John B. Dupree, Attorney at Law

Knoxville Lawyer for ERISA Relief

Free Consultation

713 Market Street

2nd Floor - Cate Building

Knoxville, TN 37902

865.437.5081

Proof of Continuing Disability

Friday, November 21st, 2008 | Uncategorized | No Comments

For you folks that are into the “any occupation” period of disability for your plan, beware of the insurance company sending “Proof of Continuing Disability” forms to you for completion on a seemingly constant basis.  Once you have established disability from any occupation, and your disability is one that arises out of a condition that is permanent and will not improve, then such forms should only be sent once a year in my opinion.  Twice a year is pushing it.  Three times a year is too much.  Look at your policy – I bet it doesn’t say that that the insurance company has the authority to hassle you and you doctor in this way.  Bring this to the attention of the insurance company.

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Letter to US Dept. of Labor

Tuesday, October 28th, 2008 | Uncategorized | No Comments

Here’s a letter I wrote to the U.S. Dept. of Labor regarding the problems with Erisa.  This letter was sent in April of last year.  I have not heard back.  I will state that Mr. Duncan’s office assisted as much as possible and it is much appreciated.

Dear Mr.   and Ms.              :

As a matter of introduction, I am a lawyer practicing in Knoxville, Tennessee and a constituent of Representative Jimmy Duncan. Last year, I sent an inquiry to Mr. Duncan regarding difficulties that I am encountering during the course of my representation of citizens who have been denied short-term and long-term disability benefits pursuant to the ERISA (Employment Retirement Income Security Act) statutes and regulations. Mr. Duncan referred me to your office for guidance. Thus, I spoke to           several times about this matter. Ms.            has been patient and helpful. She suggested that I send a letter to the two of you for consideration of my queries. Hence this correspondence.

I will attempt to summarize my concerns. These ERISA disability claims are, of course, different than a social security disability matter.  These cases involve a person who becomes totally disabled from employment for any reason – such as a bad back injury, disease etc..  Sometimes the person’s employer has a benefit offered for disability insurance that will pay the disabled person 2/3 of their salary until he or she reaches the age of 65.  The disability insurance is offered by companies such as AFLAC, UnumProvident, Hartford, JeffersonPilot etc…  The premiums are deducted from the employee’s paycheck or are paid by the employer as a benefit.  ERISA comes into play because if the policy is an employee benefit, ERISA controls all aspects of the claim.

You may not know this (or you may be well aware) that ERISA claimants are at a supreme disadvantage if their claims are denied. Set forth below is a list of the reasons why from a lawyer working at the forefront of these issues:

1) The primary reason for a claimant’s disadvantage is that if the insurance company reserves “discretionary authority” to interpret the terms of the policy and decide if the claimant is totally disabled, then the decision is subject to the highly deferential “arbitrary and capricious” standard if the matter proceeds into litigation. The “arbitrary and capricious” standard is the least demanding form of judicial review of administrative action. When it is possible to offer a reasoned explanation for a particular outcome based on the evidence, that outcome is not arbitrary and capricious. See Davis v. Kentucky Fin. Cos. Retirement Plan, 887 F.2d 689, 693 (6th Cir.1989). Hence, all that the insurance company has to do is hire a doctor to look at the medical records and determine that the claimant could perform a sedentary job. (There is a whole closet industry of physicians who willingly perform this service. Or the insurance company may simply have a nurse or physician on staff to render such a decision.). Once the doctor opines that the claimant can work at a sedentary job, the insurance company has a “reasoned explanation” for its decision. And the claimant loses the subsequent lawsuit eight or nine times out of ten.

2) Once in litigation, the reviewing judge will only look to the administrative record from the insurance company to determine if the decision was “arbitrary and capricious.” In other words, the judge gets to consider what is in the insurance company’s file – and they choose very carefully what goes into the file. I can submit anything I want but it does not matter – if the insurance company employee physician/nurse or hired gun physician/nurse determines that the employee can work at a sedentary job, the claimant usually loses – even if the consultant does not personally examine the claimant or review all of the records.

3) A sedentary position can include a host of different jobs that a claimant has never performed. It does not matter if any of the jobs are actually available in the claimant’s community – it just hypothetically has to be available in the community.

4) There is no incentive for the insurance company to award benefits. The only damages that a patient can recover from the insurance company are the benefits and nothing else (with the exception of attorney fees, but you have to win in court to get attorney fees – even then, its discretionary with the court). This means that the claimant can be disabled, apply for benefits, have the claim denied, go through a lengthy mandatory internal appeal process with the insurance company, then file in court and perhaps win – but in the mean time lose his house to foreclosure, get sued for not being able to pay bills, lose his car and his ability to pay for the necessities of life – go through the attendant depression and other mental and physical results of financial distress – and ONLY get the benefits that was entitled to in the beginning. There is no recovery for pain, suffering or other consequential damages that arise out of an unfair denial. These cases last for years and at the end, the claimant has a huge hurdle to clear in federal court in order to win. If the insurance company offers to award benefits at the end of the lengthy appeal process, it will never pay for attorney fees or any other expenses. Furthermore, the “specter” of attorney fees awarded against the insurance company is unpersuasive. Attorney fees are only calculated from the time that the litigation begins forward. Moreover, hypothetically assuming that the attorney fee might reach a high number – like $15,000.00 – this is simply a tiny drop in the bucket to an insurance company that makes profit in the hundreds of millions or even billions of dollars. Hence, there is simply no incentive to award benefits. None.

5) Discovery is only very rarely allowed during litigation so the insurance companies can hire nefarious consultants, disregard their own internal claims policies and scheme against the claimant with no fear of discovery down the road. In other words, since a claimant cannot go in and ask questions about the policies, procedures, consultants, or anything else once the lawsuit begins, the insurance company has free reign to do what it wants secure in the protection they will receive in the courts. In normal civil suits, “[p]arties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party ···· Fed.R.Civ.P. 26(c). Further, the scope of discovery is extremely broad under the Federal Rules of Civil Procedure and “is ··· within the broad discretion of the trial court.” Lewis v. ACB Business Servs. Inc., 135 F.3d 389, 502 (6th Cir.1998). However, discovery in ERISA suits has been generally limited unless there has been a violation of due process. Courts in the Sixth Circuit have repeatedly held that ERISA benefit actions are substantially limited proceedings that do not involve full trials. Schey v. UNUM Life Ins. Co., 145 F. Supp. 2d 919, 921 (N.D. Ohio 2001); see also Lucas v. Challenge Machinery Co. Salaried & Non-Union Employees. Retirement Plan, 144 F. Supp.2d 885, 887 (W.D. Mich. 2001). Therefore, in reviewing ERISA benefit denial cases, a district court only considers the administrative record that was before the administrator at the time the claim for benefits was denied. See Perry v. Simplicity Engineering, 900 F.2d 963, 966 (6th Cir. 1990). The Sixth Circuit has set forth a limited exception to this general rule in Wilkins v. Baptist Healthcare Systems, Inc. by stating: “The district court may consider evidence outside of the administrative record only if that evidence is offered in support of a procedural challenge to the administrator’s decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part. This also means that any prehearing discovery at the district court level should be limited to such procedural challenges. Wilkins v. Baptist Healthcare Systems, Inc., 150 F.3d 609, 619 (6th Cir. 1998). But how are claimants going to be able to make an initial showing of evidence in support of procedural challenges when there is no discovery allowed? The only way to obtain the information is 1) if the information falls out of the sky; 2) if the insurance company voluntarily turns over the information. In my e
xperience, 1) has never happened to date and 2) has only happened when the insurance company makes a mistake. So, the claimant can only ask the Court to allow discovery regarding procedural issues but the Court is going to require the claimant to provide evidence of procedural irregularities in order to get the chance to ask questions about procedural irregularities.[1] It’s circular and unfair.

6) Other matters that lie at the root of ERISA unfairness include:

a) Insurance consultants contact treating physicians and ask questions that are geared toward supporting sedentary work. The conversations are not recorded and the claimant is not advised that this is occurring so that he/she can participate.

b) Insurance adjusters send questionnaire’s to treating physicians that are geared toward establishing the ability to perform sedentary work rather than total disability. Again, the claimant is often not advised that this is occurring.

c) Treating physicians are requested by the insurance company to complete verifications of continuing disability over and over again until they become exasperated with the claimant and complete the form wrong, don not complete it at all or fire the claimant as a patient. Then the insurance company can deny the claim or terminate the claim for failure to provide proof of continuing disability.

d) Insurance companies repeatedly request medical records and verifications of disability to be provided by the claimant – this is not a problem for you and me, but the cost of obtaining medical records and the expense of having the treating physician complete forms on a regular basis can be devastating to a claimant that cannot work. If the information is not provided, the insurance company may deny the benefits or terminate benefits for failure to provide proof of continuing disability.

e) Frequently insurance companies hire a consultant who renders an opinion about disability and the decision is made to deny benefits without ever advising the claimant that this has occurred or providing the claimant with an opportunity to dispute the opinion of the consultant prior to the final decision. The decision simply arrives in the mail and the only thing the claimant can do is file suit in the hope of overcoming the arbitrary and capricious standard.

f) Although the terms of the policy are usually made available to claimants via a summary plan description or employee handbook, the terms themselves are lengthy and technical. Tucked away in the terms is offset language (allowing the insurance company to subtract social security benefits, worker’s compensation benefits or other sources of income out of the gross benefits due to the claimant) and the “discretionary authority” language aforementioned. The claimants are usually quite surprised to hear that they are not going to receive 2/3 of their income but much less because of the offset provisions. Further, ALL claimants are unaware of the “arbitrary and capricious” hurdle at the end of their cases. I submit that not many claimants would have purchased the insurance if they knew about the significance of these provisions and that the failure to bring this to their attention amounts to deceptive behavior by the insurance companies.

g) Insurance companies frequently label the employer as the “Plan Administrator” while reserving all discretionary authority over the claims to themselves. What this means is that the insurance companies can escape the regulatory penalties of $100.00 per day for failure to provide information to claimants. The regulatory penalties only apply to “Plan Administrators” not “Claims Administrators” or whatever label the insurance companies reserve for themselves. This shifting of responsibility has been deemed appropriate by the courts in the Sixth Circuit. [2] The problem is that the only entity with information critical to the claim is the insurance company – an entity that has escaped penalty by denoting some other entity as the “plan administrator.”

h) The insurance companies have refined the way that they administer these claims over the years. Their consultants have been trained to phrase opinions in certain ways, the policies have been redrafted to close any loopholes or beneficial paragraphs, the adjusters are trained to find ways to deny claims (and many times receive bonus compensation based upon the profitability of the company – i.e. – the more denials, the more profitable the company), and the insurance companies have a stable of lawyers that can work for them at any time. Patients have no-one to help them.

i) Many times claimants are too sick or too illiterate to fight with the insurance company over a benefit denial. Many claimants simply accept the denial and move on with their miserable lives. If the claimants do appeal, the insurance company can keep denying the benefits – maybe the claimant will die, maybe the claimant’s doctor will check the wrong box, maybe the claimant will get better, maybe the claimant will not be able to find an attorney or other person to help him, maybe the claimant will screw up and not get a form in on time. And at the end, if the insurance company is wrong, it just has to start up the benefits again. Why not just deny the benefits and see what happens? Many insurance companies do just that.

j) It is hard to find legal representation for this kind of case. Not many attorneys are willing to undertake a case that in all probability is going to amount to a judgment of “0” at the district court level. ERISA is daunting and regulation intensive – a malpractice nightmare for attorneys not experienced in this area of the law. Hence, I may be only one of a handful of attorneys in east Tennessee willing to undertake this kind of case. Here is the tragedy – I have only had one client with the ability to pay me by the hour to undertake his case.

The typical client is destitute and can only promise me a percentage of the recovery in the future. Yet they always are glad to have representation because I am able to give them hope – without me, they get nothing.

I represent two gentlemen presently who are unquestionably totally disabled.  I will give you their names because they are both constituents of Rep. Duncan.  Their names are Mr. A and Mr. B (names deleted for privacy).  I will start with Mr. A.  Mr. A has Crohns disease. He has 75% of his gastrointestinal tract removed. He has an illiostomy bag that has to be changed every two hours. He has been taking steroids since the late 1970’s – as a result his bones are brittle and he has permanently broken collar bones that will not heal. He has had no more than 2 hours sleep at a time for the last 5 years. He has had nine surgeries and has spent more than one full year IN the hospital since about 1995. He is constantly in danger of illness – during flu season he does not leave his house for about 2 or 3 months. He once went without solid food by mouth for 18 months. He takes a BAG of medication every day. He has sold everything he has to pay his bills. He has no pension and he has multiple mortgages on his home. He is in pain every single day of his life. Nevertheless, in an effort to find meaning in life, during the summer he goes to Camp       in         County to help the BoyScouts for a number of weeks. He has an air-conditioned room and a camp physician that stays in the room next to him – thus he has better care than if he was at home. His job is to counsel homesick boys and attempt to get them to stay at camp. He also serves as the camp chaplain. He lets the boys know that life is not so bad. Well, the insurance company, specifically CIGNA, found out about it and unilaterally terminated his benefits that had been paid regularly since the early 1990’s. Cigna asserted that because he could help the BoyScouts, my client was not totally disabled. Cigna did not call my client, the BoyScouts or the treating physician – it simply cut off the benefits without ever advising my client. He found out because checks started bouncing. Cigna knew that if it could find a way to deny the claim, there was a good chance that my client would lose the will to pursue the claim, that it may be able to put such financial pressure on my client that he would just settle his claim cheaply, that he may not have been able to appeal the case correctly, that he may have never be able to find an attorney to help him, that he may just die or, last but not least, that the law would be in Cigna’s favor if the matter was decided in federal court two years from now. Fortunately I have been able to help him through the appeal process and we are now in litigation but there are hosts of other patients in outskirting counties that cannot find an attorney. Of note is that, after over almost two years, Cigna still has not provided me with the name of the plan administrator and it has not provided me with a copy of the applicable policy.

The second man is Mr. B.  Mr. B has stage IV hepatitis C and needs a new liver.  He also has a five-level fusion in his lower spine.  He was receiving long term disability benefits from JeffersonPilot for about four years.  Apparently, a new adjuster took over his file, looked at the medical records and determined that Mr. B was no longer totally disabled.  No call to Mr. B, no call to the treating physicians – just cut him off.  I found out later that JeffersonPilot did not even have a medical person or vocational person of any kind reviewing the file prior to the termination.  Mr. B is in terrible pain from his diseases and is so fatigued that he sleeps for about 20 hours out of each day.  I had to reschedule his video statement several times because he did not have the strength to ride in a car to my office and give a statement.  He takes an extensive list of medications and, without question, is one of the sickest claimants that I have ever represented.  After terminating his benefits, I appealed the decision and JP hired a consultant in Omaha Nebraska to go in, look at what the adjuster did, look at the medical records and render a determination about Mr. B’s ability to work.  I have since discovered that the consultant, Dr.      , is an insurance industry utility man.  Until May 2004 he was Senior Vice President and Chief Medical Officer (whatever that means) for the Mutual of Omaha Companies.  Now he operates a medical consulting company out of his home in Omaha – _______.  He also is the managing partner for an expert witness company called ________ LLC. He is no longer treating patients but devotes himself to providing expert opinions and training other experts to provide expert opinions – he now has a J.D. and an MBA.  At any rate, without examining Mr. B or speaking to the treating physicians (one of whom gave me a sworn statement for FREE because he felt so strongly about this case), Dr.      opined that Mr. B could hold down a full time job.  Therefore JP upheld its denial.  I had to fight my way through JP’s internal appeal process before JP finally overturned its decision – but not before Mr. B received foreclosure papers on his home.

These examples are not unique.  I encounter these types of denials frequently.

Here is what I am going to propose to make this process more fair.  I am not asking to change the ERISA statute.  I am asking for a change in the federal regulations that help guide the internal appeal process.  Since the only opportunity that a claimant has to place evidence into the claim file is PRIOR to litigation, I would like a clarification of the regulations to allow claimants to test the validity of the insurance company denial prior to a final decision.  The controlling regulations are found at 29 C.F.R. 2560.503-1(h)(2)(iii) and 29 C.F.R. 2560.503-1(j)(3).  These regulations provide that a claimant can obtain “other information” from the insurance company that is or was pertinent to the denial decision.  I would like a clarification that will allow a claimant to test the validity of the decision and the validity of the insurance company evidence during the appeal process.  Or, how about some way for the claimant to have discovery after litigation begins?  I am asking for no more than any litigant would be entitled to in any ordinary breach of contract case.

III. RELEVANT STATUTES AND REGULATIONS

29 U.S.C. § 1133 states that:


Every employee benefit plan shall-


(1) provide adequate notice in writing to any participant or beneficiary whose claims for benefits under the plan has been denied, setting forth
the specific reasons for such denial, written in a manner calculated to be understood by the participant, and


(2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

29 U.S.C.A. § 1132(c)(1) states:

(c) Administrator’s refusal to supply requested information; penalty for failure to provide annual report in complete form

(1) Any administrator (A) who fails to meet the requirements of paragraph (1) or (4) of section 1166 of this title, section 1021(e)(1) or section 1021(f) of this title with respect to a participant or beneficiary, or (B) who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court’s discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper. For purposes of this paragraph, each violation described in subparagraph (A) with respect to any single participant, and each violation described in subparagraph (B) with respect to any single participant or beneficiary, shall be treated as a separate violation.

29 C.F.R. 2560.503-1(h)(2)(iii) states:

(2) Full and fair review. Except as provided in paragraphs (h)(3)

and (h)(4) of this section, the claims procedures of a plan will not be deemed to provide a claimant with a reasonable opportunity for a full and fair review of a

claim and adverse benefit determination unless the claims procedures– . . .

(iii) Provide that a claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information

relevant to the claimant’s claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by reference to

paragraph (m)(8) of this section;

29 C.F.R. 2560.503-1(j)(3) states:

(j) Manner and content of notification of benefit determination on review. The plan administrator shall provide a claimant with written or electronic notification of a

plan’s benefit determination on review. Any electronic notification shall comply with the standards imposed by 29 CFR 2520.104b-1(c)(1)(i), (iii), and (iv). In the case

of an adverse benefit determination, the notification shall set forth, in a manner calculated to be understood by the claimant–. . .

(3) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other

information relevant to the claimant’s claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by

reference to paragraph (m)(8) of this section;

29 C.F.R. 2560.503-1(i)(5) states:

(5) Furnishing documents. In the case of an adverse benefit

determination on review, the plan administrator shall provide such access to, and copies of, documents, records, and other information described in paragraphs

(j)(3), (j)(4), and (j)(5) of this section as is appropriate.

29 C.F.R. 2560.503-1(i)(5) states:

(5) Furnishing documents. In the case of an adverse benefit

determination on review, the plan administrator shall provide such access to, and copies of, documents, records, and other information described in paragraphs

(j)(3), (j)(4), and (j)(5) of this section as is appropriate.

 
29 C.F.R. 2560.503-1(m)(8) states:
 
Definitions. The following terms shall have the meaning ascribed 
to such terms in this paragraph (m) whenever such term is used in this 
section: . . . 
    
    (8) A document, record, or other information shall be considered 
``relevant'' to a claimant's claim if such document, record, or other 
information
    (i) Was relied upon in making the benefit determination;
    (ii) Was submitted, considered, or generated in the course of making 
the benefit determination, without regard to whether such document, 
record, or other information was relied upon in making the benefit 
determination;
    (iii) Demonstrates compliance with the administrative processes and 
safeguards required pursuant to paragraph (b)(5) of this section in 
making the benefit determination; or
    (iv) In the case of a group health plan or a plan providing 
disability benefits, constitutes a statement of policy or guidance with 
respect to the plan concerning the denied treatment option or benefit 
for the claimant's diagnosis, without regard to whether such advice or 
statement was relied upon in making the benefit determination.

ERISA was created for the express purpose of protecting the interests of plan participants such as Mr. A and Mr. B. Specifically, Congress stated:

It is hereby declared to be the policy of this Act to protect the interests of participants in employee benefit plans and their beneficiaries by establishing standards of conduct, responsibility and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.

29 U.S.C. § 1001(b).

Furthermore, the legislative history underlying ERISA indicates that Congress intended that the enforcement provisions should have teeth: the provisions should be liberally construed “to provide both the Secretary and participants and beneficiaries with broad remedies for redressing or preventing violations of the Act.” H.R.Rep.No.93-533, 93d Cong., 2d Sess. 17, reprinted in (1974) U.S.Code Cong. & Ad.News, p. 4639, 4655. This history further states that “(t)he intent of the Committee is to provide the full range of legal and equitable remedies available in both state and federal courts and to remove jurisdictional and procedural obstacles which in the past appear to have hampered effective enforcement of fiduciary responsibilities under state law for recovery of benefits due to participants.” Id.

The Sixth Circuit, where I normally practice, has defined what makes for a full and fair review as set forth in 29 U.S.C. § 1133. The Court has found that the persistent core requirements of review intended to be full and fair include knowing what evidence the decision-maker relied upon, having an opportunity to address the accuracy and reliability of that evidence, and having the decision-maker consider the evidence presented by both parties prior to reaching and rendering his decision. Marks v. Newcourt Credit Group, Inc. 342 F.3d 444, 462 (6th Cir. 2003) quoting Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 689 (7th Cir.1992). The problem is that the regulations do not provide a way for claimants to obtain all of the information that they need in order to “test the accuracy and reliability” of the insurance company’s evidence. All we have is a vague reference to “other information” that might have been used or considered by the insurance company.

Something has to be done.  People like Mr. A and Mr. B are suffering unfairly.  These claimants have no way to pay me for the phenomenal amount of time it takes to complete an ERISA case.  The only way to take the case is by contingency but these claimants are having to give up a percentage of their benefits because of nefarious denials.  I cannot work on these cases for free – I have a wife and three children to support.  I also understand that what I am asking for could eventually lead me to find another line of business to pursue.  But I do not care.  The present system is unfair, these policies are scams, my neighbors deserve better treatment and this is a way to help.  I must apologize for the length of this correspondence but, quite frankly, there is nothing simple or short about ERISA matters.  I would appreciate the opportunity to speak with your office further about this and I am willing to spend as much time as it takes to explain fully the nature and extent of the problem.

Very truly yours,

John B. Dupree

JBD/ll

cc: Jimmy Duncan

Mr. A

Mr. B


[1] I am reminded of Abbot and Costello’s famous skit “Who’s on First.”

[2] “It is well established that only plan administrators are liable for statutory penalties under § 1132(c).” Caffey v. Unum Life Ins. Co., 302 F.3d 576, 584 (6th Cir.2002)(citing Hiney, 243 F.3d at 960; VanderKlok v. Provident Life & Accident Ins. Co., 956 F.2d 610, 618 (6th Cir.1992)). In Hiney, the Sixth Circuit reiterated that it was clear that a plan administrator cannot be liable for statutory penalties if the request for information was not directed to it. 243 F.3d at 961.

Introduction

Friday, October 24th, 2008 | Uncategorized | No Comments

Welcome to Erisarelief.com.  My job here is to keep you informed of recent developments in Erisa law.  Check back for more information as I get this Blog up and running.

JD

ERISA

Friday, October 24th, 2008 | Uncategorized | 1 Comment

ERISA Blog is coming soon…  Please check back soon.

Thank you!

John B. Dupree, Attorney at Law

713 Market Street

2nd Floor - Cate Building

Knoxville, TN 37902

Email: john.dupree@knoxtnlaw.com

865.437.5081 Phone

865.437.5082 Fax

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