Frequently Asked Questions

///Frequently Asked Questions
Frequently Asked Questions 2021-10-13T20:19:46+00:00
The Employee Retirement Income Security Act of 1974, P.L. 93-406 (“ERISA), codified at 29 U.S.C. § 1001 et seq. and in other titles, is a “comprehensive and reticulated statute.” Nachman v. Pension Benefit Guaranty Corp., 116 U.S. 359, 361 (1980).
“The terms ‘employee welfare benefit plan’ and ‘welfare plan’ mean any plan, fund, or program which was . . . established or maintained by an employer or by an employee organization . . . to the extent that such plan, fund, or program was established . . . for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 186(c) [holiday benefits, among others] of this title (other than pensions on retirement or death, and insurance to provide such pensions).

(2)(A) Except as provided in subparagraph (B) [relating to severance pay arrangements and supplemental retirement income payments], the terms ‘employee pension benefit plan’ and ‘pension plan’ mean any plan, fund, or program which was . . . established . . . by an employer or by an employee organization . . . to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program –

(i) provides retirement income to employees, or
(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond, regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan.”

29 U.S.C. § 1002(1) (emphasis supplied).

Every employee benefit plan should be established and maintained pursuant to a written instrument. The written instrument “shall provide for one or more named fiduciaries who jointly or severally shall have authority to control and manage the operation and administration of the plan.” 29 U.S.C. § 1102(a)(1).
(1) A plan, fund or program, (2) established or maintained, (3) by an employer or by an employee organization, or by both, (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, pre-paid legal services or severance benefits, (5) to participants or their beneficiaries.

Donovan v. Dillingham, 688 F.2d 1367, 1371 (11th Cir. 1982) (en banc). In discussing the statutory elements, the Donovan court held that a “plan fund, or program under ERISA implies the existence of intended benefits, intended beneficiaries, a source of financing, and a procedure to apply for and collect benefits.” Id. at 1372.

An ERISA plan can be held to exist in the absence of a written plan document or compliance with other ERISA requirements. Donovan v. Dillingham, 688 F.2d at 1372. The test is whether a reasonable person could ascertain from the surrounding circumstances: (1) intended benefits, (2) intended beneficiaries, (3) a source of financing, and (4) a procedure for obtaining benefits. Id.

An ERISA plan can be established without a name or without formal documentation.

Yes, those that fall within the Safe Harbor provision and satisfy all four of these items:

A. no contributions by employer or union;
B. participation voluntary;
C. no endorsement by employer or union; and
D. no compensation to employer or union except for reasonable compensation for payroll deduction.

29 C.F.R. § 2510.3-1(j).

No.

The provisions of this subchapter shall not apply to any employee benefit plan if –

(1) such plan is a governmental plan (as defined in section 1002(32) of this title);
(2) such plan is a church plan (as defined in section 1002(33) of this title) with respect to which no election has been made under section 410(d) of title 26;
(3) such plan is maintained solely for the purpose of complying with applicable workmen’s compensation laws or unemployment compensation or disability insurance laws;
(4) such plan is maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens; or
(5) such plan is an excess benefit plan (as defined in section 1002(36) of this title) and is unfunded.

29 U.S.C. § 1003(b) (underlining supplied).

“The term ‘employer’ means any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity. ” 29 U.S.C. § 1002(5).

“The term ‘employee’ means any individual employed by an employer.” 29 U.S.C. § 1002(6).

“The term ‘participant’ means any employee or former employee of an employer, or any
member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.” 29 U.S.C. § 1002(7).

“The term ‘beneficiary’ means a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.” 29 U.S.C. § 1002(8).

“The term ‘administrator’ means (i) the person specifically designated by the terms of the instrument under which the plan is operated.” 29 U.S.C. § 1002(16)(A). The statutory definition makes clear that an employer can be a plan administrator. 29 U.S.C. § 1002(16)(A)(ii). ERISA defines [plan] administrator as: “(i) the person specifically so designated by the terms of the instrument under which the plan is operated; and (ii) if an administrator is not so designated,. . .” (29 U.S.C. § 1002(16)(A)) the administrator by default would be the plan sponsor.

“The term ‘plan sponsor’ means the employer in the case of an employee benefit plan established or maintained by a single employer.” 29 U.S.C. § 1002 (16)(B)(i).

A named fiduciary is [1] “a fiduciary who is named in the plan instrument, or [2] who, pursuant to a procedure specified in the plan, is identified as a fiduciary.” 29 U.S.C. § 1102(a)(2).

A plan may allocate fiduciary responsibilities. A plan document may expressly provide for procedures for allocating fiduciary responsibilities (other than trustee responsibilities) among named fiduciaries. U.S.C. § 1105(c)(1)(A).

A plan document may expressly provide for procedures for named fiduciaries to designate persons other than named fiduciaries to carry out fiduciary responsibilities. 29 U.S.C. § 1105(c)(1)(B).

ERISA requires that any procedures for allocating responsibilities for the operation and administration of a plan must be described under the plan. 29 U.S.C. § 1102(b)(2).

Except as otherwise provided in subparagraph (B), a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. Such term includes any person designated under section 1105(c)(1)(B) of this title.

29 U.S.C. § 1002 (21)(A).

(a) Prudent man standard of care.
(1) Subject to sections 1103(c) and (d), 1342, and 1344 of this title, a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and –
(A) for the exclusive purpose of:
(i) providing benefits to participants and their beneficiaries; and
(ii) defraying reasonable expenses of administering the plan;
(B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
(C) by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and
(D) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this subchapter and subchapter III of this chapter.

29 U.S.C. § 1104.

1. Time Limits and Deadlines
A. Notice of Claim – per plan/policy term
B. Proof of Claim – per plan/policy term
C. Statute of Limitation – per plan/policy term
1. claim for benefits – 4 years but can be as short as 90 days
2. interference/discrimination – 2 years
3. injunction – 2 years
4. breach of fiduciary duty – 3 years (could be as long as 6 years by ERISA statute § 413

2. Claim Process

A. Application for Benefits- Proof of Loss
B. Deadlines
C. Obtaining Documents by Which the Plan Is Operated
D. Definition of Disability
E. Claim Record

3. Appeal Process

A. Denial Letter
B. Obtaining a copy of your claim file
C. Contents of the appeal to be submitted

4. Exhaustion of Remedies

exhaustion of administrative remedies before filing suit – there are few exceptions to this requirement

5. Lawsuit for Benefits

A. Claim for Benefits
B. Jurisdiction/Venue
1. favorable/unfavorable law of circuit/division
2. favorable/unfavorable judges of division
D. Preemption

6. Standard of Review used by the federal judge that will review your case

7. Discovery

8. Remedy, if successful in lawsuit
A. Benefits that are past due
B. Interest on past due benefits
C. Reinstatement for future benefits
D. Costs
E. Discretionary Attorney’s Fees

9. Taxability of benefits

A. Benefits
B. Interest
C. Attorney’s Fees

10. Collateral coverages

A. Health
B. Life
C. Waiver of Premiums

a. written claim form or verbal claim – sometimes referred to as a “proof of claim”

b. employee portion of written proof of claim – biographical information, reason for disability, restrictions and limitations, and very important – date of disability
c. employer portion of written proof of claim – biographical information, job description, monthly pay and miscellaneous questions
d. physician portion of written proof of claim – period of treatment, restrictions and limitations, perhaps diagnosis and treatment records
e. other material

In most situations, you, the employee, would be provided with the summary plan description (SPD), which is a much shorter document and a much easier to read document than would be the plan document. If you need to make a claim under the employee benefit plan, you would most likely start with the summary plan description. The plan and summary plan description provide you with the description of the benefits of the plan and how to make a claim regarding same. This SPD, that should have been provided to you, most likely, would provide the information on the benefits available and how to make the claim for benefits.

The summary plan description or for that matter the plan document may refer to a particular insurance policy which may set out the benefits and/or the claim procedure.

You should also request relevant documents form the Plan – definition of relevant, 29 C.F.R. § 2560.503-1(m)(8),

a. relied on in making benefit determination;
b. submitted, considered or generated in the course of making benefit determination, regardless of whether relied on;
c. demonstrates compliance with administrative procedures in making benefit determination in accordance with plan documents; and
d. in case of group health or disability benefits, constitutes a statement of policy with concerning the denied treatment, regardless of whether relied on in making benefit determination.

29 C.F.R. § 2650.503-1(m).

The denial letter must provide the information required by ERISA (29 U.S.C. § 1133) and ERISA regulations (29 C.F.R. § 2560.503-1(f)) Weaver v. Phoenix Home Life Mut. Ins. Co., 990 F.2d 154 (4th Cir. 1993) (Non-compliance with §1133(1) was evidence of abuse of discretion but did not require a heightened standard of review.)
Claims Procedure provides:
(g) Manner and content of notification of benefit determination.
(1) Except as provided in paragraph (g)(2) of this section, the plan administrator shall provide a claimant with written or electronic notification of any adverse benefit determination. . . . The notification shall set forth, in a manner calculated to be understood by the claimant –
(i) The specific reason or reasons for the adverse determination;
(ii) Reference to the specific plan provisions on which the determination is based;
(iii) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary;
(iv) A description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of the Act following an adverse benefit determination on review;
(v) In the case of an adverse benefit determination by a group health plan or a plan providing disability benefits,
(A) If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other with the specific rule, guideline, protocol, or other similar criterion; or a statement that such a rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol, or other similar criterion will be provided free of charge upon request. . . .

29 C.F.R. § 2560.503-1 (g).

You must comply with all administrative procedures in the plan/policy to exhaust all of the remedies available before filing suit – there are few exceptions to this requirement.
Plaintiff has a claim against the plan for the recovery of plan benefits owed and is brought pursuant to the ERISA civil enforcement provision which provides “A civil action may be brought . . . (1) by a participant or by a beneficiary . . . (B) to recover benefits due to him under the terms of his plan.” 29 U.S.C. § 1132(a)(1)(B).
a. Disability – the definition of disability determines the scope of the coverage provided by the plan
1. “own occupation” (usually first 24 months period of disability)
2. “any occupation” (after first 24 months of disability)
b. Variance in the elements of the definition of disability – actions/skills
1. cannot perform each of the material duties of regular occupation
2. unable to perform the important duties of occupation
3. cannot perform the substantial material duties of occupation
c. The variance in the elements of the definition of disability – time
1. cannot perform duties full time
2. cannot perform duties for at lest 30 hours per week
d. The additional requirement of “loss of income”
1. less than 20% loss of income – no benefit paid
2. more than 80% loss of income – total benefit paid
3. in between loss of income – proportionate benefit paid
e. The definition of “regular occupation”
1. “material and substantial duties” are defined by “regular occupation”
2. as the employer defines the tasks/skills
3. as the employer defines it without the particularities related to the specific location/ employer
4. Department of Labor – Table of Occupations
5. as the insurer defines the tasks/skills
When a claimant complies with the administrative procedures in a plan,1 and has been denied a benefit, the claimant may bring a lawsuit pursuant to 29 U.S.C. § 1132(a)(1)(B).2 A court reviews the plan’s decision under a standard of review that is either an abuse of discretion standard or a de novo standard. Under an abuse of discretion standard, the court reviews the plan’s decision with deference to the plan, that is if the plan’s decision is on the spectrum of reasonableness, it will be upheld. Under a de novo standard, the court will review the plan’s decision without giving deference to the plan and make its own determination regarding the benefit. One can see how the abuse of discretion standard greatly favors the plan. Therefore, it is in the claimant’s interest to obtain a review by the court that is under the de novo standard.

The abuse of discretion standard of review applies where “the benefit plan gives the administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” This authority is usually found in the written plan document3 where claimant’s employer has delegated such discretion. It is typically referred to as a discretionary clause.
Firestone Tire & Rubber Co. v. Bruck, 489 U.S. 101, 115, 109 S. Ct. 948, 956 (1989).

In many benefit situations the plan benefits are funded by an insurance policy with the benefit decision made by an insurance company. If this authority to determine eligibility for benefits and to construe the terms of the plan is found in the policy of insurance, Texas law renders such discretionary clause void. As such the default standard of review applicable to a claim under 29 U.S.C. § 1132(a)(1)(B) is de novo.

If a claimant successfully alleges that such discretionary clause is void in Texas, the claimant will have secured a much more favorable standard of review, i.e., de novo.4 Any purported grant of discretion is barred by the Texas Administrative Code, §3.1201 et seq. which provides:

§3.1201. Applicability, Effective Dates, and Severability.
(a) this subchapter applies to any form filed under the Insurance Code Chapters 1701 or 1271, . . .
. . .
(c) For forms that include disability income protection coverage providing for periodic payments during disability due to sickness and/or accident, whether provided through a policy, certificate, or rider, this subchapter applies to forms, offered, issued, renewed, or delivered on or after February 1, 2011.
. . .
§3.1202. Discretionary Clauses Defined. For the purpose of this subchapter, a discretionary clause is a provision that:
(1) purports or acts to bind the claimant to, or grant deference to subsequent proceedings to, adverse claim decisions or policy interpretations by the insurer or health maintenance organization;
. . .
(3) specifies that the insurer’s or health maintenance organization’s interpretation of the terms of a form or its decision to deny coverage or the amount of benefits is binding upon a policyholder or other claimant;
(4) specifies that in any appeal the insurer’s or health maintenance organization’s decision-making power as to the interpretation of the terms of a form or as to coverage is binding; or
(5) specifies or gives rise to a standard of review in any appeal process that gives deference to the original claim decision or provides standards of interpretation or review that are inconsistent with the laws of this state.

§3.1203. Discretionary Clauses Prohibited. Inclusion of a discretionary clause in any form to which this subchapter applies is prohibited.
An effort to prohibit clauses in insurance policies that would trigger a deferential standard of review has been spearheaded by the National Association of Insurance Commissions (“NAIC”) which has promulgated a model law that is gaining acceptance in many states. NAIC, Accident and Health Insurance Consumer Protection-42-1 Prohibition On The Use Of Discretionary Clauses Model Act.

ERISA expressly preempts any state law “insofar as [it] may now or hereafter relate to any employee benefit plan,” See 29 U.S.C. § 1144(a), unless the law “regulates insurance, banking, or securities,” id. at § 1144(a)(2)(A). Section 3.120 et seq. of Title 28 to the Texas Administrative Code is therefore not preempted by ERISA because it “regulates insurance” pursuant to U.S.C. § 1144(b)(2)(A). Two other appellate circuits have addressed that state laws or practices banning discretionary clauses in health, accident, and disability insurance policies are saved from preemption under 29 U.S.C. § 1144(b)(2)(A)(“savings clause”). See Am. Council of Life Insurers v. Ross, 558 F.3d 600 (6th Cir. 2009); and Standard Ins Co. v. Morrison, 584 F.3d 837 (9th Cir. 2009) cert. denied by Standard Ins. v. Lindeen, 2010 U.S., Lexus 4079 (May 17, 2010). These cases relied heavily on Rush Prudential HMO, Inc. V. Moran, 536 U.S. 355, 373-74 (2002) in finding that the “savings clause” allows state insurance laws to otherwise obviate ERISA principles.

. . . To fall under the savings clause, a regulation must satisfy a two-part test laid out in Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329, 342, 123 S. Ct. 1471, 155 L. Ed. 2d 468 (2003). First, the state law must be specifically directed toward entities engaged insurance. Id. Also, it “must substantially affect the risk policy arrangement between insurer and the insured.” Id. . . .

Morrison, 584 F.3d at 842. Consequently, state laws banning discretionary clauses such as 28 Tex. Admin. Code § 3.120 et seq. are viewed as laws “regulat[ing] insurance” within the meaning of section 1144(b)(2)(A) and are not preempted by ERISA.

When a claimant alleges an ERISA cause of action for long term disability benefits under 29 U.S.C. §1132(a)(1)(B) (2009), the primary purpose of plaintiff’s requests for information should be to determine the procedural irregularities, the conflicts of interest of the plan in processing plaintiff’s claim and arriving at its decision to deny plaintiff’s benefits, and to refute any claim by the plan that its conflict of interest is de minimus.

I. Basis for Plaintiff’s Discovery

Rule 26(b) allows for discovery of “. . . any matter, not privileged, which is relevant to the claim or defense of any party. . .” Fed. R. Civ. P. 26(b). This rule is to be construed broadly to include “any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.”
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). Federal trial courts embrace a policy of liberal discovery.
Hickman v. Taylor, 329 U.S. 495, 506 (1947),
United States v. McWhirter, 376 F.2d 102, 106 (5th Cir. 1967). There is no exception in Rule 26 for ERISA cases and no prohibitions on discovery in ERISA.

Claimant’s discovery should be in line with Fifth Circuit guidance.

Generally, the scope of discovery is broad and permits the discovery of “any nonprivileged matter that is relevant to any party’s claim or defense.” Fed. R. Civ. P. 26(b)(1); see Waytt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982). A discovery request is relevant when the request seeks admissible evidence or “is reasonably calculated to lead to the discovery of admissible evidence.” Wiwa v. Royal Dutch Petroleum Co., 392 F.3d 812, 820 (5th Cir. 2004) (citation and internal marks omitted). . .
. . .
A claimant may question [1] the completeness of the administrative record; [2] whether the plan administrator compiled with ERISA’s procedural regulations; and [3] the existence and extent of a conflict of interest created by a plan administrator’s dual role in making benefit determinations and funding the plan.

Crosby v. La. Health Serv.& Indem. Co., 647 F.3d 258, 262, 263 (5th Cir. 2010) (footnotes omitted). A claimant must present evidence of the extent of conflict of the defendant.

Claimant’s discovery should be in line with U.S. Supreme Court guidance. The United States Supreme Court further clarified the area of conflicts of interest in its opinion in Metropolitan Life Ins. Co. v. Glenn on June 19, 2008.
Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S. Ct. 2343 (2008). The Court visited the issue of conflict of interest presented in the circumstance where the administrator both evaluates and pays claims, and then discussed how that conflict of interest should be taken into account on judicial review. The Court held:

Often the entity that administers the plan, such as an employer or an insurance company, both determines whether an employee is eligible for benefits and pays benefits out of its own pocket. We here decide [1] that this dual role creates a conflict of interest; [2] that a reviewing court should consider that conflict as a factor in determining whether the plan administrator has abused its discretion in denying benefits; and [3] that the significance of the factor will depend upon the circumstances of the particular case.

Id., at 115 (alterations in original).

The Court reiterated that the conflict must be taken into account. “Trust law continues to apply a deferential standard of review to the discretionary decisionmaking of a conflicted trustee, while at the same time requiring the reviewing judge to take account of the conflict when determining whether the trustee, substantively or procedurally, has abused his discretion.”

Id. at 117. The Court also noted that certain conduct by the insurance company may give weight to the conflict. “This course of events was not only an important factor in its own right (because it suggested procedural unreasonableness), but also would have justified the court in giving more weight to the conflict (because MetLife’s seemingly inconsistent positions were both financially advantageous).” I

Id. at 117. A claimant should be allowed discovery to rebut any claims by defendant that it has decreased the effects of its conflict of interest.

II. Compensation of Defendant’s Employees as Creating a Conflict of Interest

A claimant should make inquiries regarding a defendant’s compensation system or policy for the category or job description of those persons who had decision making authority involved in reviewing claimant’s claim and their respective supervisors up to the head of the claims department. A claimant should also inquire regarding defendant’s doctors and psychologists. A claimant should attempt to explore the conflict of interest created by certain elements of the compensation scheme. A claimant should argue that the compensation, bonuses and incentives can create an anti-claim bias in the individuals handling claims.

A claimant should inquire regarding defendant’s institutional-level conflict of interest and specifically “the absence of firewalls and other internal operating procedures to insulate the decisionmakers.”
Jurasin v. GHS Prop. & Cas. Ins. Co., et al., 463 Fed. Appx. 289, 292 (5th Cir. 2012), 2012 U.S. App. LEXIS 4008, *7 (5th Cir 2012) citing

Bellaire Gen. Hosp. v. Blue Cross Blue Shield,
97 F.3d 822, (5th Cir. 1996) reh’g den. en banc, 121 F.3d 706 (1997)

Crosby v. La. Health Serv. & Indem. Co., 647 F.3d 258, 263 (5th Cir. 2011) (“a claimant may question . . . whether the plan administrator complied with ERISA’s procedural regulations . . .”) A defendant will probably contend that it accurately handles claims in order to minimize the conflict of interest. A claimant should test that contention.

In addition, the regulations require that defendant be able to show that there are administrative processes and safeguards designed to ensure and to verify that determinations are made in accordance with the plan documents and that similarly situated claimants are treated the same in accordance with the plan provisions.5 The lack of safeguards and procedures is significant for many reasons. At the most elemental level is defendant’s obvious violation of ERISA regulations which are at the heart of the regulations’ attempt to insure a full and fair review of all claims. Also, it bears on the lack of good faith of defendant as evaluated in the second step, third factor of the 6

29 C.F.R. § 2560.503-1 (2001)503-1(b). In particular, the regulations require that:

(5) The claims procedures contain administrative processes and safeguards designed to ensure and to verify that benefit claim determinations are made in accordance with governing plan documents and that, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants[,]

29 C.F.R. § 2560.503-1(h)(iii) (2001)
29 C.F.R. § 2560.503-1(h)(2)(iii) (2001)29 C.F.R. § 2560.503-1(h)(5) (2001)

29 C.F.R. § 2560.503-1(m)(8)(iii) (2001)

29 U.S.C. § 1133 (1974)29 C.F.R. § 2560.503-1 (1977) 29 C.F.R. § 2560.503-1 (2001). Further, subsection (m)(8) provides that a claimant who is denied benefits is entitled to information generated in the course of “verifying that, in making the particular determination, the plan complied with its own . . . safeguards that ensure and verify appropriately consistent decision making in accordance with the plan’s terms.” Id.

. The regulations address the failure to establish or follow reasonable claim procedures:

Failure to establish and follow reasonable claims procedures.
In the case of the failure of a plan to establish or follow claims procedures consistent with the requirements of this section, a claimant shall be deemed to have exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under section 502(a) of the Act on the basis that the plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim.

29 C.F.R. 2560.503-1(l) (2001). In addition, the Department of Labor’s proposal addressed procedural minimums and judicial deference.

The proposal contained a provision setting forth the Department’s view of the consequences that ensue when a plan fails to provide procedures that meet the requirements of section 503 as set forth in regulations. The proposal stated that if a plan fails to provide processes that meet the regulatory minimum standards, the claimant is deemed to have exhausted the available administrative remedies and is free to pursue the remedies available under section 502(a) of the Act on the basis that the plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. The Department’s intentions in including this provision in the proposal were to clarify that the procedural minimums of the regulation are essential to procedural fairness and that a decision made in the absence of the mandated procedural protections should not be entitled to any judicial deference.

Department of Labor, 65 Fed. Reg. 70246, 70255 (11/21/00).

A. Benefits

a. long term disability benefits:
1. past due benefits
2. reinstatement for benefits in the plan – temporary, to age 65, for life
3. other “income” which is subtracted from benefits: workers’ compensation, social security benefits, retirement, and/or other disability insurance
b. medical benefits:
1. medical benefits due
2. pre-certification of needed treatment
2. avoidance of post-treatment financial crisis

B. Costs

proper – deposition and court transcripts, filing fee, photocopying, postage

C. Discretionary Attorney’s Fees

a. pre-lawsuit – in the Fifth Circuit there are no attorney’s fees allowed for attorney work in the claim process
b. lawsuit – attorney’s fees and cost of the action are discretionary with the district court
c. what are reasonable and necessary attorney’s fees

1. discretion of the court 29 U.S.C. § 1132(g)(1)
2. five factors in the Fifth Circuit:
A. degree of opposing party’s culpability
B. ability of opposing party to satisfy award of attorney’s fees
C. deterrent effect of award on other persons
D. whether party requesting fees sought to benefit all participants in the plan or to resolve a significant legal question regarding ERISA
E. relative merits of the party’s position

Yes, some plans allow for the continuation of coverages such as life and/or health insurance without the payment of premiums by you. You must make an application for waiver of the premiums.
a. before the claim is made to plan

1. examine claim for all the reasons used by insurance companies to deny claims
2. request plan document with all amendments, summary plan description, insurance policies, correspondence and other relevant documents from plan administrator and employer (must be provided within 30 days of request, discretionary penalty of up to $110.00 per day against plan administrator if not provided)

b. during claim/appeal process – accomplish the items in (a) above

1. review and dissect the denial letter to identify reasons for denial
2. determine the time for response or appeal
3. request the claim file from the claim administrator (typically the insurance company)
4. request relevant documents – definition of relevant, 29 CFR § 2560.503-1(m)(8), from the plan
5. respond with correspondence, doctor’s narrative/recorded statement, test results, if necessary, and, if pertinent, treatises, information regarding the client’s doctor(s) and the insurance company’s doctor(s), case law on issues and adverse press
6. supplement the record at any time before the lawsuit (the administrative record can only include information which was submitted and available to the plan administrator for making a decision)

a. jurisdiction – depends on cause of action alleged

1. claim for benefits – state or federal court – Defendant will remove to federal court
2. breach of fiduciary duty – federal court only
3. interference with the right to receive benefits – federal court only
4. state common law and most state law insurance claims are preempted

b. venue – specific venue statute for ERISA

c. the issue for the court is the appropriateness of the decision that you are is not entitled to benefits, e.g., not disabled, preexisting condition, not covered by plan, etc.

d. standard of district court’s review for law and fact aspects of plan’s/insurance company’s decision to deny you benefits

e. Discovery the Fifth Circuit allows

a. time and scope (exclusions) of coverage

b. preexisting condition – disability caused by, contributed to, or relating to prior medical condition

c. not continuously disabled during elimination period and thereafter

d. 24 months of benefits only for “mental and nervous” or “self-reported conditions”

e. restrictions and limitations do not prevent performance of material and substantial duties of occupation
f. 24 months change of definition of disability from “own occupation” to “any occupation”

a. you do not meet the definition of disability, especially since your job allows you to sit and stand as you please

b. you do not have a diagnosed medical condition

c. restrictions and limitations were not specified

d. there is no objective medical evidence to show your restrictions and limitations

e. your medical condition is not severe enough to prevent you from doing your occupation

f. if you could work before the date you claimed disability with all of the symptoms of your medical condition, you should be able to work the day after you claimed disability with the same conditions

g. there is nothing in the medical records to show a significant change in your condition before and after the date you chose to go on disability

h. we interviewed your treating doctor, and he did not say you were disabled

i. your doctor’s records do not show you are disabled and/or justify the restrictions and limitations

j. there is a letter from one of your treating physicians, and he said you were doing just fine

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