Insurance Claims And Issues

Conflicts of Interest Added to Judicial Review of ERISA Denials.

     Most if not all ERISA plan administrators for participating employers are also the ones who pay the benefits available under the ERISA plan.  Employers have an interest in paying the smallest lawful amount of beneifts, and it bears repeating that it is employers who hire ERISA plan administrators.

     A 5-to-4 majority of the United States Supreme Court has ruled that conflicts of interest are one among many factors for Judges to take into account when they are called upon to review denials of benefits by ERISA plan administrators.  Here is the United States Supreme Court's opinion from the Court's web site: 

Download Metropolitan_Life_Insurance_Co. v. Glenn (U.S. Case No. 06-923, Opinion Filed June 19, 2008)..pdf.  The opinion is also available, by subscription, at 2008 WL 2444796.

       The Court was careful to declare that this does not reflect a change in the legal standard of review.   The standard of review is still derived from trust law, which the Court noted "continues to apply a deferential standard of review to the discretionary decisionmaking of a conflicted trustee ...."  2008 WL 2444796 at *7.

     The ERISA plan administrator's conflict is now a factor for Judges reviewing benefits decisions to take into account, but it is one among many factors:

In principle, as we have said, conflicts are but one factor among many that a reviewing judge must take into account.  Benefits decisions arise in too many contexts, concern too many circumstances, and can relate in too many different ways to conflicts -- which themselves vary in kind and in degree of seriousness -- for us to come up with a one-size-fits-all procedural system that is likely to promote fair and accurate review.

Id. at *8.

Please Read The Disclaimer.

ERISA May Not Be Healthy.

    Employers in the United States are all but alone in the world in one respect, at least:  They bear the burden of the majority of Health Plans in the United States.  Governments shoulder that burden in virtually every other nation.  Yet Employers in the United States do not try to shift the burden, just to tweak the edges and "fix" it.  There are alternatives to the Health Insurance Crisis in the United States to making Health Insurance Employer-based, but no alternatives can be pursued if no-one brings them up.   The issue is thoughtfully explored in Joe Nocera, "Talking Business/Resolving to Reimagine Health Costs" (New York Times Nat'l ed., Saturday, November 18, 2006, page B1, col. 1)(subscription required to the article).

    If Employers are not responsible for Health Insurance and Health Plans, is ERISA necessary?

REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

Employer Restaurants Sue San Francisco for Health ....

They May Lose Their Hearts, But Not Their Wallets:  ERISA Rules, They Say.

    There are 2,500 restaurants open for business in San Francisco.  After reportedly negotiating with the Government of the City of San Francisco, the Golden Gate Restaurant Association ("GGRA") has sued the City in Federal Court.  The group claims to represent San Francisco restaurants and their interests.  It seems that the City passed a Health Care Program contained in a "Health Care Security Ordinance" in July, 2006 which is set to take effect in July, 2007.

    The restaurant association says that it is in favor of health.   However, part of the City's Program mandates Employers to pay money to support the provision of health services to otherwise uninsured people in San Francisco. The GGRA alleges in its Federal Case that this provision of the San Francisco city ordinance violates the exclusive domain of a Federal Statute, the Federal Employee Retirement Income Security Act ("ERISA").

    Under the ordinance, the city does not offer Health Insurance as such.  Instead, the ordinance is directed at paying doctors and hospitals who will provide health care to some 82,000 presently uninsured people in San Francisco.  To accomplish this end, the ordinance requires payments into the Program from various sources including from businesses with 20 or more employees.

    The GGRA's Federal Court Complaint apparently contains the restaurant association's position that the rest of the San Francisco ordinance should remain intact even if the employer payment mandate is struck down.  An electronic search of the Federal Court for a copy of the Complaint has not yielded a copy to date.  However, the Case Number in the United States District Court for the Northern District of California is 3:06-cv-06997-JSW.  Perhaps an enterprising reader will send us a copy of the Complaint and I will be glad to then post it here.  In the meantime, see the news report of this new Federal Case invoking ERISA and Health Insurance in Carolyn Marshall, "Restaurant Group Sues Over Health Plan" (New York Times, Nat'l ed., Tuesday, November 14, 2006, page A14, col. 3) or in this article posted online:  Restaurant News Resource (11.08.2006).

REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

 

Healthy Alternatives Considered For Health Insurance Plans.

    Health Insurance presents hotly contested issues in the United States.  With that said, proposals are being made for Health Insurance alternatives that would reduce or supplement the burden borne so heavily by Employers providing Health Insurance to employees.  The proposals have received initial and tentative support from "liberal" groups and from "conservative" groups alike.  Consumer groups are similarly recording favorable comments about these proposals.

    Who is making these current proposals?  Health Insurance Companies are.  The features are many but not terribly complicated.   For a comprehensive report see Robert Pear, "Health Insurance Industry Urges Expansion of Coverage" (New York Times, Nat'l ed., Tuesday, November 14, 2006,  page A14, col. 3).

REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION. 

Discretionary Disability Determination, No ERISA Claim.

                    But the Administrator is Not Entitled to Attorney's Fees
                    Without Bad Faith or Harassment.   

    Ms. Brenda Motes was once a Human Resource Generalist employed by Arthur Andersen LLP.  She was enrolled in the Arthur Andersen LLP Group Long Term Disability Insurance Plan, which was underwritten by Aetna.  She worked until she could no longer perform her job on account of "back pain and physical complications, including fibromyalgia," at which time she began receiving long-term disability benefits under the Plan because she was totally disabled, reports the Federal Court in Download Brenda_Mote_v. Aetna Life Ins. Co. (N.D. Ill. Case No. 05C6212, Opinion Filed November 3, 2006).pdf.  Ms. Mote received disability benefits for five years and eight months.

    Aetna then "reevaluated her claim" and notified Brenda Mote that  she was no longer totally disabled or entitled to such benefits under the Plan based on a review of her file including "notes" from physicians, independent medical reports, and other medical records.  She appealed, the Plan stood by its initial reevaluation decision, and she filed suit under ERISA to reinstate her disability benefits.  The Plan provided the Plan Administrator, Aetna, with discretion to determine benefits due under the Plan and to interpret the Plan's provisions:  "That language explicitly spells out Aetna's discretionary authority both to make benefits determinations and to interpret the Plan's language."  (Slipsheet Op. at page 7.)

    Since the Plan provided the Adminstrator with such discretion, the Federal Court is powerless to review the Administrator's decision to terminate long-term disability benefits in this case unless the record establishes that the decision was "arbitrary and capricious".  This means that in a case like this, the Federal Courts do not ask whether the determination was correct.  "'Instead, the only question for us is whether the adminstrator's decision was completely unreasonable.'"  (Slipsheet Op. at page 9.)

    The Federal Judge in this new case could not say that on the record, Aetna's determination regarding Brenda Mote's conditions was completely unreasonable or arbitrary and capricious.  Accordingly, the Federal Court granted Aetna's Motion for Summary Judgment on Ms. Mote's ERISA Claim.  However, there is a postscript of sorts.

    Aetna claimed that its Attorney's Fees should be paid once Aetna defeated the ERISA Claim.  This is the legal standard applied by the Federal Court to Aetna's Attorney Fees Claim:  "'Was the losing party's position substantially justified and taken in good faith, or was that party simply out to harass its opponent?'"  Even though the ERISA Claim "has proved unsuccessful," it is supported here by "reasonable bona fides".  Aetna did not claim either Bad Faith or harassment by Brenda Motes.  Aetna's Attorney Fees Claim was concisely denied:  "In sum, this Court denies the request for an award of attorneys' fees to the Plan."

REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.