This month’s Friday Five covers recent cases ruling on the enforceability of self-reported symptom limitations in policies, the scope of the term "plan document," the propriety of an insurer’s reliance on surveillance over the opinions of a claimant’s treating providers, the applicability of the U.S. Department of Labor’s ERISA "safe harbor" regulation, and the scope of the equitable remedies available under ERISA.
1. Is a policy's self-reported symptom limitation enforceable when a claimant’s diagnoses are based on standard clinical practices? The Western District of Wisconsin answered in the affirmative, granting summary judgment in favor of an insurer who argued that it did not abuse its discretion in terminating a plaintiff’s disability benefits on the basis that the plaintiff’s claim was barred by the relevant policy’s self-reported symptom limitation. The plaintiff argued that the self-reported symptom limitation should not apply because her chronic headache diagnoses were based on the standards set forth in the International Classification of Headache Disorders 3rd Edition (ICHD-3). Relying on prevailing Seventh Circuit law for the proposition that "the self-reported symptoms limitation applies to disabling illnesses that are diagnosed primarily based on self-reported symptoms," the court held that even though the plaintiff’s diagnoses comported with clinical practices, they were nevertheless based primarily on self-reported symptoms. Floerke v. SSM Health Care Plan, No. 17-CV-567, 2018 WL 5045770 (W.D. Wis. Oct. 17, 2018).
2. Does a rider to a certificate of insurance that contains discretionary language constitute a "plan document" and thereby provide a basis for arbitrary and capricious review? Yes, according to the District of Delaware. A plaintiff insured argued on summary judgment that an insurer lacked discretionary authority to interpret a policy where the insurer did not include discretionary language in the applicable certificate of insurance. The insurer countered by arguing that discretionary language was included in a separate document entitled "ERISA Information" that immediately followed the certificate of insurance. The District of Delaware agreed with the insurer, holding that the "ERISA Information" document constituted a "plan document" because it described "basic details about the plan" and "the procedures for presenting claims and appealing any denials." The court further held that because the "ERISA Information" document was a plan document, the plan granted the insurer discretionary authority such that an arbitrary and capricious standard of review was appropriate, and that the insurer did not abuse its discretion in terminating the plaintiff’s long-term disability benefits. Daly v. Metro. Life Ins. Co., No. 17-95-LPS, 2018 WL 4700224 (D. Del. Sept. 30, 2018).
3. Is it reasonable for an insurer to rely on surveillance over the conclusions of a claimant’s own treating physicians? Reaffirming its prior case law, the Eleventh Circuit answered in the affirmative. A plaintiff argued that an insurer's decision to terminate his long-term disability benefits on the basis of surveillance footage that showed him driving and dancing at a nightclub was unreasonable in light of the fact that some of his medical providers had opined that he remained disabled. The Eleventh Circuit disagreed, however, and affirmed the Northern District of Florida’s determination that the insurer acted reasonably in relying on the surveillance to support its termination decision. O’Leary v. Aetna Life Ins. Co., No. 17-15162, __ F. App’x __, 2018 WL 4697141 (11th Cir. Oct. 1, 2018).
4. The Third Circuit analyzes ERISA’s "safe harbor" regulation. The Third Circuit issued a precedential opinion analyzing the U.S. Department of Labor’s ERISA "safe harbor" regulation (25 C.F.R. § 2510.3-1(j)), which sets forth four criteria that, if met, except an employee welfare benefit plan from coverage under ERISA. In bringing suit for long-term disability benefits against an insurer, a plaintiff insured argued, among other things, that the plan under which he received coverage was not subject to ERISA because his employer had not endorsed it. The District of New Jersey rejected this argument – which related to the third “safe harbor” criterion – and the Third Circuit affirmed. The Third Circuit held that the plaintiff’s employer had, in fact, endorsed the plan because it had encouraged enrollment in the plan and determined employee enrollment eligibility. The court was also influenced by the fact that employees were not presented with “a menu of options” regarding their insurance coverage and were not free to select their insurer. Notably, the Third Circuit articulated a general rule regarding endorsement for application in future cases: “[E]ndorsement exists where there is some showing of material employer involvement in the creation or administration of a plan.” McCann v. Unum Provident, No. 16-2014, __ F.3d __, 2018 WL 5117113 (3d Cir. Oct. 5, 2018).
5. The Fifth Circuit weighs in on the scope of ERISA’s equitable remedies. The Fifth Circuit issued a precedential opinion containing an extensive discussion of the scope of the equitable remedies available under ERISA and the distinction between claims arising under ERISA § 502(a)(1)(B) and ERISA § 502(a)(3). A plaintiff insured sued an insurer and a plan administrator, arguing, among other things, that both defendants were liable under § 502(a)(3) for breaching their fiduciary duties to him because they maintained a deficient summary plan description (SPD). The Middle District of Louisiana dismissed the plaintiff’s claims, holding in relevant part that his fiduciary duty claims were improper under § 502(a)(3) and should have instead been brought as claims for plan benefits under § 502(a)(1)(B). The Fifth Circuit reversed the district court’s decision as to the plan administrator, holding that claims against plan administrators for injuries relating to SPD deficiencies are cognizable under § 502(a)(3), rather than § 502(a)(1)(B). The Fifth Circuit affirmed the district court’s decision to dismiss the plaintiff’s § 502(a)(3) claim against the insurer, on the basis that the insurer did not administer the plan, and held that any claim administration irregularities could be addressed under § 502(a)(1)(B). Manuel v. Turner Indus. Grp., L.L.C., No. 17-30835, __ F.3d __, 2018 WL 4689974 (5th Cir. Oct. 1, 2018).
