This month’s Friday Five discusses cases that address the meaning of de novo review, the relative weight to be given to initial denial correspondence versus appeal correspondence, the necessity of a claims manual, the availability of offset for military-service-connected disability benefits, and the pre-existing disability exclusion.

1. Does de novo review really mean review? Many disability litigants understand de novo review to indicate that a court must engage in its own review of the administrative record without deference to the claim administrator’s benefit decision. But, according to the Seventh Circuit Court of Appeals in Dorris, de novo review under ERISA “requires no review at all, but an independent decision,” and “[i]n such a case, the plaintiff bears the burden of proving not that the plan administrator erred, but that she is entitled to the benefits she seeks.” According to Dorris, a court can limit itself to deciding the case on the administrative record, but should also freely allow the parties to introduce relevant extra-record evidence and seek appropriate discovery in order to determine whether the plaintiff is entitled to benefits. Under this framework, it is the plaintiff’s burden of proof and the court may not resolve gaps in the record in the plaintiff’s favor. The court found that the administrative record was underdeveloped and neither party produced necessary additional evidence to the court. Accordingly, the summary judgment was properly entered in the plan administrator’s favor. Dorris v. Unum Life Ins. Co. of Am., 949 F.3d 297 (7th Cir. 2020).
2. Does an initial denial letter or a final post-appeal letter control the review of a claim administrator’s adverse benefit decision? Plaintiffs in ERISA disability litigation often attack an adverse benefit decision based on a claim administrator’s statements or conclusions that are expressed in an initial denial letter. However, the Third Circuit Court of Appeals reminded litigants in Ackaway that a plan administrator’s final post-appeal decision should be the focus of the court’s review. The plaintiff in Ackaway argued that the plan administrator’s decision to deny her claim for short-term disability benefits was improper because of the insufficiency of evidence provided in the initial benefit denial letter. But, the court explained that the initial decision was not controlling where the plaintiff appealed the initial decision and obtained an appeal determination. Ackaway v. Aetna Life Ins. Co., No. 16-3969, 2020 WL 774289 (3d Cir. Feb. 18, 2020).
3. Is a claims administrator required to have a claims manual? In Reichard, the Third Circuit Court of Appeals rejected the plaintiff’s argument that the absence of a claims manual indicated that the insurance carrier’s decision to deny disability benefits was improper. The court found that no law or regulation requires insurers to adopt a claims manual. The court acknowledged that 29 C.F.R. § 2560.503-1(b)(5) requires that claims procedures contain administrative processes and safeguards designed to ensure and to verify that benefit claim determinations are made in accordance with governing plan documents, and that where appropriate, the plan provisions have been applied consistently. However, the court held that this requirement does not impose a duty to have a claims manual. The court determined that without a claims manual, the carrier in Reichard satisfied its duty for certain administrative processes and safeguards by corresponding at length with the plaintiff about records that would be considered on appeal which prompted the plaintiff to submit extra documentation. Reichard v. United of Omaha Life Ins. Co., No. 18-2952, 2020 WL 883108 (3d Cir. Feb. 24, 2020).
4. Do veterans’ benefits for service-connected disability compensation constitute an “other income benefit” that may be used to offset disability benefits? In Martinez, the First Circuit Court of Appeals considered whether veterans’ benefits for service-connected disability compensation should be deemed a form of “other income benefit” covered by an ERISA long-term disability insurance policy’s offset provision. The court determined that the offset was proper because the plan permitted an offset of benefits for income that was awarded under a “compulsory benefit act or law.” In Martinez, the Department of Veterans Affairs (VA) was required by law to provide veterans' benefits to the plaintiff as a plan participant once VA determined his eligibility. Martinez v. Sun Life Assurance Co. of Canada, 948 F.3d 62 (1st Cir. 2020).
5. Does a pre-existing condition in one area of a plaintiff’s back preclude benefits coverage for a subsequent injury to a different area of his back? Pre-existing condition exclusions under ERISA typically preclude benefit coverage for injuries that existed prior to a plan or policy’s effective date of coverage. But what happens when a plaintiff suffers a new injury to an area of his or her body where a prior injury existed? In Meche, the plaintiff had previous back problems at the L4-5 level, but sought coverage for a subsequent work-related injury to the L2-3 level – an area where there was no evidence of problems prior to the effective coverage date. Upon review of relevant medical records, the U.S. District Court for the Eastern District of Louisiana determined that changes in location, magnitude and effect of the plaintiff’s pain suggested that the L2-3 injury did not arise from the pre-existing L4-5 injury. The court further reasoned that the occurrence of a workplace injury, followed by new anatomical findings, tied to different symptoms all indicated that the plaintiff’s disability did not result from a pre-existing condition. Meche v. Metro. Life Ins. Co., No. CV 18-3995, 2020 WL 133284 (E.D. La. Jan. 13, 2020).