Illinois ERISA Lawyer Blog

Employees in Chicago, and all over Illinois, are starting to become more aware of a state law ban on discretionary clauses in various insurance policies that fund their employee benefit plans, such as long-term disability, health insurance, and life and accidental death insurance. In 2005, the Illinois Department of Insurance enacted 50 Ill. Adm. Code § 2001.3, which bans insurers offering or issuing long term disability, health, or life or accidental death insurance policies in Illinois from having a discretionary clause in any "policy, contract, certificate, endorsement, rider application or agreement". However, this regulation only applies to insurance policies issued or offered in Illinois. If you work in Illinois, how do you know then whether you have protection from this ban on discretionary clauses?

The answer is not as simple as one might expect. Where an insurance policy is issued or offered can be a tricky question to answer. It may involve looking at the face of the policy, and where the policy said it was executed. Where is the employer's headquarters? Recently in a case in Michigan, the employee (or plan participant) argued that the Michigan ban on discretionary clauses should apply because the insurance policy benefited Michigan employees. See Foorman v. Liberty Life Assurance Co. of Boston, No. 12-927 (W.D. Mich. May 3, 2013). The court rejected this argument because the employer, Comcast, was headquartered in Philadelphia, Pennsylvania. Also, the insurance policy expressly stated it was issued in Pennsylvania, and governed by that state's laws. Pennsylvania has no similar ban on discretionary clauses.

On the other hand, a Chicago court has reached a slightly different conclusion in Curtis v. Hartford Life & Accident. Insurance. Co., No. 11 C 2448 (N.D. Ill. Jan. 18, 2012). There, Children's Memorial Hospital, based in Illinois, subscribed to a trust based in Delaware, that pooled employers to buy an insurance policy issued in Delaware, which has no ban on discretionary clauses. However, Children's Memorial paid the premiums to Hartford, and Hartford was not obligated to accept any employer subscribed to the trust. The Chicago court held that to not apply the ban on discretionary clauses in these circumstances would promote "form over substance."

If you have a claim for long term disability, health, or life insurance benefits, call an experienced ERISA attorney who knows how to determine whether your benefit plan will include an enforceable discretionary clause.

Chicago area employees with coverage under an employer-sponsored long-term disability insurance plan, health insurance plan, or life or accidental death insurance plan often do not know or think about how a standard of review affects their rights until after they have submitted a claim. It dramatically can affect how the insurer handles the claim, and the outcome in any litigation if the insurer upholds its denial of a claim. Although Illinois has enacted a regulation banning insurers of these types of plans from having discretionary authority to make benefit determinations or to interpret the terms of the plan, insurers are persisting in trying to find loopholes in the regulation, or a way around it. Most active in this endeavor appears to be Cigna, appearing in litigation under its subsidiary's name, Life Insurance Company of North America.

In 2005, the Illinois Department of Insurance enacted 50 Ill. Adm. Code § 2001.3, which bans insurers offering or issuing long term disability, health, or life or accidental death insurance policies in Illinois from having a discretionary clause in any "policy, contract, certificate, endorsement, rider application or agreement". Long ago, courts determined that this regulation was not preempted by the Employee Retirement Income Security Act of 1974 ("ERISA") in cases where the insurance policies themselves continued to contain such clauses. The next wave of cases considered whether insurance policies originally issued prior to the regulation's enactment, but renewed after it, were affected by the ban. Courts issued mixed rulings, but the Department of Insurance issued guidance stating that the regulation applied to policies renewed after its enactment. Now, employers' master welfare plan documents and summary plan descriptions contain the discretionary clauses, while the insurance policies do not, and the insurers are arguing that such a plan structure evades the regulation. Cigna has been the most active in advancing this argument, but it has failed now in every case in Chicago.

Most recently, Cigna made this argument in Borich v. Life Insurance Company of North America, 2013 U.S. Dist. LEXIS 59674 (N.D. Ill. Apr. 25, 2013). There, Judge John Tharp ruled that the regulation applies even where the discretionary granting language is in plan documents other than the insurance policy, and that ERISA does not preempt the regulation. A similar holding was reached in Ehas v. Life Insurance Company of North America, 2012 U.S. Dist. LEXIS 169151 (N.D. Ill. Nov. 29, 2012). The very same issues are pending before another judge in the same district in Novak v. Life Insurance Company of North America.

If you have a claim for long term disability, health, or life insurance benefits, call an experienced ERISA attorney today to learn about how discretionary clauses can affect your claim.

Chicago area employees with coverage under an employer-sponsored health insurance plan involved in any type of accident caused by another party often find themselves in two disputes. The first, obviously, is a personal injury dispute, be it with the other driver of an automobile, or a premises owner where an injury occurred. After the injury, naturally the person goes to the hospital, or gets subsequent medical treatment, which become part of the damages in the injury dispute. To no surprise, rather than pay the expenses out of pocket and seek recovery potentially years later, the injured parties pay the medical expenses with their own health insurance. But later, the health insurer or plan wants to be reimbursed for its own outlays for the medical expenses. Problems arise when the participant is forced to settle a case for a fraction of the actual damages due to lack of the opposing party's insurance coverage, or in how to handle attorneys' fees the injured party paid. The health insurers and plans routinely try to enforce clauses which purport to entitle the plan or insurer to full reimbursement, even if that would mean leaving the injured participant with no net recovery, or worse, in the hole after paying attorneys' fees.

This was precisely the fact pattern in McCutchen v U.S. Airways, 133 S. Ct. 1537, the facts of which were covered in a prior post here. In a surprising move, the Supreme Court held that no matter what, the plan document language must control. But if the plan is silent as to the applicability of things like how the plan and the participant will apportion attorneys' fees, then equitable principles such as the common fund doctrine fill in those gaps. Under the common fund doctrine, a recipient of the fruits of an attorneys' labor must share in the attorneys' fees. In the scenario above, if the attorney in the personal injury matter charged a one-third contingency fee, the plan would have to share in that fee from the medical expenses it recovered. The problem with the decision is that it leaves the door open for plans to start including language that would prevent these principles from applying, and quite possibly more and more plans will do just that. This could also impact disability insurance plans that contain a clause with a right to reimbursement for disability benefits from the Social Security Administration.

If you are in a dispute with your employee benefit plan about a reimbursement, speak with a knowledgeable ERISA lawyer right away.

Chicago area employees with coverage under an employer-sponsored long-term or short-term disability plan may be surprised to find out that when drafting the plan, their employer inserted a clause purporting to require that you have to file your lawsuit in a distant state if your claim is denied and you have to sue for your benefits. In fact, the Department of Labor has filed briefs in cases opposing such clauses, noting there is a "disturbing trend" among employers to place such clauses in their plans. In Chicago, one court put a stop to that trend in a case I am handling.

In Coleman v. Supervalu, Inc., No. 12-7064, 2013 U.S. Dist. LEXIS 13372 (N.D. Ill. Jan. 31, 2013), Ms. Coleman sued Supervalu because its claims administrator denied her claim for disability benefits. After she sued, Supervalu moved to dismiss the lawsuit, citing a provision in the plan that purports to require any employee covered by the plan to bring the lawsuit in Minnesota, where Supervalu is headquartered. Virtually every court to consider whether such a clause is enforceable has concluded it is, and the employee can be forced to bring a lawsuit for benefits where the employer is headquartered. The court in Coleman, however, disagreed. Relying on the legislative history and an appellate court case that acknowledged choice of venue was meant to be a participant right, the court held ERISA prohibits the plan administrator from stripping a participant of the right to choice of venue.

With regular contracts, parties are free to negotiate and agree to virtually whatever terms they like. But when employers establish ERISA plans, they do not do not start with a clean slate as with a garden variety contract. They establish the plan subject to all of ERISA's requirements, which cannot be waived. One of those provisions is a participant right to a wide selection of venue for a potential dispute. Congress gave participants a broad choice of venue in 29 U.S.C. § 1132(e)(2), which allows a lawsuit to be brought where the plan is administered, where the denial of benefit occurred, or where any defendant can be found. Courts that have upheld these forum selection clauses in plans have done so primarily because the clauses require litigation to take place in the home venue of the employer, or where the plan is administered, thus appearing to meet the requirements of the statute. But in Gulf Life Insurance Co. v. Arnold, the Eleventh Circuit explained that ERISA's broad venue provision was intended to be a sword wielded by participants and beneficiaries, not by plan administrators. ERISA's legislative history is consistent with the concern.

If you have a claim for benefits, and your employer's plan contains a forum selection clause, call an experienced ERISA attorney today.

Chicago area employees with employer-provided health insurance and individuals purchasing health insurance wonder what exactly will happen next with the Affordable Care Act, commonly referred to as "Obamacare." With a democrat-controlled Senate and White House at least through 2014, that means the most groundbreaking aspect of Obamacare--the individual mandate and prohibition on denial of coverage for preexisting conditions--will be implemented on January 1, 2014. This is when the health insurance exchanges are scheduled to be up and running. Implementation of Obamacare had two obstacles to overcome. It overcame the first after the Supreme Court decided in National Federation of Independent Business v. Sebelius that the individual mandate of the law is constitutional. The second obstacle to overcome was the 2012 general election. By November 16th, states must notify the federal government about how they intend to implement the health insurance exchanges. Many will open state-run exchanges. Others will either use a partnership-model with the federal government, or default to the federal exchange.

This is not to say health insurance will not continue to be without its difficulties. If you have been watching the news, you have undoubtedly heard about the looming "fiscal cliff." Medicare is scheduled to experience drastic cuts in reimbursement rates. And many highly anticipate there will be some sort of a "grand bargain" that would be a combination of trimming spending and increasing revenue. Currently, the exclusion from income of employer-sponsored health insurance is the single largest so-called "revenue loser" for the federal government, so don't be shocked to hear about proposals to limit that tax incentive, or eliminate it altogether.

If you have questions about how health care reform affects you, speak with a knowledgeable ERISA lawyer.

Individuals in Chicago with employer provided health insurance governed by ERISA who have been injured in an accident have been disappointed to find out that after their injury case settled, the health insurer demanded full repayment of the medical costs. This has been problematic for several reasons. Usually, the cases involve some uncertainty, and they settle for less than the full demand. Alternatively, your injuries may have been caused by a person who carried less insurance coverage than necessary to fully compensate you. Nevertheless, courts routinely held that if the health insurance plan contained a reimbursement clause, the plan could place a lien on your settlement funds for full reimbursement of medical costs.

Recently, the Supreme Court agreed to hear a case where the United States Court of Appeals for the Third Circuit held that it was not "appropriate equitable relief" for the plan to obtain full reimbursement, when the individual could not obtain a full recovery himself. See U.S. Airways, Inc. v. McCutchen, 663 F.3d 671 (3d Cir. 2011). In McCutchen's case, if the plan were entitled to full reimbursement, after paying the legal fees and costs of obtaining the recovery, he would actually be worse off than had he not pursued any recovery in his personal injury matter. This is similar to a recent case from the Ninth Circuit, where the court held that the insurance plan's claim was limited by equitable defenses where the injured party only recovered 21% of her damages. See CGI Techs. & Solutions, Inc. v. Rose, 683 F.3d 1113 (9th Cir. 2012). The Supreme Court will thus answer the question whether health insurance plans always get full reimbursement, or their claims can be reduced where the injured party recovers less than her demand, and whether the plan must share in attorney fees and costs.

The issue of reimbursement typically impacts individuals involved in personal injury matters, with a health insurance plan that covered their medical costs. It also impacts long term disability insurance recipients who have subsequently been awarded Social Security disability benefits. If the Supreme Court holds that the health plan must share in legal costs in McCutchen, it may mean that long term disability insurers must pay your lawyer's fees for obtaining Social Security disability benefits.

If you have questions about reimbursement to either a health insurance plan or disability insurance plan, speak with a knowledgeable ERISA lawyer.

State employees in Chicago and the rest of Illinois should closely monitor developments in Illinois pension law reform. Recently, Govern Pat Quinn released a proposal to manage the State's pension woes. The five state pension systems impacted would be the State Employees Retirement System of Illinois, , State Universities Retirement System, Judges Retirement System, the Teachers Retirement System, and the Public School Retirement System (for cities over 500,000 inhabitants).

Currently, Illinois faces $83 billion in unfunded pension liability, largely created by failure to make contributions in the past and declining asset values in recent years. Governor Quinn has cited the increased annual cost of maintaining the pensions, becoming 15% of state expenditures as opposed to 6% several years ago. This increase comes as a result of a few factors, though: retiring baby boomers, and previous failures to adequately fund the plan.

The current proposal aims to achieve full funding within 30 years. In addition to modifying entitlements, it does so by mandating contributions sufficient to achieve full funding status by 2042. One of the reasons the plans are so underfunded is because of the lack of required funding as is present in federal ERISA governed plans. The proposal modifies entitlements in the following ways. Employees must increase their own contribution by 3% of salary. Retirement age is increased to 67. Cost of living adjustments would be capped at the lesser of 3% or half the consumer price index. Also, the adjustments would not kick in until the later of age 67, or five years after retirement. Also, the funding obligation for local schools, colleges, and universities will be shifted to the employer, rather than the state. This last measure will eliminate abuses that have been present whereby the schools would negotiate early retirement for an employee by artificially raising the employee's final earnings, thereby boosting the pension, in exchange for the employee voluntarily leaving the employer early. It was a loophole whereby many schools reduced their own budget by increasing the state's pension obligation.

This proposal has already been criticized by unions as unconstitutional, though it appears to have governmental support. The criticizers, however, have not come forward with an alternative proposal, and have not yet proceeded with a court challenge, as it is not law yet. The state believes it can overcome any unconstitutional challenge because the reform will be "opt in" for any employees. They would have to elect to have the entitlements modified in return for continued retiree health care subsidies from the state. If this proposal becomes enacted, it surely will make its way to the Illinois Supreme Court. In this author's view, with so many employers terminating defined benefit plans in favor of 401(k) style plans, a measure that preserves lifetime income for employees through a sustainable and funded system is a better measure than the plan terminations, freezing, and conversions present in the private sector. If you are a state employee and have questions about how the pension modifications could affect you, contact a pension lawyer.

Employees who are participants in disability plans sponsored by Chicago area employers frequently call my office after receiving a letter denying a claim for benefits. Often times, the reason for the denial may have been a procedural error by the administrator, preventing it from giving you a "full and fair review", as required by ERISA. The denial letter must explain the reason for the denial, it must reference the specific plan provision upon which the denial is based, and it must describe any additional material or information you would need to submit in order to get the benefits. 29 C.F.R. § 2560.503-1(g)(1).

ERISA imposes a high standard of care upon fiduciaries that make decision on claims. Merely telling claimants they need to submit additional medical records will not typically meet this standard. But even where the administrator fails to meet this standard, the question may arise whether the claim was denied for lack of supporting evidence or not. Such was the case recently in Tortora v. SBC Communications, Inc., 2011 U.S. App. LEXIS 22407 (2d Cir. Nov. 3, 2011). Sedgwick, as claims administrator for SBC's disability plan, denied a claim and stated "You may also submit additional medical or vocational information, and any facts, data, questions or comments you deem appropriate for us to give your appeal proper consideration." The court held that language did not meet the standard imposed by ERISA because it did not provide proper notice of how to perfect the claim. However, according to the denial letter, the medical records submitted were not indicative of disability, so the error was harmless.

If you have received a letter denying your claim for benefits and have questions about whether the denial was proper, call an ERISA lawyer.

Employees in Chicago and the Midwest often find themselves making difficult decisions with regard to compensation and pension benefits in jobs. Sometimes you must sacrifice lucrative benefits for either better job security, more money, or to even have a job at all. Employers are constantly looking for ways to save money, and sometimes even customers of your employer may look for ways to save money. Recently, a local Teamsters union challenged actions taken by BNSF Railway Company as unlawfully interfering with union members' protected benefits under ERISA. Teamsters Local Union 705 v. BNSF Ry. Co., 2011 U.S. Dist. LEXIS 12750 (N.D. Ill. Nov. 3, 2011).

BNSF cancelled a service contract with Rail Terminal Services, and shortly after Rail Terminal Services discontinued its operations. BNSF then hired many of the former employees of Rail Terminal Services to perform essentially the same work they had done before. The difference was that Rail Terminal Services was subject to a collective bargaining agreement, and the employees were receiving pension, health, and other benefits through the union plan. But when BNSF hired them, it did not provide the same level of benefits, thereby reducing its cost.

The Court held this was not an unlawful interference with the employees' benefits. BNSF's cancellation of the service contract was lawful. Not to say that the action taken by BNSF could never be an unlawful interference with benefits, but in this case the Teamsters did not offer any evidence that BNSF intended to interfere with the benefits.

If you have questions about your employee benefits rights, speak with a lawyer concentrating in ERISA.

Employees of Chicago area employers that participate in an employer sponsored group health insurance plan often assume if and when their claim is denied, they must sue the insurance company. But that is not always the case in litigation under the Employee Retirement Income Security Act of 1974 ("ERISA"). The insurance company is undoubtedly the party with whom the employee or other covered participant has had communications, and received a denial letter from. But the inquiry does not stop there.

In the case of a health insurance plan that is fully insured, meaning the insurance company bears the financial risk, then the insurer will undoubtedly be a fiduciary under the plan. But in the case of large employers, the plan is often self-funded, and the insurance company merely acts as a claims administrator. The question then is whether the insurance company exercised any discretionary authority or control over approving or denying the claim. See ERISA § 3(21)(A).

In Wesson v. Jane Phillips Medical Center & Affiliates Employee Group Healthcare Plan, No. 09-561 (N.D. Okla. Sept. 30, 2011), this issue arose. The plaintiff named BMI-Healthplans, the insurance company acting as a claims administrator, as a defendant. According to the plan document, BMI was merely a "plan supervisor" and would process claims and apply the rules of the plan to claims, but would not have any discretion. If this were true, BMI would be a non-fiduciary third party administrator not subject to liability in a claim for benefits due under the terms of the plan. However, the plaintiff alleged that BMI, despite not being contractually obligated to do so, actually did exercise discretionary authority or control, thereby making BMI a "functional" or "de facto" fiduciary. This just means that if a party does the acts the ERISA statute says makes one a fiduciary, that party is a fiduciary regardless of what any contract says to the contrary.

Despite the allegation, nothing in the administrative record revealed that BMI in fact did anything to make it a functional fiduciary, so the court dismissed all claims against BMI (but not the plan). If you have questions about an ERISA lawsuit, speak to an ERISA lawyer today.

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 often call my office and inquire about the "conflict of interest" in ERISA long-term disability cases. Few cases will be determined based on whether there is a conflict of interest, as insurers have become more clever at creating an appearance of there being no conflict of interest. But the best way to understand how the conflict applies in cases is to witness it changing the outcome of a case.

In 2008, the United States Supreme Court held that where an ERISA plan administrator (such as an insurance company) both evaluates and makes benefit determinations, and is the source of funding to pay the benefits, the administrator is under a structural conflict of interest that should be weighed in judicial review of whether the administrator abused its discretion. Metropolitan Life v. Glenn, 554 U.S. 105 (2008). That does not necessarily mean the abuse of discretion standard will not apply; it just means a reviewing court will consider that conflict of interest. But something more than just the existence of the structural conflict usually needs to be shown. A claimant needs to show what else the insurance company did that shows that conflict of interest altered the administrator's benefit determination. A perfect example of this was in a recent (unpublished) decision from the United States Court of Appeals for the Ninth Circuit.

In Letvinuck v. Aetna Life Insurance Co., Aetna was the administrator of the Boeing Company Employee Health and Welfare Benefit Plan, and also funded the long-term disability benefits. No. 10-55018 (9th Cir. June 22, 2011). Aetna gave no weight to the fact that the claimant had been awarded disability benefits by the Social Security Administration, and did not try to address why the ERISA benefits were not payable despite Social Security benefits being awarded. Next, Aetna failed to tell the claimant what else she would need to show in order to be approved for the benefits. The court called this failure to "engage in meaningful dialogue" with the claimant and failure to let her know what evidence the insurer required. Because the claimant could point to these facts, the court then gave weight to the conflict of interest, viewed the denial with skepticism, and ordered the insurer to pay the benefits.

If you still have questions about how a conflict of interest can affect your right to disability benefits, speak with an ERISA lawyer.

Employees that participate in group health insurance or group disability insurance plans through their employers obtained another victory today. The United States Court of Appeals for the Ninth Circuit held that participants who bring claims under ERISA § 502(a)(1)(B) for benefits due under the terms of the employee benefit plan may sue the third party insurer--the insurance company from whom your employer buys insurance for the particular benefit plan--for those benefits.

In Cyr v. Reliance Standard Life Insurance Company, Ms. Cyr received disability benefits under the employer's disability insurance plan insured by Reliance Standard. She sued her employer, alleging it discriminated against her by paying her approximately half of what it paid male employees with similar qualifications. Cyr prevailed, and won a retroactive salary increase. She then demanded Reliance Standard increase her disability benefit payments to reflect the retroactive higher salary, but it refused. Cyr sued Reliance Standard for the increased benefits, but the insurance company was neither the plan, nor the plan administrator.

The District Court initially dismissed Cyr's case, following the precedent of previous Ninth Circuit caselaw which held only the employee benefit plan or the plan administrator could be proper defendants in an ERISA 502(a)(1)(B) lawsuit. The Court of Appeals initially affirmed that decision, but after rehearing the case en banc (i.e., before all the judges), it vacated its prior order and reversed the District Court's ruling.

The prior law limiting benefits claims to being brought against only the plan or the plan administrator is not supported by a reading of the statute. ERISA specifies who can bring a claim in § 502, but does not limit against whom a claim may be brought. Previously, the Supreme Court in Harris Trust and Savings Bank v. Salomon Smith Barney, Inc. held a participant may sue a non-fiduciary for "other appropriate equitable relief" under ERISA § 502(a)(3).

If you have any questions about who is supposed to pay your health insurance or disability insurance benefits, call an ERISA lawyer.

Employees in Chicago that are participants in any employee benefit plans should pay attention to the growing divide among Courts of Appeals over whether "satisfactory to us" is language in a plan sufficient to vest the plan administrator with discretion to interpret plan terms and make benefit determinations. When the administrator has such discretion, a court reviewing the administrator's decision will do so under an abuse of discretion standard--whether the decision was reasonable, not whether it was right.

The United States Court of Appeals for the Third Circuit joined the ranks of courts in holding such language requiring a participant to provide proof of a loss "satisfactory to us" does not confer discretion on the administrator of the plan. Viera v. Life Insurance Company of North America, No. 10-22810, Slip Op. at 19 (3d Cir. June 10, 2011). The Third Circuit joined the ranks of the Second, Seventh, and Ninth Circuits in holding that this sort of language does not clearly communicate to a participant that the plan administrator has discretion in administering the plan.

The Court of Appeals for the Seventh Circuit--located in Chicago--held this sort of language cannot vest the administrator with discretion back in 2005. Diaz v. Prudential Life Insurance Company of America, 424 F.3d 635, 637 (7th Cir. 2005). However, employees cannot take these holdings for granted. When there is a divide in courts of appeals such as the one present here, it is more likely the Supreme Court will allow an appeal in order to resolve the conflict.

If you have any questions about how a standard of review or a discretionary clause could impact your claim for benefits, consult a lawyer knowledgeable in ERISA.