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).
Long-Term Disability Insurers Cannot Ignore, and Cannot Unreasonably Discount, the Subjective Symptoms of their InsuredsMarch 08, 2016 McKennon Law Group PC
Short-term disability and long-term disability insurers very often deny claims for benefits by stating that the claimant’s alleged restrictions and limitations are not supported by the claimant’s medical records. While a broad statement like this can mean a number of things, it often means that an insurer does not believe an insured’s complaints of pain or other subjective symptoms are disabling as they have not been proven by objective evidence. However, insurers will rarely state in their denial letters that they do not believe an insured has the subjective symptoms reported because there is no objective proof of such symptoms. Rather, they will typically ignore or downplay an insured’s subjective complaints and simply state that the medical records show that the insured can perform their occupational tasks and is thus not disabled under the terms of the policy. However, as the Ninth Circuit continues to make clear, it is an error to require objective medical evidence of complaints that are inherently subjective in nature. See Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 635 (9th Cir. 2009).
Would You Believe that an Insurer’s Policy Violates the “Efficient Proximate Cause” Doctrine? Believe it!February 11, 2016 McKennon Law Group PC
A homeowners’ insurance policy does not always mean what it says. That is, in effect, what the California Court of Appeal recently concluded in Vardanyan v. AMCO Ins. Co., 243 Cal. App. 4th 779 (2015), a case involving the well-established “efficient proximate cause” doctrine. The insurer’s policy explicitly stated it did not cover property damage caused by collapse of a building unless the collapse was caused “only by” hidden decay, hidden insect damage or a couple other listed perils. Although the collapse was caused in part by non-listed perils that were excluded by the policy, the Court of Appeal still concluded the loss should be covered if the jury on remand decides one of the listed perils is the most important cause of the loss. It looked not just to the written contract language, though the claim would have been excluded if it did that, but to public policy as well. The court held the insurer’s collapse provision “is an unenforceable attempt to contract around the efficient proximate cause doctrine.”
Supreme Court Requires Plan Fiduciaries to Act Fast if They Want to Ensure Reimbursement from Plan ParticipantsJanuary 29, 2016 McKennon Law Group PC
Spending money quickly on lavish trips and fine dining could prevent collection on a debt owed to your ERISA plan. At least this may be the case if you are a plan participant who recently recovered money from a third party for injuries that already resulted in a payment of expenses by your plan.
Exchanging correspondence with a plan administrator requesting reconsideration of a denial may preserve the right to sue by extending contractual time limitations and demonstrating that the pursuit of administrative remedies would be futile. The United States District Court Southern District of California determined that the date of an initial claim denial did not trigger a pension plan’s two-year time limitations clause, since the language within the clause indicated that resolution of the claim, rather than awareness of the claim, is the triggering event. Watkins v. Citigroup Retirement Systems, No. 15-CV-731 DMS (NLS), 2015 WL 9581838 (S.D. Cal. Dec. 30, 2015). The Court also declined to dismiss the plaintiff’s complaint for failing to exhaust administrative remedies due to the defendant’s persistent restatement of its position in response to Plaintiff’s repeated requests for reconsideration. Id.