This month’s Friday Five covers cases relating to interpretation of regulatory deadlines, the enforceability of discretionary clauses, circuit courts going both ways on appeals from summary judgment rulings in favor of plans, and a benefits award for a former professional football player where the court specifically references longstanding bias by the plan.
- Second Circuit Issues Strict Interpretation of Regulatory Deadline for Insurers to Make Benefits Decisions on Appeal. The Second Circuit recently reversed the Eastern District of New York’s dismissal of an ERISA long-term disability benefits case for failure to exhaust administrative remedies. The district court reasoned that because the plaintiff’s administrative appeal was pending when litigation had commenced, the suit was not yet ripe. On appeal, the Second Circuit adhered to a strict reading of the underlying ERISA regulations, which require a “benefit determination” within 45 days of an administrative appeal. Because the insurer in the case made a decision to send the appeal back to the claims team, who did not render a substantive benefits decision within 45 days, the Second Circuit ruled that a deemed denial of benefits occurred and the plaintiff’s claim was ripe for federal jurisdiction. Amicus briefs were filed by the U.S. Department of Labor and American Council of Life Insurers. McQuillin v. Hartford Life & Accid. Ins. Co., No. 21-1514, 2022 WL 2029879 (2d Cir. June 7, 2022).
- Court Refuses to Apply Illinois Standard of Review Regulation to Policy Issued Elsewhere. In a recent long-term disability and life insurance waiver of premium dispute, the plaintiff, a former law firm partner who resided and worked in Illinois, tried to enforce a provision of Illinois law that prohibits discretionary clauses in benefits plans to ensure application of the de novo standard of review. The district court disagreed and relied on express language in the underlying insurance policy that applied Florida law and the fact that the firm’s human resources department, which handled the policy, was likewise in Florida (among other connections of the benefits plan to Florida). Therefore, the court rejected the plaintiff’s arguments and agreed that the discretionary language in the plan documents allowed for the arbitrary and capricious standard of review to apply. Murch v. Sun Life Ass. Co. of Can., No. 20-3900, 2022 WL 1773772 (N.D. Ill. June 1, 2022).
- Seventh Circuit Affirms Summary Judgment for Plan and Excuses Imperfect Denial Letter, While Making a Number of Evidentiary Remarks. The Seventh Circuit affirmed summary judgment in favor of a benefits plan in a short-term disability benefits case and interspersed a series of interesting soundbites and rulings along the way. For example, in response to objections from the plaintiff regarding the manner in which his benefits termination was communicated, the appellate court agreed that the correspondence from the plan was certainly imperfect. But, at the same time, the court decided that the letters were sufficient, even if “improvement is almost always possible in the real world.” Next, the plaintiff argued that job accommodations provided by his employer months after his alleged disability established that he was unable to perform his job and was entitled to benefits. The court disagreed and explained that, with a reference to the inadmissibility of subsequent remedial measures: “We are also mindful of the risks of viewing a later accommodation in an adverse light, as this could discourage plans and employers from providing accommodations and other forms of support after the denial of a benefit.” Canter v. AT&T Umbrella Benefit Plan, 33 F.4th 949 (7th Cir. 2022).
- Eleventh Circuit Reverses Summary Judgment Decision for Insurer. The insurer in a long-term disability benefits dispute established the reasonableness of its termination of benefits at the district court level, but the Eleventh Circuit had other plans. In reversing summary judgment, the appellate court relied heavily on the consistent evidence from the plaintiff’s providers that cognitive limitations existed and impacted job abilities, while the court also criticized the insurer for failing to secure an independent medical examination. The court also took time to specifically note, but conversely say that it was not a weighty issue, that the insurer had previously been found to have used biased claims review processes in the past. Sisung v. Unum Life Ins. Co. of Am., No. 21-11593, 2022 WL 1772273 (11th Cir. June 1, 2022).
- California Federal Court Awards Benefits to Former NFL Player in Lengthy Dispute. In a long-running ERISA disability benefits dispute, a California federal court determined that a plan abused its discretion in denying benefits. The plaintiff, a former professional football player, challenged the National Football League’s Player Retirement Plan’s decision to deny him total disability benefits. The court picked apart the plan’s decision, which rested solely on a records review by the plan’s medical director. The court slammed the plan’s decision on the evidence and also noted that the course of dealings between the plan and the former player, which spanned many years, “suggests an intent to deny . . . benefits . . . regardless of the evidence.” In the end, the evidence and clear bias doomed the plan’s decision. Dimry v. Bell, No. 19-5360, 2022 WL 1786576 (N.D. Cal. June 1, 2022).