ERISA Penalties: When Can Plan Administrators Be Fined for Failing to Timely Produce the Administrative Record?August 16, 2016 McKennon Law Group PC
When insurance companies deny long-term or short-term disability, life or health insurance claims, it is vital that the plan participants and their beneficiaries be able to receive the claim file (also known as the Administrative Record) and ERISA Plan documents so that they can review them and challenge these claim denials. It is therefore not surprising that ERISA Plan administrators are required to comply with certain claims procedures and requests for information from plan participants, otherwise, under ERISA, they could be fined up to $100 per day for each day they fail to comply. Pursuant to 29 U.S.C. § 1332(c)(1), a plan administrator:
When is a Group Long-Term Disability Insurance Plan Not an ERISA Plan? When it’s Established and Maintained by a Church to Qualify as an ERISA-exempt Church Plan – That’s WhenAugust 15, 2016 McKennon Law Group PC
You know church can be very good for you, but you probably never contemplated that church could help you in ways other than spiritually. Let’s say you find yourself in this position: you become disabled, work for a church-related employer and now want to make a disability claim under your short-term disability and/or long-term disability insurance policy. You wonder: is my claim covered by ERISA or will I have those really good state law remedies because ERISA does not apply? Your question was recently answered by the Ninth Circuit Court of Appeals, albeit in a pension plan case.
National Investigation Continues to Uncover Systemic Practice Among Life Insurers Depriving Beneficiaries of Life Insurance BenefitsAugust 04, 2016 McKennon Law Group PC
The Social Security Administration’s Death Master File database provides insurers with the names of deceased people in the U.S. who have social security numbers. It is a useful tool for insurers to identify deceased policyholders and pay life insurance benefits to beneficiaries who may be unaware that they are owed money. However, until recently many life insurers used the Death Master File only to benefit themselves, such as using it to identify deceased annuity holders in order to stop making annuity payments, but not to pay life insurance benefits.
How do disability benefits from Social Security, the State or from Workers’ Compensation affect your claim?August 02, 2016 McKennon Law Group PC
Most group long-term disability policies and employer-sponsored long-term disability plans include a provision called “Offsets,” “Other Income Benefits,” “Income Which Will Reduce Your Disability Benefit,” “Deductible Sources of Income” or a similar name. These provisions allow the insurer to reduce the monthly disability benefit that you would otherwise receive under the disability insurance policy by the amount of the “other income” paid to you during the same time period. Each policy is different, but the insurer is usually allowed to reduce your monthly disability benefit by the following types of “other income” you receive: (1) Social Security disability benefits; (2) California State disability benefits; (3) disability benefits paid under Workers’ Compensation laws; (4) retirement plan benefits funded by the employer that issued the group policy; (5) unemployment compensation; (6) amounts received in a personal injury lawsuit settlement or judgment for loss of earnings; and (7) amounts received as sick leave, salary continuation, vacation pay and personal time off.
Ninth Circuit Affirms Rule that Ambiguous Policy Terms Must Be Construed Against Insurer in ERISA Disability Insurance CasesJuly 06, 2016 McKennon Law Group PC
The “reasonable expectations of the insured” doctrine has been around for decades in California. The state Supreme Court started toying with rules that became its foundation after the turn of the century. See Pac. Heating & Ventilating Co. v. Williamsburgh City Fire Ins. Co., 158 Cal. 367, 370 (1910) (“any ambiguity … must be resolved in favor of the insured”).
In an Insurance Bad Faith Case, Attorneys’ Fees are “Compensatory Damages” That can Increase a Punitive Damages AwardJune 24, 2016 McKennon Law Group PC
In 2003, the United States Supreme Court decision State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003) that generally limited punitive damages suffered by a plaintiff. Since then, California courts have stated generally that a 10-1 ratio of punitive damages to compensatory damages may be the legal limit based on the due-process clause, although some California courts have allowed a higher ratio. Given that limitation, plaintiff’s attorneys and defense counsel have waged many battles regarding what constitutes compensatory damages and can be counted when calculating the maximum amount of punitive damages that can be awarded. In Nickerson v. Stonebridge Life Insurance Company, 203 Cal. Rptr. 3d 23 (2016), the California Supreme Court awarded a victory for plaintiffs by ruling that Brandt fees (that is, attorneys’ fees incurred by the policyholder in establishing coverage under the policy when there is also bad faith) determined after a jury verdict by stipulation or by the court are considered compensatory damages for purposes of calculating the ratio of punitive damages to compensatory damages.
When and under what circumstances an insurer paying long-term disability benefits may collect retroactive benefits paid to an ERISA plan participant under the Social Security Act has been the source of conflicting opinions over the years. The most recent pronouncement: a long-term disability plan administrators must “specifically identify a particular fund” from which it will be reimbursed in order to seek to recover of alleged overpayment of disability benefits. So held the Southern District of California in its recent plaintiff-friendly decision in Wong v. Aetna Life Insurance Company, 2014 U.S. Dist. LEXIS 135661 (S.D. Cal. 2014). Through its decision in Wong, the district court reaffirmed that simply because an ERISA governed long-term disability plan’s language provides for recovery of an award of back-dated SSDI benefits does not mean that an insurance company may seek reimbursement from an insured’s general assets. Instead, the onus is on the insurer to specifically identify specific funds, separate from a plan participant’s general assets, on which it may place an attachment.
The June 8, 2016 edition of the Los Angeles Daily Journal features an article written by Robert McKennon of the McKennon Law Group entitled: “9th Circuit OKs Multiple Claims for Relief under ERISA.” In the article, Mr. McKennon discusses an important decision from the U.S. Court of Appeals for the Ninth Circuit, Moyle v. Liberty Mut. Retirement Ben. Plan, 2016 DJDAR 4747 (9th Cir. May 20, 2016), in which the Ninth Circuit Court of Appeals allowed Insureds/plan participants to sue an insurer simultaneously for benefits due under an ERISA plan (such as a short-term or long-term disability insurance policy) and also for equitable relief, thus expanding the remedies available to them.
National Investigation Uncovers Systemic Practice Among Life Insurers Depriving Beneficiaries of $5 Billion!April 29, 2016 McKennon Law Group PC
Four years ago we blogged about Metropolitan Life Insurance Company’s (“MetLife”) inconsistent use of the Social Security Administration’s Death Master File database to deprive beneficiaries of $40 million in life insurance benefits. See http://www.mslawllp.com/metlife-pays-40-million-to-settle-allegations-that-it-failed-to-properly-identify-and-pay-life-insur/. That database, created by the Social Security Administration, is consistently updated with the names and identity of everyone for whom a death certificate is filed in the United States. The Administration licensed it to life insurance companies so they could easily identify decedents, a necessary part of their business.
Obtaining Letters From Doctors and Co-Workers Can Help Prove a Disability Based Upon Subjective ComplaintsApril 25, 2016 McKennon Law Group PC
Insureds suffering from disabling conditions that cannot be objectively verified (for example pain, fatigue, migraines, and confusion) are often denied long-term disability benefits because of the difficulty of proving their claims. In an attempt to deny a claim for disability benefits, a plan administrator will often assert that there is not enough objective evidence to support a disability classification under the terms of the policy. Most often, these disabling conditions render the insured incapable of pursuing either their own occupation or any gainful occupation, and the insured’s condition satisfies the definition of total disability within the policy at issue. However, insureds do not necessarily need to provide objective evidence of a disabling condition that inherently cannot be proven with objective evidence, even when satisfactory proof of such a condition is required by the policy. Recently, Fernando M. Olguin, United States District Judge for the District Court for the Central District of California, outlined evidence an insurer must consider in determining whether an insured is entitled to disability benefits under ERISA due to a disorder that is not capable of objective proof. Pamela Jahn-Derian v. Metropolitan Life Insurance Co., No. 2:13-cv-07221-FMO-SH, 2016 WL 1355625 (C.D. Cal. March 31, 2016).