Illinois ERISA Lawyer Blog

Employees and executives in Chicago frequently want to know when a participant in an ERISA covered plan can recover attorney fees. ERISA does provide for fee shifting in litigation. ERISA § 502(g). However, these fees are only recoverable once they are incurred in litigation upon achieving "some degree of success on the merits." Hardt v. Reliance Standard Life Ins. Co., 130 S. Ct. 2149, 2152 (2010). This case changed the standard, where previously a claimant had to be a prevailing party. This gave long term disability insurers and plan administrators every incentive to withhold benefits, wait until a complaint was filed, and then just pay the claim--preventing the claimant from becoming a prevailing party. This precise strategy was demonstrated recently in Pakovich v. Verizon LTD Plan, No. 10-1889, Slip Op. (7th Cir. July 22, 2011).

In Pakovich, the claimant achieved a remand in court back to the administrator to make a determination on her benefits claim. Rather than make the determination on remand, the plan just did nothing. After several months, Pakovich filed another complaint in court seeking benefits due, arguing he claim was "deemed denied" because the plan did not render a decision on her claim within the time allowed by ERISA. Soon after filing the complaint, the plan paid all benefits due. The plan then moved to dismiss the case, arguing it was moot. The district court granted the motion, and denied any attorneys fees to Pakovich because she was not a prevailing party. Both parties appealed.

The Seventh Circuit Court of Appeals held the claim for benefits was moot, because the plan paid Pakovich all the benefits to which she was entitled. But the court also held the plan had to pay Pakovich's attorney fees. A contrary holding would permit "opportunistic plans [to] routinely delay deciding whether to pay benefit claims until participants and beneficiaries file suit, effectively requiring them to incur legal costs unrecoverable under ERISA § 502(g) in order to receive benefits to which they are legally entitled . . . . Such a barrier would contradict one of ERISA's primary policies, to protect 'the interests of participants in employee benefit plans and their beneficiaries . . . ." Id. at 9.

If you are a participant in an employer-sponsored employee benefit plan and the administrator or insurer is not responding to your claim for benefits, contact an experienced ERISA lawyer.

A recent ruling from the Seventh Circuit Court of Appeals in Chicago protected employees with conditions such as fibromyalgia or chronic fatigue syndrome who have an insurer deny benefits based on an exclusion that was not properly disclosed to the employee. Weitzenkamp v. UNUM Life Ins. Co., No. 10-3898, 2011 U.S. App. LEXIS 14180 (7th Cir. July 11, 2011). In this case, Weitzenkamp was diagnosed with fibromyalgia, chronic pain, anxiety, and depression. UNUM awarded her long term disability benefits. After two years of paying the benefits, however, UNUM cut off her payments, citing a clause in the policy that limits benefits paid because of a disability dependent on "self-reported symptoms." The problem was that UNUM also prepared a summary plan description of the plan, and referenced a two-year limitation on benefits in three separate locations (all referencing mental health), but the SPD never mentioned the self-reported symptoms limitation.

The Seventh Circuit Court of Appeals held that the failure to include this important limitation in the SPD was a violation of the part of ERISA that requires the SPD to disclose the material terms of the plan. ERISA § 102. Because UNUM did not disclose this critical limitation in the SPD it distributed to participants, the court held UNUM could not then rely on the limitation in order to terminate benefits. The court did grant a rehearing on this case, and we will track its progress.

If you are a participant in an employee benefit plan and the administrator or insurer denied or terminated your benefits based on a limitation or exclusion not previously disclosed to you, call an ERISA lawyer.

Employees in Chicago and the Midwest have mostly heard about insurance companies, especially ERISA long-term disability insurers, employing video surveillance when evaluating claims. Insurers have created this mass misconception that disability applicants get caught in the act of performing activities wildly inconsistent with the claimant's asserted limitations. But the truth is the insurers use the surveillance in many cases, and these so called "inconsistencies" are far more subtle than the insurers would have many believe.

In a recent case, Life Insurance Company of North America ("LINA") terminated the long-term disability benefits of a claimant because it captured her on video surveillance removing groceries from her trunk in September 2007, and during January 2008 walking with a cane and test-driving a vehicle. Hunter v. Life Ins. Co. of N. Am., No. 10-1244, 2011 U.S. App. LEXIS 13598, at *4-6 (6th Cir. Jun29, 2011). Hunter had been diagnosed with degenerative joint disease, degenerative arthritis, rheumatoid arthritis, osteoarthritis, scapular pain, fibromyalgia, spondylolithesis, and spinal stenosis. She had been a Revenue Cycle Manager at a hospital. Her long-term disability insurance policy defined "disabled" as "unable to perform all the material duties of . . . her regular occupation . . . ." Because LINA classified Hunter's job as sedentary, and viewed her doing things that it claimed were consistent with being able to do sedentary work, LINA terminated Hunter's benefits.

A district court upheld LINA's decision, but the Court of Appeals for the Sixth Circuit overruled the district court, and ordered LINA to pay the benefits. LINA never considered the description of Hunter's "regular occupation," and whether she could perform all the material duties of her regular occupation. Instead, it merely claimed she could do sedentary work. The Court of Appeals also found several other troubling indications of a conflict of interest in the record, and held that LINA had acted arbitrarily and capriciously in terminating Hunter's benefits.

If you have questions about insurers and video surveillance in connection with an application for long-term disability benefits, speak with an experienced ERISA lawyer today.

Employees in Chicago and the Midwest who are participants in plans maintained by associations finally have clarity about the required administrative claims process when seeking long-term disability benefits. Often association boards meet on set schedules, such as monthly or quarterly. The boards may have used these meetings in the past in order to make determinations on claims for benefits from plans established and maintained by the association. But a recent decision from the United States Court of Appeals for the Ninth Circuit may have changed that forever.

In Barboza v. California Association of Professional Firefighters, No. 09-16818, 2011 U.S. App. LEXIS 13341 (9th Cir. June 30, 2011), Barboza was a participant in a long-term disability plan maintained by the California Association of Professional Firefighters. Barboza filed his claim for disability benefits, but the association's board did not render a decision on the claim until its next scheduled quarterly meeting. In the meantime, Barboza filed a lawsuit in federal court, claiming he did not have to exhaust any administrative claims procedure because the plan did not make a determination on his benefit claim within the time prescribed in the regulations pursuant to 29 C.F.R. § 2560.503-1(l).

Plan administrators generally must make determinations on benefit claims within 60 days. Id. § 2560.503-1(i)(1)(i). Certain plans that have a committee or board of trustees can make general benefit determinations at regularly scheduled quarterly meetings. Id. § 2560.503-1(i)(1)(ii). Disability claims, however, must be resolved within 45 days instead of 60. Id. § 2560.503-1(i)(3)(i). But multiemployer disability plans may still make the determinations at quarterly meetings. Id. § 2560.503-1(i)(3)(ii). This seems straight-forward, but each rule is subject to exceptions, citing other provisions of the regulation. The plan in this case planned to avail itself of the quarterly meeting rule, but Barboza argued that rule is not available to the plan because it is not a multiemployer plan.

The Department of Labor submitted an amicus brief, arguing in favor of Barboza, and construed the regulation to preclude associations, even those with a committee or board of trustees, from making determinations on claims for disability benefits at quarterly meetings. The Court of Appeals agreed, and ruled that Barboza did not have to wait for the plan to make a determination on his claim for benefits, and could proceed to court after the plan failed to render a decision or request an extension within the 45-day period.

If you have a question about ERISA plan claims procedures, contact a knowledgeable ERISA lawyer.