provisions of the policy allowing for reimbursement from tort settlement proceeds.


  1. ERISA Section 1132(a)(3) allows for a civil action “to obtain appropriate equitable relief…” Op. at 6.
  2. “[T]he test for whether a remedy constitutes ‘appropriate equitable relief’ under [ERISA]…is whether such relief was ‘typically available in equity….’” Op. at 7.
  3. “[T]he power to reform contracts…is a traditional power of an equity court … To seek reformation it is not necessary to suggest specific contract language. Op. at 7.
  4. No Unclean Hands. Unum properly informed Jalali it was “possible” that it could seek reimbursement. This was an accurate representation and did not constitute misrepresentation. Op. at 9.
  5. No Waiver. Unum did not “intentionally relinquish” its known rights, even though Unum never asserted reimbursement as an affirmative defense. Emails between counsel showed that both parties understood that Unum planned to assert its interest in the settlement proceeds. Op. at 10.
  6. No Laches. Jalali argued that Unum was not diligent in pursuing reimbursement because Unum did not seek to do so when Unum learned of the settlement in 2012. “There is no strict time limit within which Unum must seek enforcement, and there is no evidence that the delay caused Ms. Jalali’s legal position to change”. Op. at 11.
  7. The Make Whole Rule — Remand for Further Proceedings. “‘[A]n insured should not be allowed to retain a double recovery at the expense of the insurer.’” The Sixth Circuit follows the make whole rule, which means that the “insurer does not have a right to subrogation until the insured has been fully compensated….’” Op. at 12.
    • Unum has not attempted to establish an equitable lien over the settlement funds. Op. at 13.
    • “Because …the settlement funds have been dissipated, [Unum cannot now establish an equitable lien].” Op. at 13.
    •  The record indicated that Jalali’s future wage loss exceeded the amount of the settlement…[b]ut this evidence is not conclusive”. The court remands for fact-finding on application of the “make whole” rule. Op. at 14.

Does an insurer’s litigation history dating back 10 years justify overbroad discovery in an ERISA case? It might… (See below for a strategy to combat this from occurring in your cases).

Also, in each case you should reassess whether or not to argue for the arbitrary and capricious standard. Consider the adverse effects of pushing for application of the abuse of discretion standard… versus stipulating to the de novo standard. This can help limit discovery.

This new case highlights these concerns…

Here’s the case of Black v. Hartford Life Ins. Co., 2018 WL 3872113 (D. Or. August 14, 2018).

FACTS. Plaintiff sought and received ERISA-governed disability benefits for nine years as a result of “Atypical Parkinson’s Disease.” An Independent Medical Exam, which relied in part on surveillance video concluded Plaintiff did not have Atypical Parkinson’s, and Hartford terminated benefits. The abuse of discretion standard of review could apply to the case. Hartford operated under a conflict of interest because it served as both the claims administrator and insurer.

Plaintiff brought suit and sought broad discovery regarding: (1) financial relationships between insurer and vendors; (2) performance evaluations of key employees of insurer.


  1. “District courts are generally limited to the administrative record unless a so-called structural conflict of interest exists.” Op. at 4.
  2. “[W]hether to permit ‘conflict’ discovery is well within the discretion of the Court….” Op. at 6.
  3. In this case, Hartford operated under a conflict of interest because it is the claims administrator and insures the claim. Op. at 6.
  4. “[I]n other ERISA cases within the Ninth Circuit, Hartford has used [certain investigator vendors] to conduct biased investigations.” Op. at 6. Remarkably: the Court cited cases that went back 10 years, 6 years and 4 years ago.
  5. “Given that Hartford operates under a conflict of interest and has a history of biased claims administration, the Court exercises its discretion to allow Plaintiff to obtain the discovery he seeks.” Op. at 6-7.
  6. The Court allowed discovery of vendor agreements because the Court “is particularly persuaded by the fact that Hartford has used the same vendors in this case as were used in [the 2012 and 2014 cases].” Op. at 7.
  7. “Hartford’s performance reviews ‘may reveal a structural incentive for individual claims adjustors to deny disability claims.’” Op. at 7.

KEY TAKE AWAYS to Limit Overbroad Discovery:

In discovery motions, most courts consider only the case at hand, and will not accept arguments tainting the insurer that rely on ten year old court rulings against the insurer in other cases.

  1. In discovery battles, consider agreeing to de novo review (which all but eliminates discovery) versus the abuse of discretion standard which allows the court greater discretion to order overbroad discovery. Where, as here, the district court reviews de novo the denial of benefits, that review is limited to the administrative record unless “circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision.” Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir. 1995) (quoting Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1025 (4th Cir. 1993)).
  2. For future discovery battles, create a list now of court decisions upholding your insurer claims decisions. Each insurer should develop a “case win list” that can be made as an exhibit and submitted to the court to combat Plaintiff’s briefing cherry-picking adverse decisions.


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?


  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.


          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.