This month’s Friday Five discusses cases that focus on what information properly constitutes the administrative record before the court on which a decision must be based. One case explores the ERISA Records Rule which limits an insurer’s ability to supplement the administrative record, and another case explores whether a claimant can obtain a “full and fair review” if she is precluded from reviewing and commenting on the results of an IME. Other cases examine the potential for non-ERISA claims where a claimant questions the existence of a plan, exhaustion of administrative remedies, and whether plan documents must be disclosed to a claimant pre-suit in order to be part of the administrative record.

1. Will an insurer’s multiple requests for additional outside medical reviews, described as “irregular in their timing and prompting,” establish that the insurer’s decision to terminate LTD benefits was arbitrary and capricious? Yes, where those requests are at odds with the insurer’s determinations regarding claimant’s condition. The plaintiff was determined to be totally disabled and had been receiving LTD benefits for about two years. The claims administrator for his plan believed the plaintiff continued to be totally disabled, but after referring him to a doctor who reached a different conclusion, the insurer terminated benefits. The plaintiff appealed, but the decision was affirmed. After moving the matter to federal court, the district judge determined that the insurer’s actions were arbitrary and capricious, and ordered that benefits be retroactively reinstated. Relying on the ERISA Records Rule, the district court determined that the matter must be decided purely on the administrative record, which did not include an affidavit offered by the insurer attempting to explain why it adopted the opinion of a third-party reviewer following a paper review of the file over the determination of its own review that the claimant continued to be disabled. On appeal, the Third Circuit affirmed. The appeals court determined that the ERISA Records Rule required the exclusion of the insurer’s affidavit attempting to characterize some of its actions in handling the claim. Further, the appeals court agreed with the district court that based on the administrative record, the insurer’s decision to terminate benefits based on IME paper reviews that contradicted findings of the insurer was arbitrary and capricious. Noga v. Fulton Financial Corp. Employee Benefit Plan, 2021 WL 5540848 (3d Cir. Nov. 26, 2021)
2. Does ERISA preemption apply where claimant alleges that her employer may not have purchased insurance policies to fund an ERISA plan? Laura Thoms, acting as the personal representative of her husband’s estate, brought suit against her husband’s former employer as well as the claims administrator of an ERISA plan. After removal from state court, the federal court dismissed all non-ERISA claims based on ERISA preemption. Undeterred, and on the theory that her husband’s employer never actually formed and funded an ERISA plan, Thoms filed an amended complaint including alternative state claims for breach of contract, negligent procurement, fraud, negligent misrepresentation, and suppression of material fact. The employer moved to dismiss the amended complaint, and Thoms objected, arguing that it was unclear if there was an ERISA plan. In analyzing the arguments, the court noted that “ERISA preemption is anything but narrow.” The court concluded that even at the pleadings stage it was clear that all of the elements required for a benefits plan existed, so no state law claims could survive. Similarly, because a plan existed, the plan rather than the employer was the appropriate party, so the court dismissed all ERISA and non-ERISA claims against the employer. Thoms v. Advanced Tech. Systems. Co., 2021 WL 5450453 (M.D. Ala. Nov. 22, 2021).
3. Will a claimant be deemed to have exhausted administrative remedies, entitling her to reopen a federal case on remand, where the insurer did not render a decision on an administrative appeal within the statutorily required timeframe? Yes. The plaintiff was pursuing a claim in federal court in 2020 which the district court remanded to the insurer for a full and fair review. After the insurer denied the claim, she filed an administrative appeal on February 5, 2021. While the plaintiff timely returned a release form, the insurer purported to give the claimant an unsolicited 30 days to provide additional information on her appeal which time would not run against the insurer’s deadline to render a decision. The insurer then also requested an IME, stating that it was a “special circumstance” that entitled it to an additional 45 days to render a decision. When the claimant was contacted for the IME, she filed a motion with the court to reopen the case, and declined to participate in the IME. In deciding whether claimant exhausted her administrative remedies, the court balanced the need for the insurer to have time to consider an appeal against a claimant’s interest in a prompt claims decision. The court ruled in favor of the claimant, determining that she had exhausted her administrative remedies. The court rejected the insurer’s argument that its unsolicited offer to claimant to provide additional information tolled the time to render a decision. And, because the time to render a decision had then already lapsed by the time the insurer requested an IME, the insurer’s request for an IME could not extend an already expired deadline. Krysztofiak v. Boston Mut. Life Ins. Co., 2021 WL 5304011 (D. Md. Nov. 15, 2021).
4. Are documents related to an insurer’s discretion to make benefit determinations admissible as part of the administrative record even if they are not provided to the claimant pre-suit, and does a court appropriately deny a request for a 30(b)(6) deposition of an insurer where there is no evidence that a structural conflict influenced a benefit termination? Yes. Mary MacNaughton was a radiologist receiving LTD benefits related to an eye injury. Following an examination where a doctor determined that MacNaughton could return to practice as a radiologist, the insurer terminated MacNaughton’s LTD benefits, and she then filed a claim in federal court. As part of those court proceedings, MacNaughton filed a motion in limine seeking to exclude from evidence three plan-related documents that purported to give the insurer discretion to make benefit determinations. The district court judge upheld the recommendation of a magistrate judge that the documents should not be excluded. The court rejected the claimant’s argument that the documents were not admissible because they were not disclosed to claimant pre-suit. Also, the district judge upheld the magistrate judge’s recommendation that plaintiff not be permitted to conduct a 30(b)(6) deposition to inquire into the insurer’s structural conflict. The district court concluded that the administrative record appeared to be complete, and plaintiff made no showing that the structural conflict influenced the insurer’s decision to terminate benefits. MacNaughton v. Paul Revere Life Ins. Co., 2021 WL 5180238 (D. Mass. Nov. 8, 2021).
5. Does an insurer deny a claimant a “full and fair review” by requiring a claimant pursuing an administrative appeal to submit to an examination by a doctor but refusing to give the claimant a copy of the doctor’s report and an opportunity to respond? Yes. Karen Jette participated in an ERISA LTD plan where the insurer funded the plan and served as the claims administrator. Jette was receiving LTD benefits, which the insurer terminated. When Jette filed an internal appeal, the insurer required Jette to present to a doctor for an IME. The doctor then filed a report, but the insurer refused to provide a copy to Jette and would not let her file a meaningful response. The insurer upheld the termination, in part on the doctor’s report. Jette then filed a claim in federal court, arguing that the insurer had denied her a “full and fair review” by withholding the doctor’s report from her. The district court granted summary judgment to the insurer, and Jette appealed. The Court of Appeals reversed, and remanded the matter to the district court with instructions to remand the matter to the insurer to conduct a full and fair review. The Court of Appeals rejected the insurer’s argument that the regulations requiring an insurer to permit a claimant to comment on documents related to the claim applied only to documents related to the original claims decision. The Court of Appeals also rejected the district court’s reasoning that an insurer only needed to provide to the claimant documents created in the appeals process if they related to a new basis to deny coverage. Jette v. United of Omaha Life Ins. Co., 2021 WL 5231971 (1st Cir. Nov. 10, 2021).