December 4, 2017

The Friday Five: Five Current ERISA Litigation Highlights

Caitlin Strauss

Saul Ewing LLP

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Saul Ewing Arnstein & Lehr LLP

DOL Rethinking Changes to Claim Procedure Regulations: On November 29, 2017, the Department of Labor (DOL) further delayed and extended the applicability date of the 2016 Final Rule amending claims procedures for ERISA-covered employee benefit plans. Previously, the Final Rule would have applied to claims filed on or after January 1, 2018, but that date has now been postponed to April 2, 2018. The Department is using this additional time to accept feedback and substantive data that will allow the DOL to examine the merits of potentially rescinding, modifying, or retaining the Final Rule. These comments must be submitted to the Department on or before December 11, 2017.
Church Plan: To date, there are only a handful of cases applying the Supreme Court’s June 5, 2017 decision Advocate Health Care Network v. Stapletonconstruing the scope of ERISA’s church plan exemption. One district court has noted that the applicability of ERISA to the plan post-Stapleton may be a determinative threshold issue and advised that parties should move for summary judgment on this issue after a period of focused discovery. Cardoza-Estremera v. Berrios, CV 16-2318 (ADC), 2017 WL 3098089 (D.P.R. July 20, 2017).
Pre-Existing Conditions: The Eleventh Circuit reversed summary judgment for an insurer, finding that the policy’s Pre-Existing Conditions Exclusion was not triggered solely by the plaintiff’s back pain and muscle spasms during the “look-back” period. The court found that per the language of the policy, back pain and muscle spasms are not by themselves an accidental bodily injury, a disease, a disorder, nor a condition. Rather, these are symptoms for which an accidental bodily injury, a disease, a disorder, or a condition might be a cause, and the plain text of the policy expressly defined pain as being a “symptom,” not a “condition.” Genuine issues of fact remained as to whether the underlying cause of these symptoms would potentially trigger the Pre-Existing Conditions Exclusion. Horneland v. United of Omaha Ins. Co., 16-16935, 2017 WL 5508496 (11th Cir. Nov. 17, 2017).
Statistics on Claims Acceptance Rates Not Discoverable: The Southern District of New York held that statistical information on claim acceptance rates by a disability insurer were not discoverable, after the court determined that the requested statistics would not meaningfully assist the plaintiff’s case. The court noted that “there is no dispute that has a structural conflict of interest . . [n]or does there appear to be any dispute that has a history of a biased claims administration.” Therefore, additional information regarding firm-wide practices, including its aggregate liability acceptance rates, would be of limited marginal relevance to McFarlane v. First Unum Life Ins. Co., 16-CV-7806 (RA), 2017 WL 4564928 (S.D.N.Y. Oct. 12, 2017).
Arbitrary and Capricious Standard Applied for Mental Illness (“MI”) Limitation: The Third Circuit held that the arbitrary and capricious standard of review was appropriately applied where the cause of the plaintiff’s disability had to be independent of her depression, anxiety, and other non-physical issues. Because the policy’s MI limitation precluded further benefits for disabilities “caused by or contributed to by mental or nervous disorders,” the district court correctly recognized that the p “must establish that it was arbitrary and capricious for to determine that her physical conditions alone did not render her totally disabled from performing any occupation.” Davies v. First Reliance Stand. Life Ins. Co., 17-1782, 2017 WL 5256857 (3d Cir. Nov. 13, 2017).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.