COVID-19 is stunning in its impact on the complexity of our daily lives. For the past eighteen months, entire societal systems have been upended. As some commentators have put it, we have advanced a decade in a matter of months in terms of how we live, work, and interact with each other.

 

Understandably, the pandemic has created even more anxiety over subjects that everyone already worries about: health and finances. We all want to know that our families will be cared for and that we can rely on the benefits we’ve earned through our careers.

 

As with many other aspects of our employment situations, COVID-19 has had an influence on healthcare and disability benefits. In order to ensure the best care for you and your family, it’s important to be aware of the state of your employee benefits plans.

 

Here are five important things you should know about your benefits in the wake of COVID-19:

 

 

Acute care needs related to the pandemic should be covered

 

 

Since COVID-19 is a contagious disease transmitted through respiratory exposure, contracting it results in obvious acute care needs. Treatment related to COVID-19 should, for the most part, be covered by your insurer or through federal government reimbursements. The nationwide vaccination program is being administered at no cost and COVID-19 testing is often free or covered without cost-sharing obligations. If you are being charged for COVID-19 preventative or diagnostic care, there is likely a problem with the claim. 

 

 

Mental health treatments should also be covered

 

 

An extremely important, but often overlooked aspect of healthcare during the pandemic, is for the treatment of mental health and substance abuse. Treatment for these conditions is mandated under federal law (and some state laws). Appropriate care for outpatient, inpatient, and residential treatment is to be provided in all healthcare plans that are covered by the Patient Protection and Affordable Healthcare Act

 

 

If you’ve been laid off, the health exchange may be a better option than COBRA

 

 

Continued healthcare if you were furloughed or laid off is also of particular concern. If you work for an employer with more than 20 employees, you should have received a COBRA notice if you were furloughed or laid off. COBRA allows you to continue with your current health insurance for 18 months, albeit at a significant cost. Many employees that have been laid off find coverage on the ACA exchanges may be a more affordable option than COBRA. For those who have been hurt financially in a more significant way, some states will provide basic health insurance coverage paid for by Medicaid. 

 

 

Your physical work location should not interrupt your coverage

 

 

Employee benefits such as healthcare and other benefits, particularly long-term disability (LTD) insurance, are available to employees who are “actively-at-work.” In other words, the employees have to be active employees, and in most cases, working full-time. What this means is that even if you are working from home, or off-site, certain benefits should continue without interruption as the employment status is what governs your eligibility, not the physical location of the work site.  

 

This is particularly important in the context of long-term disability insurance protections. Your LTD benefits typically replace your income if you are unable to work because of a non-work related medical event, such as an illness or injury that occurs outside the workplace.  

 

LTD benefits are critically important for an individual or family’s financial security since a good policy provides roughly the same amount of income that a person brings home after taxes. 


“Actively-at-work” clauses have been interpreted to mean that an employee must be working at his or her regular place of business. For many, that place of business has become the home.

 

 

Employees are slacking on retirement investing

 

 

Now is not a time to get lax with your retirement investing, but that’s exactly what’s happening. Since the pandemic began, the meeting with 401(k) representatives has been largely moved to video conference calls that are easy to miss or reschedule. When representatives are onsite (often providing lunch) it is easier to think about the health of your retirement plan.  

 

Through COVID-19 we’re seeing many employees lose a year-and-a-half or more of time at the office, making it easy to skip the meeting with your advisor. Failing to properly fund your retirement investing during this time can provide some challenges later in life – like extending your retirement date. 

 

Don’t fall victim to this. Stay on top of it and schedule that call. Also important is to take stock of the charges and fees that have been assessed against those accounts. Keep an eye on them. If the fees are excessive, your retirement planning may be further affected. 

 

To summarize, now is not the time to coast and hope your benefits are fine. 

 

The COVID-19 crisis has affected almost every aspect of our lives. Employee benefits are no exception. Knowing what your benefit plans provide, and how they are supposed to support you, is critical to your future physical and financial health. It’s easy to let this slip to the back of your mind, but to not take stock and make sure your benefits are in order would be a mistake. 

 

Do this now: Help ensure your family’s well-being by setting up a call with your human resource manager to go over the details of your healthcare, disability, and retirement benefits. 

 

The legal world involving employee benefits claims is complex and specialized. If you suspect there is a problem with your health insurance coverage, disability, or retirement benefits, please ask us for help. The first call is on us. We have the legal background and skills necessary to help you solve the problem.

 

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Authored by J.J. Conway, Principal Attorney and Founder

With such intense focus on a single communicable illness, it is easy to forget that we, as human beings, suffer from other illnesses.  Some medical journals are concerned that rates of serious medical conditions may rise as many would-be patients did not seek preventative care during much of 2020. And the trend continues.(https://healthcostinstitute.org/hcci-research/the-impact-of-covid-19-on-the-use-of-preventive-health-care.)

“Work from Home” will not affect occupational disability situations.  Obviously, people will still have to confront illness or injury even if they are working from home.  The risk for injury may be reduced somewhat since there is less travel, driving, and going in and out of public places, but illness still shows up.  Just think of how many people you may know who have passed away or become sick from something other than Covid-19 over these past months.

“Work from Home” may affect the manner in which insurers evaluate “Essential Duties” or “Main Duties” but not right now. Group disability plans and insurance contracts are often provided without comprehensive underwriting as in the case of individual disability insurance policies.  When an individual applies for disability insurance coverage, the insuring company typically requires blood tests, electrocardiograms, and body-mass index (BMI) measurements. The company reviews medical records, tax returns, and then issues the contract for a premium.  Group disability contracts, by contrast, typically insure occupational titles, not specific people.

The question arises now that people can work from home, will insurers claim that ill or injured workers are able to perform their jobs more easily with at-home accommodations. For the immediate future, insurers may be on the wrong end of this one. Since group insurance contracts often insist that a job must be evaluated on how it is performed – nationally as opposed to specifically – the impact of WFH may not be available as a defense to denying or terminating a disability claim.

The “Essential Duties” or “Substantial Duties” clauses of those contracts have not yet been updated to look at those jobs as they are being performed at home versus a standard work environment.  Furthermore, the guides for those jobs – like the Dictionary of Occupational Titles or ONET – have not yet been updated to account for this WFH period in our work history.  For a while, the insured stands to benefit.

Bottom Line: Work from Home (WFH) should not aid insurers in the short-term.  Group contracts may be re-thought if WFH is a trend that continues and as the work requirements for occupational titles is updated.

In Thole v. U.S. Bank N.A., No. 17-1712, 2020 U.S. LEXIS 3030 (June 1, 2020), the U.S. Supreme Court ruled, 5-4, that defined pension plan participants lacked constitutional standing to sue over a $750 million loss to their plan because they had not yet missed a benefit payment. Justice Kavanaugh, writing for the majority, brought a new approach.  He analyzed the dispute as if it were a simple contractual matter involving an un-breached contract– i.e., no damages at present, no case at present. This might strike some ERISA practitioners as unusual since the last three decades of ERISA jurisprudence has focused on analyzing fiduciary actions under the law of equity. Under an equitable analysis, a fiduciary would, arguably, have a duty to protect a trust fund, like a pension fund, from preventable erosion.

Justice Clarence Thomas’ Concurrence was, perhaps, the most honest assessment of the Court’s ruling where he wrote, effectively, ‘did we really want to spend so much time in the law of equity?’ Thomas has been on the Court for 30 years – about two-thirds of ERISA’s statutory existence.

Now the Court’s newest members, Justices Kavanaugh and Gorsuch, are giving ERISA a look through new legal eyes. Justice Kavanaugh wrote that a pension shortfall, alleged to be the result of fiduciary mismanagement, was not an actual case because:

“Win or lose, they would still receive the exact same monthly benefits they are already entitled to receive.”

Given the Court’s broad ruling, it may be that pension funds have to be squandered and lost before there is a “case or controversy” under Article III of the U.S. Constitution.  The opinion details several of ERISA’s regulatory protections and discusses the backup insurance provided by the Pension Benefit Guaranty Company as a potential safety net to retirees.  (Although it should be noted that the PBGC has announced it will be insolvent by 2025).

In the dissent, Justice Sonia Sotomayor said:

“The Court holds that the Constitution prevents millions of pensioners from enforcing their rights to prudent and loyal management of their retirement trusts. Indeed, the Court determines that pensioners may not bring a federal lawsuit to stop or cure retirement-plan mismanagement until their pensions are on the verge of default. This conclusion conflicts with common sense and longstanding precedent.”

One fact that was obscured from the Court’s majority opinion, that figured prominently in the lower court decisions, was the important and operative fact that U.S. Bank transferred money into the plan to effectively overfund it during the litigation.  U.S. Bank’s self-corrective measure seemed persuasive to the judges below.  The move, which a healthy plan sponsor can pull off, may be more challenging for struggling plans. For those plans, the pensions may erode, and there is seemingly little that can be done under ERISA to remedy this after Thole.  The Court’s holding of the case is considerably broader than what was happening factually in Thole.

As the Court’s majority continues to emphasize texts, not the history behind the texts, it was not thinking about the Studebaker Automobile Company bankruptcy or other abuses that led to ERISA’s passage.  (ERISA took nearly ten years to pass after Studebaker went bankrupt and its workers lost everything in their retirement).  The Court, at least for the moment, seems content to let the federal government mop up any pension plan problems through its taxpayer supported pension insurance program.

On February 26, 2020, the U.S. Supreme Court issued its unanimous decision in Intel Corporation Investment Policy Committee v. Sulyma, Case No. 18-1116. https://www.supremecourt.gov/opinions/19pdf/18-1116_h3cj.pdf.  The decision resolves a split in the Circuits concerning the appropriate date by which to measure the shortened statute of limitations for breach of fiduciary duty claims.  The triggering event for the three-year statute is based on the ERISA participant’s “actual knowledge.” The Court held that there is a proof requirement when a plan or fiduciary seeks to invoke a claim of “actual knowledge” under 29 U.S.C. §1113(2).  Previously, courts around the United States (including the Sixth Circuit) had applied a quasi-constructive notice standard.  Under that low threshold, if there was proof of sufficient disclosure, the ERISA participant could be held to the shortened period of limitations.  No longer.

In Sulyma, the Court held:

This is the reason for ERISA’s requirements that disclosures be written for a lay audience. See, e.g., 29 U. S. C. §1022(a). Once plan administrators satisfy their obligations to impart knowledge, petitioners say, §1113(2)’s knowledge requirement is satisfied too. But that is simply not what §1113(2) says. Unlike other ERISA limitations periods—which also form §1113(2)’s context—§1113(2) begins only when a plaintiff actually is aware of the relevant facts, not when he should be. And a given plaintiff will not necessarily be aware of all facts disclosed to him; even a reasonably diligent plaintiff would not know those facts immediately upon receiving the disclosure.

This is a significant development in ERISA litigation. The decision also signals that the Supreme Court is taking a strict construction approach to the statute.

For those who have successfully fought to have a disability claim approved, they want it to stay that way. When the letter arrives from an insurance company seeking an update in status, most claimants begin to worry – and rightly so. As the Western District of Michigan federal court wisely observed fifteen years ago:

The plan and insurance language did not say, but the world should take notice, that when you buy insurance like this you are purchasing an invitation to a legal ritual in which you will be perfunctorily examined by expert physicians whose objective it is to find you not disabled, you will be determined not disabled by the insurance company principally because of the opinions of the unfriendly experts, and you will be denied benefits.

Loucks v. Liberty Life Assurance Co. of Boston, 337 F. Supp. 2d 990, 991 (W.D. Mich. 2004) (vacated following settlement).

Under the terms of their contracts, disability insurers are entitled to request continuing proof of loss.  So, it is also reasonable to expect that that a disability claimant will be called upon to provide updated medical proof of their condition and disability. This does not mean that an insurer may act unreasonably in requesting continuing proof of disability, only that an insurer may reasonably request updates on a claimant’s medical status.  For a disability claimant receiving a monthly payment, it should be acknowledged that once the payments begin the claim is not over.  The only way to effectively deal with this climate is get out in front of it.

Here are our suggestions:

  1. Go to every doctor’s appointment with a list of continuing physical (or if applicable psychological) limitations. Don’t leave a single thing out.
  2. Document and report every single side effect of your treatment or medication.
  3. Document and report every unique episode (a fall, a forgetful spell, or a day spent in bed) and timely make your doctor aware.
  4. Do not miss doctor’s appointments. If you anticipate a problem, reschedule right away. Under no circumstances should it ever be listed that the claimant was a “no show.”
  5. Make sure the doctor has documented everything before you leave.
  6. Routinely request copies of your records and make sure they are complete and correct – before they are requested from an insurance company.  Best practice would be to request a report be sent to you after every visit.

Successfully securing a disability claim approval is a victory to be sure – yet take care to follow the steps set forth above, or it can be short lived.

The Ninth Circuit Court of Appeals ruled yesterday that, contrary to prior Circuit precedent, the presence of an arbitration provision in an employee benefits plan could compel arbitration.  See, Dorman v. Charles Schwab Corp., Case No. 18-15281 (9th Cir., Aug. 20, 2019).  The plaintiff had filed a class action suit in district court alleging that the defendants, plan fiduciaries, administrators, and employers, had improperly selected proprietary funds for inclusion within the offerings of multiple 401(k) plans, despite their poor performance, and to the detriment of the plans and individual participants.

Relying principally on the holding of American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013), the court ruled that Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1984), was no longer good law and ERISA claims could be subject to contractually-mandated arbitration.

The relevant arbitration provision, contained within the plan document itself, was wide-reaching, stating that “[a]ny claim, dispute or breach arising out of or in any way related to the Plan shall be settled by binding arbitration….”  The provision also included a waiver of class or other collective action, “even if absent the waiver [the plaintiff] could have represented the interests of other Plan participants. The arbitration provision within the second plan at issue was materially identical.

The plaintiff sought to recover under both ERISA Section 502(a)(2) and (3), “seeking plan-wide relief on behalf of a class comprising all participants in, and beneficiaries of, the Plan at any time within six years of the filing of the Complaint.” The complaint’s claims were focused on violation of ERISA’s prohibited transaction rules through demonstrated preference of inclusion of investment funds affiliated with Schwab, despite mounting evidence of poor performance across benchmarks.

The district court had previously denied the motion to compel arbitration, holding the provisions were inapplicable since enacted after the plaintiff’s participation in the plan ended and that “the claims were ‘claims for benefits’ that were expressly carved out of the arbitration agreement in the Compensation Plan.” Further, the district court ruled that even if the agreements were applicable, they were unenforceable as the plaintiff’s claims were “brought on behalf of the Plan,” not for individual relief, and an individual “cannot waive rights that belong to the Plan, such as the right to file this action in court.”

While the Dorman opinion cites Munro v. University of Southern California, No. 17-55550 (9th Cir., Jul. 24, 2018), multiple times throughout as complimentary, the outcome in Munro was, notably, the opposite of that within Dorman – the Ninth Circuit held that the Plaintiffs, who had been required to sign arbitration agreements as part of their employment contracts, were asserting claims squarely on behalf of their plans and, accordingly, arbitration clauses executed on behalf of the individuals themselves, pursuant to employment contracts, would not compel arbitration of claims clearly brought on behalf of the plans.

Under the Munro court’s holding, employees

seek[ing] financial and equitable remedies to benefit the Plans and all affected participants… including a determination as to the method of calculating losses, removal of breaching fiduciaries, a full accounting of Plan losses, reformation of the Plans, and an order regarding appropriate future investments” are clearly “bringing their claims to benefit their respective Plans across the board, not just to benefit their own accounts as in LaRue.

Munro slip op. at 12-13. The Dorman court was arguably facing a distinguishable analysis on two separate fronts – while the obvious difference is the fact the plans at issue in Dorman contained the relevant arbitration agreement (rather than individual employment agreements, as in Munro), the scope and direction of the separate plaintiffs’ claims would also seem to be critically different.  The Dorman plaintiff was seeking relief which could, conceptually at least, be segregated into an individual claim – ultimately, the recovery of losses sustained on his individual retirement account(s) owing to alleged fiduciary breach, versus the clear plan-wide relief sought in Munro.

But take for instance a hybrid-hypothetical, somewhere between both Dorman and Munro – a class of plaintiffs seeking to litigate claims clearly brought on behalf of their plan (removal of breaching fiduciaries and reformation) yet faced with an arbitration provision contained within the relevant plan itself and barring class-wide or collective arbitration.  Consistent with the Munro holding, an ERISA plaintiff seeking judicial remedy which exists for the benefit of a plan may not alone settle a claim.  Id. at 11.  If arbitration was compelled, would a plan-appointed representative step-in or is that not the position already occupied by a plaintiff bringing a derivative action? Would a split of the individual claims and the ‘clear’ plan relief-related claims be compelled, resulting in the possibility of two distinct resolutions on fact?

The Dorman court also addressed, in a separate memorandum, the effectiveness of an arbitration provision in barring class-wide arbitration of 502(a)(2) claims brought by a plaintiff.  However those claims are, as articulated in the memorandum, and under LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S. 248 (2008), “inherently individualized when brought in the context of a defined contribution plan….”  Dorman, et al. v. The Charles Schwab Corporation, et al., No. 17-cv-00285, ECF No. 53, at 5-6 (Aug. 20, 2019).

Despite the protections ERISA offers a beneficiary, every now and then relief available outside of the statute tempts a plaintiff to argue against ERISA qualification – in this instance, the plaintiff was a former President and CEO of Safelite Group, Inc.  In 2005, Safelite’s Board of Directors created the Safelite Group, Inc. 2005 Transaction Incentive Plan (“TIP,”) which provided substantial bonus payments to the five Safelite executive participants, dependent on their securing a strategic buyer for the company.

After a likely buyer emerged, the size of the TIP participants’ tax obligations in the event a purchase went through became evident, prompting the board to adopt the Safelite Group, Inc. Nonqualified Deferred Compensation Plan (the “NDCP”).  At the date of its creation, only the four executives who were participants in the TIP were eligible for the Safelite NDCP.

The NDCP allowed its participants to defer two types of income – compensation and TIP amounts.  These deferments were made by individual election forms indicating percentages of TIP Amounts, base annual salary, and bonuses sought to be deferred, as well as the year or years distributions were desired.

Between 2006 and 2014, the plaintiff deferred a total of $9,111,384 – until a federal audit revealed some of his elections failed to comply with a tax statute regulating deferred compensation plans.  The plaintiff brought suit against Safelite, asserting breach of contract and negligent misrepresentation.  In federal court, Safelite asserted in its motion to dismiss that plaintiff’s claims were preempted under ERISA as the NDCP constituted an “employee pension benefit plan” under ERISA Section 3(2)(A)(ii), 29 U.S.C. § 1002(2).  The district court granted the motion but permitted the plaintiff 28 days to amend his complaint.  With no amendment, the district court entered final judgment and the plaintiff appealed.

On appeal the court considered (1) whether the Safelite Plan was an employee pension benefit plan covered by 29 U.S.C. § 1002(2)(A)(ii), and (2) whether the Safelite Plan was exempt from ERISA pursuant to DOL regulation 29 C.F.R. § 2510.3-2(c).

 

Did the NDCP Qualify as an Employee Pension Benefit Plan?

Under ERISA and Sixth Circuit precedent, an employee pension benefit plan must “by its express terms or as a result of surrounding circumstances,” either

(i) provide retirement income to employees, or

(ii) result in a deferral of income by employees for periods extending to the termination of covered employment or beyond…

29 U.S.C. § 1002(2)(A). The court noted that ERISA’s overarching purpose in the scope of EPBP’s is to “protect[ ] monies belonging to plan beneficiaries while such funds are held and managed by others.”  Accordingly, any state law remedy which duplicates or supplements ERISA’s available remedies is preempted.

Attempting to move the plan outside of the scope of preemption, the plaintiff argued that in order to fit within the “results” stratum, a plan “‘must require’ deferrals to the termination of covered employment or beyond.”  The court was not persuaded, noting the difference between “results” and “requires,” as well as Congresses’ use of the actual term “require” within other sections of ERISA.

Was the NDCP an exempt bonus plan under DOL regulations?

DOL regulations exclude “payments made by an employer… as bonuses for work performed, unless such payments are systematically deferred to the termination of covered employment or beyond….” 29 C.F.R. § 2510.3-2(c). The court interpreted the regulation as “envision[ing] bonuses, not pay for regular compensation, such as annual salaries.”  Id. at p. 8.  “A bonus plan may defer payment of bonuses and remain exempt, ‘unless such payments are systematically deferred to the termination of covered employment or beyond, or so as to provide retirement income to employees.’” – Systematic deferral would suggest the payments were not ‘merit’ based but rather an ERISA-exempt proxy for retirement income.

Hoping to slot the plan into the exception, the plaintiff disputed whether the plan actually resulted in a deferral of income by employees for periods extending to the termination of covered employment or beyond.

The court noted that the NDCP “expressly provides for employees to defer income from several sources to the future” and accordingly fit within the meaning of 29 U.S.C. § 1002(2)(A)(ii) and fell outside the ambit of the DOL exclusion.  Id. at 10-11 (Emphasis added). The inclusion of multiple sources of income in the NDCP (general wages and other incentives outside of the TIP amounts) factored into the court’s decision, leading the court to conclude that the “Safelite Plan [was] not designed as a bonus plan and instead distributes deferred amounts of non-bonus income, [therefore] it is not a plan providing for payments made ‘as bonuses for work performed.’”  Id. at 11-12.

Analytics Brings the Past Back to the Future

While the majority opinion was directed toward assessing the ERISA-qualified nature of the plan at issue, the concurrence diverged considerably – advocating for the utility of “corpus linguistics,” crediting it with focusing “on the common knowledge of the lay person by showing us the ordinary uses of words in our common language.”  Id. at 15 (Thapar, J., concurring).

Specific arguments in Safelite may have been novel, but there exists at the very least tens of cases interpreting the provisions at issue here – more interesting perhaps is the potential application of corpus linguistics to the interpretation of plan terms.  Consider an arguably ambiguous term or phrase in a plan which an insured asserts led him or her to reasonably expect a greater level of coverage than that actually provided.  Rather than expecting attorneys and judges to unwind years of legal experience and analyze the language at issue from the perspective of a hypothetical, reasonable reader (one lacking any formal legal training), could not analytics aid in evaluating the general import of a term or phrase at its time of publication?

The concurrence endorses this possibility of a greater incorporation of corpus linguistics into legal analysis, drawing upon millions of examples of everyday word usage” to divine the “ordinary meaning” of language at a particular point in time – with the

corresponding search results… yield[ing] a broader and more empirically-based understanding of the ordinary meaning of a word or phrase by giving us different situations in which the word or phrase was used across a wide variety of common usages… corpus linguistics is a powerful tool for discerning how the public would have understood a staute’s text at the time it was enacted.

* * *

[T]he entire practice of law – and certainly the practice of interpretation – involves judgment calls about whether a particular source is relevant.  And at least with corpus linguistics, those calls can be vetted by the public in a more transparent way.

Responding to another concurring opinion’s suggestion that corpus linguistics is redundant when compared with dictionaries, Judge Thapar notes that rather than a meaning arrived at in an indistinguishable point in time, “corpus linguistics… help[s] pinpoint the ordinary uses of a word at the time a statute was enacted.”

While Judge Thapar was not advocating for contract interpretation to devolve into administration by “automatons of algorithms” (and neither are we), perhaps it is time to introduce a more formulaic – and arguably representative – portrait of the idealized ‘reasonable insured’ into the traditional legal algorithm.

 

For the full opinion, see, Wilson v. Safelite Group, Inc., No. 18-3408 (6th Cir., Jul. 10, 2019)