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.

©Public Domain.

Most are familiar with the famous sketch of the simultaneous-silhouette of the older and younger woman appearing within the same image. Both women can be seen within the same drawing. Depending on the viewer’s perspective, the image appears to be of one of two different people.  While viewing the image, the mind can move back and forth, alternating constantly between the two different people. The picture serves as an apt metaphor for claims involving the payment of long-term disability benefits.

Similarly, two reviews of the exact same set of facts in a typical long-term disability claim can yield two entirely different, if not opposite, perspectives.  The same person, with the same medical and work history, can appear entirely different depending on a reviewer’s perspective. Consider this factual scenario as an example:

A twenty-year employee who has coped with severe and chronic lower back pain for years files a claim for long-term disability benefits. He claims that he can no longer regularly and continuously perform his main job duties on a full or part-time basis.  His condition has been the same for at least two years before he stopped working.  Simple enough – but look at how this same set of facts can be viewed through different perspectives:

Perspective No. 1:  The employee worked through the pain until it became unbearable and very likely long after he should have     stopped working and filed a valid claim for benefits. This employee is occupationally disabled.

Perspective No. 2:  This employee was working full-time with the same condition before filing a claim for disability benefits. Obviously, he was able to cope with the same condition until he decided to file a claim for disability. This employee could continue working and is not occupationally disabled.

So, how is one supposed to get to the truth of this situation?  Medical and Non-Medical Evidence. For a disability claimant fighting his or her way to an approved LTD claim, there is only one way to assure there is but one perspective about the situation – the record as a whole must show there is only one logical perspective once all evidence is taken into consideration. That requires proving one’s own ‘perspective’ while disproving the other’s ‘perspective.’  Definitively.

The question naturally arises, how do you prove a case in the typical disability insurance claim?  Here are some basic steps that are required for any successful LTD claim or appeal:

  1. Secure the administrative claims file of the denied claim. This file, containing a compilation of notes and records, holds the key to understanding the other side’s perspective (be it an insurance company or even employer in certain cases).  The information is often invaluable.  For example, the administrative record can reveal internal notes of what the insurance company claims is missing from its files and is preventing it from approving a claim.  It can show bias, or it can simply show how things have gotten off-track.
  2. Securing the medical and non-medical documentation proving the validity of the claim.   This information is the basis for the claim.  It is the treatment notes, test results, and medical opinions of physicians and health providers which serves to medically substantiate the actual claim of disability.  Ideally, this information would appear in chronological format explaining the medical changes in one’s condition leading to an inability to work on a consistent and competitive basis.
  3. Coordinating with treating physicians. Securing the medical records is only part of the requirement of a successful claim.  Explaining to treating medical providers that a disability claim is being processed is critical – it may move any request to the front of queue and also communicates the seriousness of any unique response required from a physician.  After the initial request, you may discuss how best to coordinate with a treater’s office to timely secure records, test results, completed disability claims forms, and evidence that may be required by legal counsel. See, ERISA Long-term Disability Basics: The Role of the Treating Physician, regarding general communications with your treating physicians regarding disability claims.
  4. Consulting with or retaining legal counsel.  If a case is for total disability, consider retaining legal counsel for consultation or representation to address issues where medical/legal expertise might be needed.  Disability cases often present both complex medical and contractual issues.  They often require input from experts beyond a client’s treating physicians – even sometimes requiring experts in matters of vocational rehabilitation, physical medicine, or certain objective testing methods.  A good lawyer will know this and will incorporate this requirement into the claim or appeal process, if necessary.
  5. Meeting every deadline – preferably early.  Move early, quickly, and effectively toward completing the above steps.  Typical due date timeframes can be between 30, 60, 90, or 180 days, depending on the claim.

For more information, please contact our law firm at jj@jjconwaylaw.com.

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.

It appears questions raised by the Ninth Circuit’s decision in Dorman v. Charles Schwab Corp., Case No. 18-15281 (9th Cir., Aug. 20, 2019), may move towards resolution sooner than anticipated, with the plaintiff filing an en banc petition last week.

Arguments within the statement and supporting memorandum center on the Dorman court’s application of the Supreme Court’s Epic Systems Corp. v. Lewis precedent, chiefly that its applicability is limited in relation to ERISA claims brought in a representative capacity:

Epic Systems “did not address whether ERISA, an entirely different statute, creates a right to bring a representative action.  Mass. Mutual, LaRue and Munro, by contrast, have all ruled that fiduciary breach claims under ERISA are inherently representative.”  En Banc Petition Brief, p. 12, n.5.

The petition also claims that

the panel’s decision crashes head-on with the Supreme Court’s concern about arbitration-related waivers eliminating the enforcement of federal rights; namely, when they purport to eliminate the right to pursue a remedy guaranteed by statute.

EP Brief, p. 13. The petition argues that if an ERISA plaintiff brings claims subject to a valid arbitration clause, under the Dorman court’s ruling, any relief sought would be limited to individual relief, and fiduciary defendants “would be relieved of virtually all of their liability under  § 1109, except to the extent that liability relates to an individual’s account.” EP Brief, pp. 12-13.

The Dorman court distinguished the case from those in Munro v. University of Southern California, No. 16-cv-06191, 2018 WL 3542996 (9th Cir., Jul. 24, 2018) on two separate fronts.

The first obvious factual difference is that the Dorman plans contained an arbitration agreement (as opposed to the clause appearing in an employment agreement in Munro).  The second difference was the scope of the agreements at issue.  In Dorman, the plaintiff’s relief could, conceptually at least, be resolved as an individual claim – ultimately the recovery of losses sustained on his individual retirement account(s) owing to alleged fiduciary breach.

The larger issue is, hypothetically, 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 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.  Munro, Slip Op. at 11.  If arbitration were 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 claims be compelled, resulting in the possibility of two distinct resolutions on fact?

While these specific questions may not be directly answered even through an en banc rehearing, the hope is that clarity in some form regarding protection guaranteed to ERISA plans of a right to representational adjudication of plan-wide relief, in the context of an (arguably) otherwise valid arbitration clause, may emerge.[1]

[1] The Dorman plaintiff’s brief also argues that “§ 1110(a) renders void the arbitration provision’s prohibition on seeking plan-wide relief under § 1109 in a representative capacity.”  EB Brief, p. 15.  ERISA Section 410, 29 U.S.C. § 1110(a), bars any contractual provision which would relieve a fiduciary from liability.  In this sense, clarification of the general rights guaranteed to an ERISA plan, as a whole, for a “deputized” plan-appointed representative may hold the answers toward the validity of broad ERISA arbitration clauses, such as that at issue in Dorman.

“My doctor will support me.”

This is one of the most common expressions heard from clients dealing with an ERISA long-term disability insurance claim. Disability claimants know, perhaps without formal recognition, that their disability insurance claim requires a solid evidentiary foundation. Most claimants realize they carry the burden to prove their claim and recognize that a claim requires medical proof – not merely a statement of one’s inability to work. In fact, most of our clients recognize this immediately, even before meeting with us. A disability claimant’s treating physician will likely play the most important evidentiary role in a disability claim, as they are the one providing at least the baseline medical foundation to support a claimant’s contention that they are occupationally disabled.

While disability plan insurers are not bound to accept a treating physician’s opinions without scrutiny, “plan administrators, of course, may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician.”  Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003).

What is important for not just disability claimants but also their physicians to understand is the integral role treating physicians play in a disability claim, and how to successfully navigate that interdependent relationship as it moves from providing treatment to providing evidence.  Below are a few suggestions for consideration toward understanding and enhancing these critical relationships.

1)            Establish a Trusted Relationship.   First, it is important to let your doctor know about your disability claim and keep them updated on its status. Most treating physicians are familiar with disability claims and are willing to help their patients through the process. It is best to tell your physician, up front, that you are filing a claim and are likely to need some help with the claim forms. You may also want to use this as an opportunity to thank your physician for his or her anticipated cooperation and to communicate that you will try not to impose too much.

Some physicians do refuse to be a part of the disability application or appeal process. If your physician is unwilling to assist, do not be upset – it is better to know, preferably as early as possible. Nothing is worse than sending Attending Physician forms to a doctor whose office says they refuse to deal with insurance companies. While unhelpful, this position is somewhat understandable since paperwork is time-consuming and often uncompensated. In our experience, physicians work extremely hard and their compensation, often dictated by insurance companies, is below their fair value. They simply may not be able to financially perform this extra work.  (Note: your disability insurer knows this).

2)            Consider A Referral to A Specialist.  Depending on your condition, you may need to consult a specialist.  Again, timing is critical.  Specialists can book appointments three to four months out.  You need to consult, begin treatment with, and then, once the relationship is established, enlist their assistance. When it comes to the requirement for submitting “proof of disability” or “proof of claim,” sometimes more is required than the findings of a family doctor or internist. Here, the medical examination is centered on establishing one’s functional abilities. A treating physician may be fully capable of assessing the patient’s condition. For others, a specialist such as a Physical Medicine and Rehabilitation (PM&R) doctor may be appropriate.

3)            Allow the Physician Plenty of Time to Respond.  All claims forms have a due date, so don’t delay.  These forms are sometimes ambiguous and confusing – if there is any confusion over what is being requested, you may want to consider hiring counsel since even a minor mistake on a form can exponentially complicate the claims process or even lead to a denial.  That said, the forms should be in the hands of the doctors as soon as reasonably possible. The forms should also be reviewed after completion by a physician but before return to the insurance company.  A mistake or misunderstanding can add as much as one year of delay in resolving a valid claim.

Given the importance of these forms, a claimant should be considerate of a physician’s time and understand that a physician is typically not compensated for efforts toward supporting a disability claim.  Most physicians will help with a claim as an act of professional courtesy.  We have written about this previously.  See, Do You Have An ERISA Disability Claim? Print This Article, And Take It To Your Doctor.

4)            Be Willing to Compensate the Physician for Administrative Time. This is self-explanatory.  Politely inquire whether the physician is typically compensated for filling out forms and be willing to pay all reasonable charges.

5)            Explain that the Physician’s Involvement Will Be Minimal – No Depositions or Trial.

This is perhaps the most important and often overlooked part of an ERISA disability claim.  Most physicians are familiar with accident cases and workers compensation cases, yet lack familiarity with ERISA disability case. This presents a slight problem when physicians mistakenly believe they may be “called to testify” if they provide a professional opinion on a claimant’s medical and/or functional status. In practice, however, ERISA does not provide for trials, depositions, or live testimony.  At most, the physician will be asked (usually by the claimant’s lawyer) to supply a sworn statement or medical narrative.  This is part of a written submission or appeal for the claimant.  A physician will not be called to testify in a deposition or trial in an ERISA case.

In the Sixth Circuit (Michigan, Ohio, Kentucky, and Tennessee), there is a special “framework” for resolving disability cases, allowing federal courts to conduct a “review based solely upon the administrative record and render findings of fact and conclusions of law accordingly.”  Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609, 619 (6th Cir. 1998).  This means that cases are decided on written submissions such as motions. While Wilkins did recognize that there are times when discovery is appropriate against an insurer or plan administrator, this does not include depositions of the treating physician.[1]

Bottom Line:      Establish a strong and courteous relationship with all treating physicians.

Explain to your physicians your need for their assistance with your claim.

Be willing to pay all reasonable charges for any administrative work, including completion of forms and preparation of medical narratives.

Don’t Delay!

[1] For more information about the Wilkins review process, see, see, John J. Conway & Trever M. Sims, Refining Wilkins: A 20-Year Look at the Recurring Factors Used in the Sixth Circuit’s Resolution of Disability Claims Under ERISA Section 502(a)(1)(B), Sec. II.B, WMU-Cooley Law (2018), available at: https://issuu.com/cooleylawschool/docs/wmu-cooleylawreview-34-2/94.

It is one of the most commonly asked questions by disability claimants who have successfully battled their disability insurance companies to overturn a denied or terminated disability claim. They have won, but there is one lingering question:

Can my insurance company cut me off again?

Technically, the answer is “yes.” Most disability law practitioners have tried to couch the answer to that question based on their experience with the nation’s major insurance companies.  For some insurers, once you have beaten them, they are reluctant to put you through it again.  For others, it is one successive battle after another until they skate dangerously close to violating ERISA Section 510 (the statute’s prohibition on the intentional interference with one’s benefits).

Now, some federal courts are providing claimants a little more optimism about the future.  There is an oft cited, little used provision, tucked away in ERISA Section 502(a)(1)(B) which empowers a participant “to clarify his rights to future benefits under the terms of the plan.” (Emphasis added).

That portion of the (a)(1)(B) provision is gaining new potency after a series of decisions where federal courts in the Pacific Northwest have weighed in on its meaning.

In Gorena v. Aetna Life Ins. Co., No. 17-532, 2018 WL 3008873 (W.D. Wash., Jun. 15, 2018), while reviewing that provision, the district court ordered the payment of past due disability benefits to the claimant and placed real, substantive limits on an insurer’s ability to terminate a claimant’s monthly payments.  The district court held that the defendant was

directed to pay [the plaintiff’s] LTD claim to the policy’s maximum benefit duration absent a showing of improvement in her medical condition such that a reasonable physician would conclude that she could work in “any gainful activity for which [she is], or may reasonably become, fitted by education, training, or experience and which results in, or can be expected to result in, an income of more than 60% of [her] adjusted predisability earnings.” Unless Defendant can establish that Plaintiff is capable of performing such work productively, full-time, and without undue disruptions and/or absences due to her MS and its related symptoms, she is to continue to receive LTD benefits to the Plan’s maximum duration.

(Internal citations omitted). A similar resolution was reached in Bethany Coleman-Fire v. Standard Ins. Co., No. 18-cv-00180, 2019 WL 2011039, at *13 (D. Or., May 7, 2019), where the district court cited to a previous version of the Gorena ruling and held:

Accordingly, and in accordance with 1132(a)(1)(B), the Court offers the following clarification regarding Plaintiff’s right to future benefits: Subject to the terms and conditions of the Plan, Defendant shall pay Plaintiff’s LTD claim to the Plan’s maximum benefit duration absent a showing of improvement in her TBI/PCS symptoms such that a reasonable physician would conclude that Plaintiff could work more than forty hours per week in her Own Occupation.

With federal courts now appearing more apt to tackle the meaning of ERISA’s clarification provision, hopefully practitioners will be able to provide more resolute answers when a client asks the question, “will my insurance company cut me off again?”

Stay off social media if you have a long-term disability claim.

We have written about this issue before. See, Long-Term Disability Insurance Update: An Online ‘Friend’ You May Not ‘Like.’

Perhaps one of the most overlooked features about ERISA disability claims is the fact that, since most jurisdictions generally restrict the ability of parties to conduct discovery, the fact gathering process is a little like the Wild West.  Claimants gather their own evidence outside of the formal discovery rules used in federal court.  Disability insurance companies gather their own evidence in this way as well.

Nearly every claim we review for our clients contains the insurer’s detailed social media investigation report – this is part of why disability claimants are being asked for their email addresses on claims forms. Disability insurers like Aetna, Unum, Reliance Standard, CIGNA, and Life Insurance Company of North America, as well as administrators like Sedgwick, are now reviewing social media activity as a part of their investigatory process.

Armed with an email address, the insurance company’s investigators can track Facebook, Twitter, and perhaps even dating sites. Exploiting the failure to activate privacy controls on publicly-viewable pages, these insurance companies can examine your life as told through your family and friend’s posted photographs and videos.   Those images are downloaded or screen-captured and then put into the claims file – sometimes in a totally dishonest or misrepresentative arrangement.

For those accustomed to litigation under the Federal Rules, the fact that much of this stuff has not been authenticated is particularly galling.  Nevertheless, it is usually admitted without so much as an objection when those administrative records are filed with a federal court.

Recently, a Nevada federal court put the brakes on the weight given to such social media posts in terminating a benefit claim.  In Williamson v. Aetna, No. 2:17-cv-02653 (D. Nev. March 31, 2019), the disability insurer terminated a long-term disability claim based, exclusively, on its capture of social media posts (which it failed to independently verify) and an 11-minute surveillance video. The district court found that the insurer’s decision to base its determination on this type of non-medical evidence violated ERISA.  Here the Court opined that it found

that Defendant abused its discretion when it terminated Plaintiff’s disability benefits absent medical evidence that her disabilities had improved. To the extent Defendant relied upon Plaintiff’s Facebook and dating website postings, the Court finds that such evidence is an illogical, implausible, and unreasonable basis for a revocation of disability benefits compared to the use of medical records. First, Defendant was aware of the inherent accuracy issues with such postings. Second, Defendant never sought to independently verify the posted information beyond the limited surveillance.

Notably, the district court zeroed in on the authentication issues without necessarily putting the case through an F.R.E. 901 formal analysis.  The district court found that “Defendant possessed no external evidence of when or where the posted photographs were taken.” The district court continued that “the Defendant did not ask Plaintiff when those pictures were taken or seek additional context” or seek “to actually verify the explanations provided by Plaintiff.”

Critically, however, the district court did find “it was not an abuse of discretion for Defendant to use the information gleaned from Plaintiff’s social media accounts as a trigger to investigate Plaintiff’s ongoing disability status.”  The district court held “that social media postings are minimally informative and inherently inaccurate as to a person’s medical symptoms and capacity for sustained employment. Such postings cannot plausibly constitute a basis for Defendant’s 2016 disability determination.”

Even though the district court narrowed in on the unreliability of social media evidence in disability cases, it still does not alter the bottom line:  Stay off social media during a disability claim.

What is the single greatest mistake long term disability claimants make?

Preparing their own internal disability appeal.

It is that simple.

A case worth hundreds of thousands of dollars can be converted to zero – near instantly – when a disability insurance claimant attempts to prepare his or her own administrative appeal.  There are several reasons for this, as discussed below.

No. 1.    Disability Claimants and Disability Insurers Have Grossly Unequal Resources

There is a complete disparity of resources when disability claimants attempt to take on their disability insurers.  Viewing this from the claimant’s perspective, what resources are typically available to the average insured person?  Presumably, there is a home computer or tablet, a printer, access to an internet fax program, and copies of pertinent medical records.   All these instruments and evidence can be used to assemble a homemade disability appeal.

By contrast, however, a disability insurer is often a multi-billion-dollar company, publicly traded on the stock market, with profit motivations designed to satisfy shareholders, including institutional investors.  It has significant financial resources – all of which are at the ready to be deployed against a disability claimant.  This is just the macro-picture of the disparity.

On the micro-level, disability insurance claims departments are populated by claims adjusters who have been trained to handle and process disability claims, oversee medical exams, and have been taught how to selectively read medical exam records.  Disability insurance companies have in-house physicians, nurses, and large expense accounts to pay unfriendly experts who routinely perform thousands of reviews and exams favorable to the insurers. Finally, the disability claim is one of typically 300 to 400 other claims these claims adjusters oversee simultaneously.  In short, they know how to deny a claim and are not able (or willing) to dedicate a material amount of time to review your medical as a true fiduciary should.

No. 2.    Not Fully Understanding the Reason for the Denial

A disability insurance denial is usually a lengthy letter. These letters contain required notices, citations to insurance contract language, several addresses, claims identifying information, and so on.   Sandwiched in-between all this writing is the rationale for denying the claim.  The rationale is the “why,” or explanation for why, a sought-after disability benefit is not being paid.  This can be confusing, even to the lawyers who work on these claims regularly.

For example, based on the language a disability insurance company uses to deny a claim, a claimant might mistakenly believe that the insurer is claiming they are not actually suffering from an illness when, in fact, the insurer is really disputing whether a person who is ill can still work.  Another often confusing rationale is the challenge to the supportive medical evidence.  By way of further example, is the insurer saying the evidence is non-existent or inadequate or is the insurer seeking another type of evidence altogether?  Furthering the opportunity for confusion, an insurer typically will not explain to a claimant the difference between objective and subjective evidence.  Misunderstanding why a claim is being denied can doom it.

No. 3.    Overlooking Critical Supporting Documentation

Medical records are obviously key evidence in supporting a disability claim.  The trouble is that medical records, alone, are rarely enough to the win a case.  The records require in depth explanation.  The records must be tied to showing a physical or mental limitation.  Often the records, themselves, provide foundation evidence for other documentation – such as a Functional Capacity Examination (FCE) or vocational rehabilitation analysis.  These are areas of expertise to which a claimant may not have ready access to make their case. Leaving out this crucial documentation can also doom a claim during the appeal process and leave a lawyer little to work with if the case eventually goes to court.

No. 4.    “Writing a Letter”

When was the last time you wrote a letter and the reader was so moved to start paying you instantly?  Has that ever occurred?  Has it even occurred to anyone you know personally?  In short, it does not happen.  As fine a person as you may be, no one will ever approve a disability benefit based on a written letter – no matter how beautifully composed or compelling in narration.

Somewhat cynically, disability insurers love receiving ‘a letter’ explaining why a person cannot work.   So long as that letter is not accompanied by medical evidence, the insurer will always be able to deny the claim based on no ‘proof of loss’ or ‘proof of claim.’  A disability claimant will likely never be treated better by an insurance company than in the 30-day period following their ‘writing a letter.’  The case is over, the insurer knows it, but the insurer does not want you to know it – yet.

The Bottom Line

While disability claims are not (lawfully) supposed to be adversarial, they truly are.  It is you against them.  You forget that rule at your peril.  No claims adjuster is there to help – their intention, and job, is to keep costs down by paying on claims as infrequently as possible.  They do their job the way that you did your job – they aim to do it well.  And doing it well means denying your claim.

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).