This month's Friday Five covers recent cases addressing: (1) the scope of ERISA’s administrative exhaustion requirement; (2) whether ERISA permits a claim for “equitable estoppel through silence”; (3) the reasonableness of an insurer’s interpretation of an ambiguous SSDI award; (4) the quantum of proof required to link a physiological disorder to a mental illness; and (5) whether a policy requirement of a “significant change” in a claimant’s health may be read to encompass only instantaneous changes.

1. ERISA’s exhaustion requirement cannot be circumvented by "dressing up" a claim for benefits as a claim for breach of fiduciary duty. In Jones, the Eighth Circuit affirmed the Eastern District of Missouri’s determination that administrative exhaustion is required before a breach of fiduciary duty claim under ERISA may be brought in federal court when the thrust of the claim is a wrongful denial of benefits. The claimant, who alleged two fiduciary breaches pertaining to the claim administrator’s internal policies and procedures, contended that her claim under 29 U.S.C. § 1132(a)(3) for breach of fiduciary duty was not subject to an exhaustion requirement because it was distinct from a claim for benefits under 29 U.S.C. § 1132(a)(1)(B).  The Eighth Circuit rejected this argument as an elevation of form over substance, holding that the claimant essentially sought to litigate the insurer’s determination that she was not disabled.  The court thus determined that the claimant was required under ERISA to exhaust her administrative remedies prior to filing suit.  Jones v. Aetna Life Ins. Co., 943 F.3d 1167 (8th Cir. 2019).

2. Middle District of Florida rejects theory that ERISA contemplates a cause of action for "equitable estoppel through silence." In Keys, the plaintiff, a former NFL player, submitted a claim for disability benefits due to injuries he allegedly sustained during his professional football career. The defendants initially approved and paid benefits to the plaintiff after they determined that the plaintiff’s disability arose from playing in the NFL. They later terminated the plaintiff’s benefits and sought to claw back the benefits they had paid, asserting that the plaintiff had been in a car accident years before that had caused his disability. The plaintiff asserted a claim for “equitable estoppel based upon silence” under 29 U.S.C. § 1132(a)(1)(B), arguing that the defendants should be estopped from clawing back benefits because they had known about the automobile accident for years, but had remained silent about it and chose instead to pay benefits. The court rejected the plaintiff’s arguments and dismissed the claim, holding that ERISA’s preemption of common law claims is sweeping, and the plaintiff’s theory did not fall within the narrow estoppel doctrine that the Eleventh Circuit has recognized under § 1132(a). This doctrine requires a plaintiff to show that (1) the relevant plan provisions at issue are ambiguous, and (2) the plan administrator made representations to the plaintiff that constitute an informal interpretation of the ambiguity. Keys v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, No. 8:18-CV-2098-T-36JSS, 2019 WL 5887172 (M.D. Fla. Nov. 12, 2019).

3. Fifth Circuit upholds insurer’s interpretation of ambiguous SSDI award. In Wittmann, after she ceased work, the disability claimant initially listed her medical condition as "unknown – other than fibromyalgia and pericarditis," but later supplemented her claim with psychological records and an SSDI award. The SSDI award did not include any findings on the nature of the plaintiff's disability, but it referenced a psychological evaluation report. The defendant insurer thereafter approved the plaintiff's claim under the operative policy’s mental illness provision and paid the maximum two years of benefits, but denied her claim for physical disability benefits. The plaintiff filed suit, arguing that the insurer’s decision was made in bad faith because it used the policy’s mental illness limitation to "limit its exposure." The Fifth Circuit affirmed the district court (which had applied an arbitrary and capricious standard of review) and rejected the plaintiff's argument. Specifically, the court held that based on the SSDI award’s reference to the psychological evaluation report, the insurer had a rational basis to conclude that the SSA's decision was based on a mental illness, rather than the claimant’s alleged physical disability.  Wittmann v. Unum Life Ins. Co. of Am., No. 19-30254, ___ F. App’x ___, 2019 WL 6699750 (5th Cir. Dec. 6, 2019).

4. Eighth Circuit refuses to infer physical disability based on potential physiological link to psychiatric symptoms. In Miller, the Eighth Circuit affirmed the Eastern District of Arkansas’ judgment in favor of an insurer that terminated a claimant’s disability benefits based on her exhaustion of mental illness benefits and the lack of a disabling physical condition. The plaintiff argued that her mental illness was secondary to a physical impairment (a thyroid disorder) and that she was therefore entitled to benefits for a physical disability. The insurer initially approved her claim, but later learned that the only treatment the claimant was receiving was from a psychiatrist. The insurer commissioned an Independent Medical Examination of the claimant, which concluded that she had no physical impairment that precluded her from working, but noted that her medical records suggested that her mental illness may be exacerbated by a thyroid condition. The insurer terminated the claim and the district court upheld the termination decision. The Eighth Circuit affirmed the district court’s decision and held that “the existence of a potential link between thyroid disorders and psychiatric symptoms” did not equate to substantial evidence that the plaintiff suffered from her mental illness as a result of a physical condition. Miller v. Hartford Life & Accident Ins. Co., No. 19-1096, ___ F.3d ___, 2019 WL 6834049 (8th Cir. Dec. 16, 2019).

5. Court rejects insurer’s interpretation of policy’s requirement of "significant change." In Counts, the Eastern District of Michigan granted a plaintiff insured's motion for judgment on the administrative record and held that a "significant change" in a claimant’s health may occur over an extended period of time. The operative policy required claimants to demonstrate a “significant change” in their functional capacity in order to receive disability benefits. The defendant insurer argued that this policy language only contemplated instantaneous “significant changes,” as opposed to those that occur gradually. The court, which applied a de novo standard of review in accordance with a Colorado law that prohibits discretionary review clauses in insurance policies, disagreed, explaining that the insurer was not entitled to read additional eligibility requirements into the policy. Brenda Counts v. United of Omaha Life Ins. Co., No. 18-12312, 2019 WL 6877880 (E.D. Mich. Dec. 17, 2019).