This month’s Friday Five discusses cases that address the admissibility of an expert opinion, the calculation of pre-disability earnings, the definition of disability earnings, circumstances where a court will transfer venue in an ERISA case, and the standard for liability on the basis of a misrepresentation by an insurer or plan administrator.

1. When is an expert not an expert? If an ERISA case is not resolved on summary judgment and proceeds to trial, expert testimony may be appropriate. In Wood, the U.S. District Court for the District of Arizona held that a plaintiff’s insurance expert – a licensed insurance agent – could not offer an expert opinion about what the plaintiff reasonably understood the policy to cover. The agent’s opinion failed to meet the standard provided in Rule 702 as it was not based on adequate facts, it did not reflect the application of reliable principles and methods to accurate facts of the case, and the opinion would not be helpful to the jury as it said a little more than the actual language of the policy. The agent’s opinion that the plaintiff did not engage in an additional occupation also failed the standard of Rule 702 because she failed to identify any experience or training in general vocational assessment or the duties required of the alleged additional occupation. The court further held that the agent’s opinion that the defendant insurer had ratified the plaintiff’s understanding of the contract was an impermissible legal conclusion. Wood v. Provident Life and Accident Ins. Co., No. 17-02330, D. Ariz., 2020 U.S. Dist. LEXIS 134263.
2. How should pre-disability earnings be calculated? Although plaintiffs often assert that courts should consider how a layperson might interpret the language of a policy, courts may still rely on legal definitions to resolve disagreements over interpretation of policy language. This was the approach taken by the U.S. District Court for the Northern District of New York in Vellano, where the case hinged entirely on the defendant’s methodology for calculating pre-disability earnings for the plaintiff, a CEO and shareholder of an S-Corporation, who suffered a business loss. The court rejected the plaintiff’s argument that a “person of average intelligence and experience” would not use negative numbers in the equation provided in policy documents as the defendants did. But relying on Black’s Law Dictionary, the court determined that words like “net profit” and “income” might, under certain circumstances, end up as a negative. Applying the defendants’ interpretation of the policy’s definition, the court awarded the defendant more than $30,000 for overpayment of short-term disability benefits. Vellano v. Standard Life Ins. Co. of New York, No. 1:18-CV-944, 2020 WL 4464605 (N.D.N.Y. Aug. 4, 2020).
3. What constitutes disability earnings? As the amount payable for disability benefits is determined, in part, on a claimant’s income, it is important to correctly identify what income should be considered. In Mohammed, the U.S. District Court for the Eastern District of Illinois held that the plaintiff’s earnings from a job that he began after he became disabled did not constitute “disability earnings.” According to the long-term disability policy, disability earnings included earnings from other employment began after the claimant became disabled that, based on restrictions and limitations, he was able to do. The claimant had left the job he began after he became disabled because he soon began missing deadlines due to his disability. Accordingly, the court denied the defendants’ motion to dismiss, finding that the plaintiff had adequately pled that his earnings from the employment did not constitute disability earnings for purposes of the long-term disability plan. Mohammed v. Prudential Ins. Co. of Am., No. 19 C 3258, 2020 WL 4569696 (N.D. Ill. Aug. 7, 2020).
4. Is a plaintiff’s choice of forum always entitled to deference? The question of proper venue often turns on the question of convenience for parties and witnesses. Accordingly, venue is not typically a factor in ERISA cases because they so frequently resolve on cross-motions for summary judgment. The U.S. District Court for the District of Wisconsin, however, recently reminded litigants that a court will still transfer an ERISA case if it determines that venue is not proper. In Packman, the plaintiff sued his plan administrator for denying his claim for long-term disability benefits. The plaintiff lives and was treated for his alleged disability in Missouri. He filed his lawsuit, however, in Wisconsin because he believed that Seventh Circuit law was more favorable to him and, as he argued, his choice is entitled to deference. The court agreed that venue was proper in Wisconsin, but held that the plaintiff’s admitted forum-shopping was not entitled to deference. The court determined that Missouri had a much stronger interest in the outcome of the matter, and therefore granted defendant’s motion to transfer venue to that forum. Packman v. Prudential Ins. Co. of Am., No. 19-CV-1012-JDP, 2020 WL 4700642 (W.D. Wis. Aug. 13, 2020).
5. Does a misrepresentation automatically lead to liability? Misrepresentations by insurers and plan administrators may cause confusion about what a claimant is owed. However, the U.S. District Court for the District of New Jersey recently reiterated that evidence of a misrepresentation is not sufficient to withstand summary judgment unless the claimant can show that he detrimentally relied on the misrepresentation. In Hotop, the defendant stated in a billing notice that $1,000,000 in supplemental dependents term life insurance (“SDTLI”) coverage would be available for the plaintiff’s spouse under the plaintiff’s life insurance policy. The correct amount, however, was actually $100,000. The plaintiff conceded that he made no changes in his life or financial planning or purchases on the expectation that his spouse’s SDTLI coverage would be $1,000,000. The plaintiff also presented no evidence that he decided not to consider other life insurance policy options in reliance on the defendant’s statement after he elected to port his coverage under the plan. Nor was there evidence that the plaintiff considered other life insurance policies before he elected to port his insurance. The plaintiff further admitted that he originally sought to continue only $100,000 in SDTLI coverage. Finding no evidence of detrimental reliance on the defendant’s misstatements, the court granted the defendant’s motion for summary judgment on the plaintiff’s claim for a $1,000,000 benefit payment. Hotop v. Prudential Insurance Company of America, No. CV 18-15312, 2020 WL 4364337 (D.N.J. July 30, 2020).