NOVEMBER
2016
2
ERISA
& LIFE INSURANCE NEWS
Covering ERISA and Life, Health and Disability Insurance Litigation
Healthcare Providers’ Right to Sue Under ERISA is Derivative, Limited in Scope, and Narrowly Construed 4 Penalty for Failure to Provide Plan Documents Cannot Be Claimed for First Time in Summary Judgment Brief 5 Claim for Life Insurance Benefit Barred by Failure to Exhaust Administrative Remedies 6 Statute Barring Defense Based on Application Does Not Prevent Insurer from Relying on Policy Exclusion 6 Court Denies Dismissal of Complaint Against Potential Plan Administrator 7 ERISA Denial of Benefits Affirmed, Despite Award of SSDI Benefits 7 “Right of Payment” versus “Rate of Payment” Distinction Irrelevant for Out-of-Network Case 8 One-Year Contractual Limitation Provision Bars Claim for Death Benefits under ERISA Plan 9 ERISA Preempts State Community Property Law in Interpleader Action 9 Insured Who Is Already Totally Disabled by Sickness Cannot Recover Lifetime Benefits Based on Injury 10 Loss Due to Intoxication Cannot Be Established by Elevated Blood Alcohol and its Common Effects
Healthcare Providers’ Right to Sue Under ERISA is Derivative, Limited in Scope, and Narrowly Construed Under ERISA’s civil enforcement provision, 29 U.S.C. §
healthcare providers are plan beneficiaries and continue to
1132(a)(1), only two categories of persons may sue directly
do so, thereby precluding such providers from bringing direct
to recover benefits due them under the terms of an ERISA-
actions to recover benefits under ERISA. Hobbs v. Blue Cross
governed plan, or to enforce their rights under the plan, or to
Blue Shield of Ala., 276 F.3d 1236, 1241 (11th Cir. 2001).
clarify their rights to future benefits under the plan. Those persons are plan participants and plan beneficiaries.
Healthcare providers are “not ‘beneficiaries’ of an ERISA welfare plan by virtue of their in-network status,” or their
Healthcare providers seeking to recover benefits under
provider agreements. Rojas v. Cigna Health and Life Ins. Co.,
an ERISA-governed plan generally do not claim to be plan
793 F.3d 253, 259 (2d Cir. 2015); Penn. Chiropractic Ass’n,
participants. See, e.g., Penn. Chiropractic Ass’n v. Indep.
802 F.3d at 929.
Hosp. Indem. Plan, Inc., 802 F.3d 926, 928 (7th Cir. 2015) (chiropractors conceded they are not “participants”). Rather, they claim to be plan beneficiaries. Id.
“The fact that [a healthcare provider] may be entitled to payment from [an insurer] as a result of her clients’ participation in an employee plan does not make her a beneficiary for the
A “beneficiary,” as defined in ERISA, is “a person designated
purpose of ERISA standing.” Brown v. BlueCross BlueShield of
by a participant, or by the terms of an employee benefit plan,
Tenn., Inc., 827 F.3d 543, 545-46 (6th Cir. 2016), citing Rojas,
who is or may become entitled to a benefit thereunder.” 29
793 F.3d at 257 (plan provision entitling healthcare providers
U.S.C. § 1002(8).
to receive payments directly from the insurer “does not a beneficiary make”); Grasso Enter., LLC v. Express Scripts, Inc.,
The circuit courts have long rejected the argument that
2
ERISA & LIFE INSURANCE NEWS
809 F.3d 1033, 1040 (8th Cir. 2016) (citing Rojas, but stating
“[t]he issue … is not whether [the health care providers] have
If a valid and enforceable assignment of a claim for payment
standing but whether their claim comes within the zone of
of benefits has been made, the court will assess the scope of
interests regulated by [ERISA]”).
the assignment by applying rules of contract construction.
“
Nonetheless, “a healthcare provider may acquire derivative standing ERISA
to by
sue
under
obtaining
a
written assignment from a ‘participant’ or ‘beneficiary’ of his right to payment of medical benefits.” Conn. State Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1347 (11th Cir. 2009); New
See, e.g., Griffin v. Suntrust Bank, Inc., 2016 WL 1657973, at *4 (11th Cir. Apr. 27, 2016) (“Nothing in an assignment of benefits transfers the
A healthcare provider-assignee ‘stands in the shoes of the beneficiary,’ and can only assert claims that could have been brought by the patients themselves.
patient’s right to bring a cause of action for breach
”
of fiduciary duty, to seek statutory failure
to
documents,
penalties provide or
to
for plan seek
equitable relief to redress
Jersey Brain and Spine Ctr. v. Aetna, Inc., 801 F.3d 369, 373
a practice that violates ERISA or the terms of the Plan.”);
(3d Cir. 2015); Spinedex Physical Therapy, USA, Inc. v. United
Rojas, 793 F.3d at 258-59 (“By expressly assigning only their
Healthcare of Ariz., Inc., 770 F.3d 1282, 1289 (9th Cir. 2014),
right to payment, [the] patients did not also assign any other
cert. denied, 136 S. Ct. 317 (2015).
claims they have under ERISA,” including an ERISA antiretaliation claim); Montefiore Med. Ctr. v. Local 272 Welfare
“A healthcare provider-assignee ‘stands in the shoes of
Fund, 2015 WL 7970026, at *3 (S.D.N.Y. Oct. 19, 2015)
the beneficiary,’ and can only assert claims that could have
(assignment of patients’ rights to “monies and/or benefits
been brought by the patients themselves.” Brown, 2016 WL 3606686, at *4; see also City of Hope Nat’l Med. Ctr. v. HealthPlus, 156 F.3d 223, 227-28 (1st Cir. 1998). Claims that implicate coverage and the right to recover benefits under a plan, often characterized as “right to payment” claims, are
... to cover the costs of care and treatment” did not include patients’ rights to seek injunctive or other equitable relief under ERISA), order adopting report and recommendation of magistrate, 2015 WL 8073909 (S.D.N.Y. Dec. 4, 2015).
properly assignable to a healthcare provider. Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 325 (2d Cir. 2011); see, e.g., CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165 (3d Cir. 2014). But plan participants and beneficiaries cannot assign “amount of payment” claims. For example, “claims regarding the computation of contract payments or the correct execution of such payments” cannot be assigned to a healthcare provider because those “are typically construed as independent contractual obligations between the provider and ... the benefit plan.” Montefiore, 642 F.3d at 331. See, e.g., Brown, 543 F.3d at 548; Merrick v. United Health Group Inc., 127 F. Supp. 3d 138, 150 (S.D.N.Y. 2015) (same). Such claims are properly the subject of a breach of contract action, not an ERISA action. CardioNet, 751 F.3d at 177-78 Anti-assignment clauses in ERISA plans are valid and enforceable. Physicians Multispecialty Group v. Health Care Plan of Horton Homes, Inc., 371 F.3d 1291, 1295 (11th Cir.), cert. denied, 543 U.S. 1002 (2004).
ERISA & LIFE INSURANCE NEWS
3
Penalty for Failure to Provide Plan Documents Cannot Be Claimed for First Time in Summary Judgment Brief Juan v. Minnesota Life Ins. Co. | 2016 WL 1169576 (N.D. Ga. Mar. 25, 2016)
Ms. Juan’s husband, a native of Guatemala, was employed in Georgia. He participated in an ERISA plan sponsored by his employer, Shaw Industries, a company associated with Berkshire Hathaway. The plan provided a basic life insurance benefit of $30,000 and a basic accidental death insurance benefit of $30,000 under a group insurance policy issued by Minnesota Life. The policy was delivered to Berkshire Hathaway, as group policyholder, in Nebraska. Ms. Juan’s husband was murdered in Guatemala while visiting his wife, who was a resident and citizen of Guatemala. Although her husband had not designated a beneficiary, Ms. Juan was the default beneficiary under the terms of the group policy. Shaw Industries reported the death to Minnesota Life, which began an extended effort to obtain a certified death certificate and other documents. Minnesota Life repeatedly asked Ms. Juan’s attorney to provide a completed Form W-8BEN, an
4
ERISA & LIFE INSURANCE NEWS
Internal Revenue Form needed for the payment of benefits to a foreign national. Instead of providing the form, the attorney sued Minnesota Life, alleging breach of contract. In an amended complaint, Ms. Juan sought to recover a daily penalty from Shaw Industries under 29 U.S.C. § 1132(c) (1), alleging that the employer had failed to provide plan documents upon request.
“
[T]he proper procedure for plaintiff to assert a new claim is to amend the complaint in accordance with Federal Rule of Civil Procedure 15(a).
”
A few weeks after the complaint was filed, Ms. Juan’s attorney provided a signed Form W-8BEN. Minnesota Life paid the life insurance and accidental death insurance benefits, with interest computed at 6% per annum. The group
policy provided that interest would be paid “at an annual rate determined by [Minnesota Life], but never less than 4% per year.” Ms. Juan then contended that additional interest was owed under a Georgia statute. Ms. Juan filed a motion for summary judgment, alleging for the first time that Minnesota Life was a de facto plan administrator, and that it also was liable for a penalty under 29 U.S.C. § 1132(c)(1) for failure to provide plan documents. Minnesota Life and Shaw Industries filed crossmotions for summary judgment. Their motions were granted, and Ms. Juan’s motion was denied. The court rejected as untimely Ms. Juan’s claim to recover a penalty from Minnesota Life for the alleged failure to provide plan documents stating, “At the summary judgment stage, the proper procedure for plaintiff to assert a new claim is to amend the complaint in accordance with Federal Rule of Civil Procedure 15(a). Plaintiff has failed to properly assert any
such new claim, and as a result, Minnesota Life is not liable for an ERISA penalty.” The court also held that Minnesota Life was the claims administrator, not the plan administrator, as defined by ERISA. “Because Minnesota Life was not the plan administrator ...,” the court said, “it cannot be liable for the penalty, even if it had received a request for plan documents.” Finally, the court rejected Ms. Juan’s claim that a Georgia interest statute applied and held that the right to recover interest on the death benefits was governed by the law of Nebraska, where the group policy was delivered. Because Nebraska law required interest at a rate less than the minimum rate of 4% required by the policy, Minnesota Life had already paid all interest that could be due under the policy, the court said. Regarding the claim for a penalty against Shaw Industries, the court noted that when Ms. Juan’s attorney requested information, a representative of Shaw Industries responded promptly, asking for an executed release from her husband’s estate. However, Ms. Juan’s attorney “did not respond with the requested information or in any way at all.” Because the obligation to provide plan documents is triggered “upon written request of any participant or beneficiary,” 29 U.S.C. $ 1024(b) (4), the court held that a plan administrator is not required to provide documents to a third party unless authorized in writing by the participant or beneficiary to do so. “While a plan administrator may be penalized for ignoring a request for information,” the court said, “Shaw Industries quickly responded in an attempt to obtain the estate’s consent. In so doing, Shaw Industries acted consistently with ERISA.”
Claim for Life Insurance Benefit Barred by Failure to Exhaust Administrative Remedies Lopez v. Reliance Standard Life Ins. Co. | 2016 WL 3191242 (W.D.N.C. June 3, 2016)
Lopez submitted a claim for life
that letter and notified Lopez and her
insurance benefits to Reliance Standard
attorney that its denial of coverage had
arising out of the death of Ricardo
become final.
Galarza. At the time of his death,
Lopez filed a breach of contract
Galarza was insured under a group life
claim in state court, and Reliance
insurance policy issued by Reliance
Standard removed the case to federal
Standard to his employer, RSI Home
court. Reliance Standard then moved
Products, to fund benefits under an
for
employee welfare benefit plan.
arguing that the complaint should be
judgment
on
the
pleadings,
Reliance Standard denied Lopez’s
dismissed because Lopez had failed
claim because of discrepancies in the
to exhaust administrative remedies
name, age, and marital status of Galarza
available to her under the plan and
and the person identified on the death
ERISA. The court converted the
certificate submitted by Lopez.
motion to one for summary judgment
The denial letter, dated April
and granted the motion.
30, 2013, informed Lopez that she
The court first determined that
could request a review of the claim
Lopez’s breach of contract claim
determination within 60 days. The
was preempted by section 502(a)
letter further informed Lopez that
of ERISA, 29 U.S.C. § 1132(a), such
“failure to request a review within
that it had jurisdiction over the claim.
the 60 days ... may constitute a
Next, the court held that Lopez’s claim
failure to exhaust the administrative
was barred by her failure to exhaust
remedies available under [ERISA] and
administrative remedies: “While ERISA
may affect your ability to bring a civil
does not contain an explicit exhaustion
action under [ERISA].”
provision, an ERISA welfare benefit
Lopez did not seek a review of the
plan participant must, nevertheless,
claim determination within 60 days of
both pursue and exhaust plan remedies
receiving the letter. In August 2014,
before gaining access to the federal
Reliance Standard received a letter from
courts,” the court said. Accordingly,
counsel for Lopez requesting a review.
summary judgment was granted for
Reliance Standard declined to consider
Reliance Standard.
ERISA & LIFE INSURANCE NEWS
5
Statute Barring Defense Based on Application Does Not Prevent Insurer from Relying on Policy Exclusion
Court Denies Dismissal of Complaint Against Potential Plan Administrator
Russell v. Gill | 2016 WL 1452494 (S.C. App. Apr. 13, 2016)
This case involves an intoxication
intoxication exclusion, because its
exclusion in an individual disability
proof of delivery of the policy was
policy. Russell applied to Penn Life
insufficient. That statute provides:
for the policy in 1999. The policy
“Every insurer doing accident
was issued with an intoxication
or health insurance business in the
exclusion, providing that Penn Life
State shall deliver with each policy
would “not be liable for any loss
of insurance issued by it a copy of
which result[ed] from [the insured]
the application made by the insured
being: (1) intoxicated; or (2) under
so that the whole contract appears
the influence of any narcotic unless
in the application and policy of
taken on the advice of a Physician.”
insurance. If the insurer violates this
In 2002, Russell increased his and
to the policy on account of anything
he received a receipt with similar
contained in or omitted from the
monthly
disability
benefit,
“ ”
language. Neither party disputed that the policy contained the intoxication exclusion. In
2008,
Russell
was
injured in a
application. If the insurance policy
The statute does not bar... defenses based on... the policy itself.
is
issued
upon an oral application, no
defense
is allowed to the policy on account
of
motorcycle accident and was issued
anything contained in or omitted
a citation for driving under the
from the oral application.”
influence. He applied for disability
On appeal, the South Carolina
benefits under the policy, which
Court of Appeals reversed, finding
Penn Life paid until it learned that
that a violation of the statute only
alcohol may have been a factor in
prohibits an insurer’s use of any
the accident.
defense “on account of anything
Russell filed suit, alleging bad faith
contained in or omitted from the
refusal to pay first-party benefits,
application.”
breach of contract to procure
not bar an insurer from asserting
insurance, and breach of contract.
defenses based on the terms of the
Penn Life filed a counterclaim for
policy itself.
declaratory judgment that Russell’s
Because
The
the
statute
does
intoxication
loss was not covered because of the
exclusion was contained within
intoxication exclusion.
the policy, rather than within the Circuit
application, the Court of Appeals
Court held that a statute, S.C
held that § 38–71–30 did not
Code
prohibit Penn Life from enforcing
The
South §
Carolina
38–71–30,
prevented
Penn Life from enforcing the
6
requirement, no defense is allowed
ERISA & LIFE INSURANCE NEWS
the exclusion.
Haysman v. Metropolitan Life Ins. Co., 2016 WL 1305360 (S.D. Ga. Mar. 28, 2016)
Haysman purchased life insurance as part of an ERISA plan established by his employer, Patcomp Inc. After Haysman’s death and the denial of his beneficiaries’ claim for death benefits, plaintiffs brought suit under ERISA against MetLife, which issued the coverage, and an entity called Bill Lucas & Associates, Inc. (BLA), described by plaintiffs as being “actively engaged in soliciting, enrolling, and servicing the Employee Benefit Plan of Patcomp and its employees.” The complaint alleged that BLA was “the agent and representative of Defendant Patcomp in the administration and carrying out of the employee benefit plan and acted on behalf of the Plan Administrator in carrying out the requirements of the plan.” Finally, the complaint asserted that BLA “advis[ed] employees of Patcomp on all aspects of said benefit plans, including determinations of eligibility for benefits.” BLA moved to dismiss the complaint, asserting that it was “utterly devoid of any contention that [BLA] is a plan administrator or fiduciary subject to liability as an ERISA entity.” Plaintiffs argued that they had “properly alleged that Defendant BLA was a ‘de facto Plan Administrator with control over the employee benefits program of Patcomp.’” The court denied the motion to dismiss, concluding that plaintiffs had “sufficiently alleged that Defendant BLA is a plan administrator.” Among the allegations, the court noted, was the “contention that Defendant BLA was somehow involved in determining whether individuals were eligible for plan benefits.” According to the court, “[t]his type of activity would render Defendant BLA a plan administrator and subject to suit under ERISA for the improper denial of benefits.” The court acknowledged that “it very well may be that Defendant BLA does not qualify as a plan administrator.” At this early stage of the litigation, however, only a “short and plain statement” of the claim showing entitlement to relief was required.
ERISA Denial of Benefits Affirmed, Despite Award of SSDI Benefits Sobh v. Hartford Life and Accident Ins. Co. | 2016 WL 3564380 (11th Cir. July 1, 2016)
Sobh, a former employee of JPMorgan
disability in the plan was different from
whose
Chase Bank, sued to recover long term
that utilized by Social Security, and that
governed by plan documents, the Social
disability
assessments
disability benefits under his employer’s
Hartford had reviewed “key evidence”
Security Administration employs a highly
ERISA plan after his claim was denied
that was not considered by the Social
particularized,
under the “any occupation” standard. The
Security Administration, including the
evaluation
denial of benefits was based in part on a
surveillance material and the opinion of
regulations.”
surveillance video, described as reflecting
the treating physician that Sobh could
no impairment, and the opinion of an
“perform full-time sedentary work.”
five-step
process’
are
‘sequential
prescribed
by
Moreover, “the circumstances that caused Hartford to conclude that Sobh
independent medical examiner that Sobh
The trial court granted summary
was no longer disabled did not occur
was capable of employment that allowed
judgment in favor of Hartford, and Sobh
until two years after the Social Security
for frequent positional changes.
appealed. Affirming the trial court’s
Administration’s determination.”
Hartford acknowledged that Sobh
ruling, the Eleventh Circuit noted that its
Specifically, the court noted, the
had been awarded Social Security
decision was not altered by the decision
“Social Security Administration did not
disability benefits, but according to the
of the Social Security Administration.
have before it at the time it made its
court, the company “explained why
First, the court wrote, the determination
disability determination, the surveillance
Hartford reached a different conclusion
of disability under the plan differed
video recordings or Sobh’s treating
than the Social Security Administration
significantly from the “framework” utilized
physician’s opinion that Sobh was able to
regarding disability benefits.” During the
by the Social Security Administration.
perform sedentary work.” As a result, the
administrative review of the claim denial,
In a footnote, the court elaborated that
earlier Social Security determination was
Hartford noted that the definition of
“[u]nlike ERISA claim administrators,
“of little consequence.”
“Right of Payment” versus “Rate of Payment” Distinction Irrelevant for Out-of-Network Case Alliance Med, LLC v. Blue Cross and Blue Shield of Ga., Inc. | 2016 WL 3208077 (N.D. Ga. June 10, 2016)
A
group
of
medical
Nonetheless, the providers moved to remand the case to state court. The issue was whether the state law claims were subject to complete preemption by
providers
to set out certain state law claims for
ERISA and therefore supported federal
brought suit in state court against Blue
misrepresentation, fraud, and unfair
question removal jurisdiction.
Cross, which removed the case to
trade practices. The providers admitted
The court noted that the gravamen of
federal court. Following removal, the
that some of the insurance agreements
the claims was “the difference between
providers
at issue constituted ERISA plans.
the
amended
their
complaint
rates
paid
to
out-of-network
ERISA & LIFE INSURANCE NEWS
7
providers and the representations made
terms of provider contracts, rather than
Defendants and Plaintiff’s patients.” In
to the employers that purchased policies
the terms of the plan itself.
addition, it “would be difficult, if not
from Defendants.” The court concluded
The court, however, determined that
impossible, to determine the amount of
that these claims “were directly related to
this distinction “is irrelevant in cases
damages without considering the plan
the terms of the plans themselves.”
involving
documents.”
out-of-network
providers
the
because a ‘rate of payment’ dispute is
The court denied the motion to
distinction between “rate of payment”
governed by the provider agreement.”
remand. The court further concluded
cases and “right of payment” cases.
Here, the providers were not “in-network
that it could exercise supplemental
Cases addressing the former issue
providers and thus do not hold a provider
jurisdiction under 28 U.S.C. § 1367
are sometimes determined not to be
agreement with Defendants.”
as to state law claims that were not
The
providers
relied
on
that
preempted by ERISA, because they
amount of payment (versus the right to
resolution of the claims would “necessarily
arose out of the “same common nucleus
payment) may be dependent upon the
require examining the contract between
of operative fact.”
removable to federal court, because the
The
court
also
concluded
One-Year Contractual Limitation Provision Bars Claim for Death Benefits under ERISA Plan Webb v. Liberty Life Assurance Co. of Boston | 2016 WL 3087455 (N.D. Ga. June 1, 2016)
Webb was a participant in an
Mrs. Webb filed suit on June 12,
ERISA-governed plan sponsored by
2015. Liberty moved for summary
his employer, Adobe. He was insured
judgment based on the contractual
under a group policy issued by Liberty,
“ ”
providing basic and optional life and accidental death insurance benefits. On December 27, 2013, Mr. Webb died from a self-inflicted gunshot wound to the head. By December 31, 2013, Adobe provided Liberty with the information it was required to submit and noted that the cause of Webb’s death was a “possible suicide.” On January 24, 2014, Liberty received Mrs. Webb’s
The court found “no reason not to enforce the contractual limitations period.”
the time Proof is otherwise required.” Citing
Harrison
v.
Liberty
Life
Assurance Co. of Boston, 2011 WL 2118954, at *2 (N.D. Fla. May 27, 2011), the court construed the contractual limitation provision to mean that a legal action could not be filed “more than one year plus 30 days from the date of loss,” unless it was not “reasonably possible” for the claimant to submit proof within 30 days of the date of loss,
Under the group policy, a legal
in which case the legal action could not
action could not be commenced “more
be filed more than two years plus 30
than one year after the time Proof of
days from the date of loss.
claim is required.” The “proof of claim”
Because Mrs. Webb could, and
certificate, which stated that the cause
provision stated: “Satisfactory Proof of
did, submit the required proof of loss
of death was suicide.
loss must be given to Liberty no later
within 30 days of the loss, the court
On January 27, 2014, Liberty paid
than 30 days after the date of loss.
concluded the applicable limitations
the basic life benefit to Mrs. Webb
Failure to furnish such Proof within such
period was one year and 30 days
but denied the other benefits based
time shall not invalidate or reduce any
from the date of loss, or January 27,
on suicide exclusions. On March 26,
claim if it was not reasonably possible
2015. Mrs. Webb did not file suit until
2014, Mrs. Webb, through an attorney,
to furnish such Proof within such time.
June 12, 2015. The court found “no
appealed
completed claim form and the death
8
limitations provision.
of the claimant, later than one year from
and
Such Proof must be furnished as soon
reason not to enforce the contractual
provided additional proof. On June 23,
as reasonably possible, and in no event,
limitations
2014, Liberty upheld its decision.
except in the absence of legal capacity
judgment in favor of Liberty.
the
claim
decision
ERISA & LIFE INSURANCE NEWS
period”
and
granted
ERISA Preempts State Community Property Law in Interpleader Action
Insured Who Is Already Totally Disabled by Sickness Cannot Recover Lifetime Benefits Based on Injury Silverman v. Unum Life Ins. Co. of Am. | Case No. 1:13-cv-04296 (N.D. Ga. July 12, 2016)
Companion Life Ins. Co. v. McCreary, 2016 WL 3090649 (D.S.C. May 9, 2016)
Companion Life issued a group life insurance policy, insuring employees of The Society of St. Vincent de Paul as part of an employee welfare benefit plan. Rodney Moore, an employee of The Society, enrolled in the group policy and designated his mother, Jean Bankett, as the beneficiary. The policy was delivered in Arizona, where Moore worked and lived until his death. After his death, Moore’s wife, Michelle McCreary, claimed that she was entitled to 50% of the death benefit under the community property law of Arizona. Faced with competing claims for the death benefit, Companion Life filed an interpleader action. The court recognized and the parties did not dispute that the policy was governed by ERISA. McCreary argued, however, that there was no conflict with ERISA if the court were to apply the Arizona community property law first, awarding her 50% of the death benefit, prior to administering the plan to pay the remaining benefit to Bankett as the designated beneficiary. Citing Egelhoff v. Egelhoff, 532 U.S. 141 (2001), the court rejected McCreary’s argument. The Arizona community property law related to and attempted to affect benefits paid pursuant to the plan, and therefore, was preempted by ERISA. The court also rejected Bankett’s assertion that she should receive an award of interest on the death benefit as compensation for the delay caused by McCreary’s claim. The court found that Companion Life’s interpleader action was properly filed. Auto Parts Mfg. Miss., Inc. v. King Constr. of Houston, LLC, 782 F.3d 186, 194 (4th Cir. 2015) (“It is not for the district court, in determining whether interpleader is proper, to consider whether the competing claims are meritorious.”).
Dr. Silverman, an endocrinologist,
the
maximum
benefit
period
was insured under two individual
for disability due to sickness
disability policies issued by Unum.
was reached in 2013. Silverman
The policies provided a maximum
then sued, seeking a declaratory
benefit period to age 65 for total
judgment that he was entitled to
disability due to sickness. Accident
lifetime benefits for total disability
benefit riders provided lifetime
due to injury under the accident
benefits if Silverman became totally
benefit riders.
disabled as the result of an accidental
Unum
filed
a
motion
for
bodily injury that “prevents [the
summary judgment, which was
insured] from engaging in his regular
granted. The court noted that at the
occupation.”
time of his traumatic brain injury, working
Silverman “had already been forced
in May 2009 due to illness. He
Silverman
stopped
to leave his endocrinology practice
submitted a claim for total disability
as a result of sickness.” Thus, the
benefits
based
myasthenia
court said, the question was this:
gravis,
peripheral
on
neuropathy,
“[A]ssuming that Silverman’s injury
degenerative disc disease, and other
would ordinarily have prevented
medical conditions. Unum began
him from engaging in his regular
paying
benefits
occupation, is his injury nonetheless
under the sickness provisions of the
outside the policy because he was
policies in July 2009, after Silverman
already completely prevented from
had satisfied the elimination period.
engaging in his regular occupation?”
total
disability
Two and a half months later, in
The court held that lifetime
September 2009, Silverman suffered
benefits were not payable. “There is
a traumatic brain injury when he fell
no evidence that Silverman would
down a flight of stairs. According
have been able to practice in 2011,
to his doctor, Silverman sustained
when he submitted his claim, or
a post concussive syndrome with
even in 2013, when Unum ceased
cognitive impairment, which “would
making benefit payments, since
significantly impact his continuing
these same unabated conditions
practice as a physician.”
rendered him completely unable
In 2011, Silverman submitted
to practice beginning in 2009,” the
a claim to Unum, seeking lifetime
court said. “Thus, the effect of his
benefits
accident
injury could not have prevented
benefit riders. Unum denied the
him from doing something he was
claim, stating, “[y]our injury, or fall
already unable to do. Accordingly,
in September 2009, was not the
a material condition of the ‘total
cause of your Total Disability.”
disability’ definition is not met,
Unum total
under
the
continued
disability
to
pay
benefits
until
meaning Silverman is not entitled to the [lifetime] benefit.”
ERISA & LIFE INSURANCE NEWS
9
Loss Due to Intoxication Cannot Be Established by Elevated Blood Alcohol and its Common Effects Prelutsky v. Greater Georgia Life Ins. Co. | 2016 WL 4177469 (N.D. Ga. Aug. 8, 2016)
Prelutsky, a partner in a law firm, was a participant in an ERISA plan and
Three weeks later, Prelutsky was
was insured under a group disability
transferred to a long-term rehabilitation
policy.
the group policy, disability caused by, resulting from, or related to intoxication was excluded from coverage.
While on a ski vacation in
facility. The admitting physician noted
The insurer denied Prelutsky’s claim
Aspen, he fell down a flight of stairs,
that Prelutsky had a history of binge
based on the intoxication exclusion, citing
resulting in traumatic brain injuries. No
drinking and that he was intoxicated
a federal regulation describing physical
one witnessed the fall. His son found
when he fell.
The records from the
and mental symptoms associated with
him unconscious.
rehabilitation facility contained several
a BAC between 0.20 and 0.29 (e.g.,
references to Prelutsky’s “blood alcohol
stupor, severe motor impairment, loss of
level of 0.25 at the time of his fall.”
understanding, impaired sensation, loss
Within 20 minutes after arriving at the hospital, Prelutsky’s blood alcohol concentration (“BAC”) was 281 mg/ dL. The test records stated:
“These
unconfirmed ‘screening’ results are to be used for medical purposes only. They are not intended for non-medical purposes (e.g., employment and/or legal testing).” The medical records were replete with other references to Prelutsky’s intoxication, including: “Patient ... drank heavily this evening; fall 20 carpeted steps with immediate loss of consciousness.
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family friends are present in the ER.”
His son and
ERISA & LIFE INSURANCE NEWS
“ ” The insurer could not sustain its burden by relying solely on Prelutsky’s blood alcohol concetration.
of consciousness, possibility of falling). Prelutsky appealed, submitting an affidavit from the owner of the Aspen home, who stated she did not see Prelutsky fall, but he did not appear intoxicated before the fall. The owner speculated that Prelutsky tripped over his ski pants.
Prelutsky submitted a claim for
The insurer obtained an independent
benefits. The insurer had discretionary
medical records review. Citing medical
authority to administer the claim and was
treatises, the physician noted that
responsible for paying benefits. Under
at “0.25% BAC, the individual needs
assistance in walking, and experiences
the homeowner’s personal opinion that
intoxication.” The court rejected the
total mental confusion.”
Prelutsky did not appear intoxicated.
insurer’s argument that, because there
Because
Prelutsky’s BAC was .281 at the time,
The court construed the intoxication
was no eyewitness, further investigation
the physician opined that intoxication
exclusion to require a causal link
would not have yielded any information
most probably contributed to the fall.
between Prelutsky’s intoxication and
as to the cause of the fall.
The insurer upheld its claim decision.
his loss. Citing Capone v. Aetna Life Ins.
The court suggested that Prelutsky’s
On cross-
Co., 592 F.3d 1189 (11th Cir. 2010), and
son and the family friends who were in
motions for judgment, the court noted
cases from other jurisdictions, the court
the ER could have provided additional
that the insurer had a minimal burden
concluded the insurer could not sustain
information
of proof (i.e., to show that the injury was
its burden by relying solely on Prelutsky’s
physical and mental state immediately
“related to” intoxication) and that the
BAC and a general list of alcohol’s
preceding the fall.” The court identified
deferential standard of review applicable
effects. Nor would a medical expert’s
additional “facts that logically could
in ERISA cases applied. But the court
opinion as to causation be sufficient if
[have been] investigated to evaluate the
granted judgment for Prelutsky, finding
based solely on such evidence.
relationship between the intoxication
Prelutsky filed suit.
Plaintiff’s
Thus, the court concluded the insurer
and the fall,” such as the volume of
was required to conduct a further
alcohol consumed, the type of alcohol
the insurer’s decision to be both de novo wrong and an abuse of discretion.
“regarding
evidence
investigation to determine if Prelutsky’s
consumed, the time period over which
sufficient to establish that Prelutsky
intoxication resulted in a “degradation
it was consumed, whether Prelutsky
was intoxicated at the time of the fall,
of his physical and cognitive abilities
was tired as a result of physical activity,
stating it was reasonable to place more
such that the causal link can reasonably
and whether he was wearing attire that
weight on the medical evidence than
be drawn between the injury and
might cause a fall.
The
court
found
the
ERISA & LIFE INSURANCE NEWS
EDITORS
SANDERS CARTER
K E N T C O P PA G E
A N D R E A C ATA L A N D
OTHER CONTRIBUTORS TO THIS ISSUE
MANNING CONNORS
MARY RAMSAY
JENNIFER RATHMAN
ERISA & LIFE INSURANCE NEWS
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Smith Moore Leatherwood LLP Attorneys at Law Atlantic Center Plaza 1180 W. Peachtree St. NW Suite 2300 Atlanta, GA 30309-3482 T 404.962.1000 F 404.962.1200 www.smithmoorelaw.com
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