This month’s edition of The Friday Five highlights the disparity in outcomes across the courts for and against insurers in this area of the law. With the new DOL regulations set to take effect in one month, we will be monitoring developments in the law as the courts grapple with interpreting the new regulations.
1. What is the risk of relying on a peer reviewer’s report that contains factual oversights? Remand, according to the Southern District of Indiana. In denying a claim for LTD benefits, Aetna fully credited the conclusions of a peer reviewer, despite the fact that the report contained numerous factual errors. These factual errors, coupled with the insured’s suggestion that the peer reviewer misrepresented the context of a peer-to-peer conversation with her treating provider, were enough for the court to remand the case for further review. Garner v. Aetna Life Ins. Co., No. 1:17-cv-01307-JMS-TAB, 2018 WL 953081 (S.D. Ind. Feb. 20, 2018).
2. May an insurer apply a plan’s mental illness (MI) limitation even if the insured’s MI was not present when the insured first claimed her disability? Yes, according to the United States Court of Appeals for the Third Circuit. In upholding the Middle District of Pennsylvania’s denial of summary judgment to the plaintiff, the Third Circuit held that if an insurer was restricted to assessing whether an MI “contributed to” a disability only when the disability was first claimed by an insured, that would be a “static interpretation inconsistent with the plan.” Krash v. Reliance Stnd. Life Ins. Group, No. 17-1814, 2018 WL 826742 (3d Cir. Feb. 12, 2018).
3. If an insurer fails to render a timely decision, but the insured still pursues an administrative review, does the insurer’s initial untimeliness compel a de novo standard in future litigation? No, according to the United States Court of Appeals for the Seventh Circuit. Although 29 C.F.R. § 2560.503–1(b) imposes a penalty of the loss of discretionary authority on plan administrators for failing to maintain reasonable claims procedures, it is at the point a failure occurs that the claimant is entitled to pursue available remedies under section 502(a). But, by pursuing administrative review through an appeal instead, the claimant effectively waived an untimeliness argument in litigation. Dragus v. Reliance Stnd. Life Ins. Co., No. 17-1752, 2018 WL 851164 (7th Cir. Feb. 14, 2018).
4. When can a file review be inadequate to support an insurer’s denial? Within the Sixth Circuit, at least, a file review may be inadequate when: “(i) the file reviewer concludes that the claimant is not credible without having actually examined him or her, (ii) the file reviewer fails to provide a rational basis for his or her conclusions or to rebut contrary evidence in the claimant’s medical records, or (iii) the plan administrator, without any reasoning, credits the file reviewer’s opinion over that of a treating physician.” Kellar v. Aetna Life Ins. Co., No. 1:17-cv-81-DCR, 2018 WL 715381 (E.D. Ky. Feb. 5, 2018) (Finding “Aetna fully explained its reasons for adopting the file reviewer’s findings in its decision denying Kellar’s appeal.”)
5. Can an employer plan document (SPD) properly confer discretion absent an express provision incorporating the SPD into the plan? Probably not. When faced with this question, the United States District Court for the District of New Jersey determined that because the employer plan document contained an express waiver stating that the insurance contracts (not the SPD) remain the final authority, and because the insurance contracts did not confer discretionary authority on the insurer (i.e., were in conflict with the absolute discretion conferred in the SPD), the court reviewed the insurer’s determination de novo. Alzza v. Prudential Ins. Co. of Am., No. CV 15-5194 (JMV), 2018 WL 785858 (D.N.J. Feb. 7, 2018).
