This month’s Friday Five explores recent decisions with issues spanning physician power of attorney to preexisting exclusions and the fiduciary duty of an insurance company. 

1. Whether a provider has sufficiently pleaded the existence of a valid assignment clause to withstand a Motion to Dismiss in light of recent Third Circuit precedent. Aetna Life Insurance Company and TIAA Health & Welfare Benefits Plans (“Defendants”) filed a Motion to Dismiss Dr. Arash Emami's (“Plaintiff”) First Amended Complaint pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). On August 15, 2022, Plaintiff performed a procedure on Brian J. (“Patient”) at St. Joseph's University Medical Center. At the time of the surgery, the Patient had health benefits through his employer which provided health insurance benefits via a group insurance contract administered by Aetna Life Insurance Company. Following Patient’s procedure, a bill was submitted to Defendants for reimbursement in the amount of $96,824.00. On September 20, 2022, Defendants allowed reimbursement for the services rendered by Plaintiff in the amount of $5,15049. Plaintiff disputed the calculations Defendant used for reimbursement. Plaintiff contends that he has standing to sue under ERISA because the Patient had executed a valid power of attorney and argued that “an anti-assignment clause in an ERISA plan does not impact a valid POA”. The Third Circuit has held that unambiguous anti-assignment clauses in ERISA plans are valid and enforceable in Plastic Surgery Center, P.A. v. Aetna Life Insurance Co., 967 F.3d 218 (3d Cir. 2020). The Court acknowledged that “[w]hile we left open the possibility that a patient could grant her provider a valid power of attorney to pursue claims for benefits on her behalf, for most out-of-network providers, the rising prevalence of anti-assignment provisions signals the proverbial end of the road for relief under section 502(a).” Id. at 228-29. The sufficiency of a power of attorney is governed by the New Jersey Revised Durable Power of Attorney Act, N.J. Stat. Ann. § 46:2B-1, et seq. (“RDPAA”), which provides that “[a] power of attorney must be in writing, duly signed and acknowledged in the manner set forth in [N.J. Stat. Ann. §] 46:14-2.1.” N.J. Stat. Ann. § 46:2B-8.9. The Court found that Plaintiff’s complaint generally alleged that the Patient signed a power of attorney but did not provide further details regarding the document, its execution, or relevant witnesses. Based upon that information, the Court held that Plaintiff had not demonstrated that Patient’s power of attorney is sufficient to confer standing under New Jersey law and granted Defendants’ Motion to Dismiss. Emami v. Aetna Life Insurance Company, 2024 WL 1715288 (NJ Dist Ct., April 22, 2024)
2. Whether Plaintiff’s disability related to Covid-19 fell under a pre-existing condition exclusion in the long-term disability policy. Jason Kim (“Plaintiff”) was employed by Dreamhaven, Inc. (“Defendant”) and enrolled for coverage under the group long-term disability (“LTD”) policy (the “Policy”) issued by Guardian Life Insurance Company of America (“Guardian”). The Policy states that an employee is “Disabled” under the following circumstances: Total Disability or Totally Disabled means that as a result of Sickness or Injury, during the Elimination Period and the Own Occupation period, you are not able to perform with reasonable continuity the substantial and material acts necessary to pursue Your Usual Occupation and you are not working in Your Usual Occupation. (AR:273) The Policy excluded coverage for a disability that was caused or substantially contributed to by a pre-existing condition or medical or surgical treatment of a pre-existing condition. In January of 2021, while working for Defendant, Plaintiff became symptomatic for Covid-19. Plaintiff submitted a claim for LTD benefits asserting a date of disability in March of 2021. Guardian denied the claim in August of 2021, concluding that while Plaintiff was disabled, his disability was caused by pre-existing conditions that were excluded under the Policy. In February of 2022, Plaintiff appealed the denial of his claim. In September of 2022, Guardian denied Plaintiff's appeal finding that Plaintiff did have Covid-19 in early January 2021, but there was no mention in the records that these symptoms were related to Covid-19, and Plaintiff had a history of anxiety and depression and concluded that Plaintiff was only disabled due to conditions falling under the pre-existing condition exclusion. The Court found that because Guardian relied on an exclusion to coverage under the Policy, it had the burden to establish that the exclusion applies. Dowdy v. Metropolitan Life Ins. Co., 890 F.3d 802, 810 (9th Cir. 2018). The Court noted that in McClure v. Life Ins. Co. of N. Am., 84 F.3d 1129 (9th Cir. 1996), it was determined that the proper standard is whether a pre-existing condition “substantially contributed” to the loss, “even though the claimed injury was the predominant or proximate cause of the disability.” Id. at 1136. The Court held that Guardian has failed to meet its burden based upon the weight of the evidence and overturned Guardian’s final decision. Jason Kim v. The Guardian Life Insurance, 2024 WL 2106240 (California District Court S.D., May 9, 2024)
3. Whether the insurance company’s letter communicated rational reasons for its decision to deny a long-term disability claim. Donald Artz (“Plaintiff”) worked as an electric distribution controller at WEC Energy Group (“Employer”) with disability insurance provided through Hartford Life and Accident Insurance Company (“Defendant”). In 2003, Plaintiff was diagnosed with multiple sclerosis. In 2020, Plaintiff asked Employer to accommodate a reduction in shift length due to his fatigue-related symptoms as a result of his multiple sclerosis. Employer denied his request and Plaintiff started to receive short-term disability benefits under Employer’s plan beginning in January 2020. Plaintiff applied for long-term benefits under Employer’s disability plan in January 2021 and that request was denied by Defendant. Under the terms of Employer’s long-term disability benefits plan, the plan administrator has “full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions.” The plan defines “Disability or Disabled” as being “prevented from performing one or more of the Essential Duties” of “Your Occupation.” Plaintiff filed an administrative appeal in November 2020 of Defendant’s denial. Defendant denied Plaintiff’s administrative appeal and upheld the denial of benefits in January 2021. Plaintiff sued both Defendant and Employer in state court, alleging that the denial of long-term benefits amounted to a breach of contract under Wisconsin law. Defendant removed the case to federal court, viewing the claim as completely preempted by ERISA. The district court upheld the denial of benefits at summary judgment, concluding that Plaintiff had placed too much emphasis on the duties of his specific position at his Employer rather than the “essential duties” of his job in the general workplace as required by the company's plan. Plaintiff appealed the district court’s decision. The Seventh Circuit affirmed the district court and held that Plaintiff’s claim failed where several physicians concluded that he did not present enough objective evidence to show “severity and frequency” of symptoms “such that functional impairment [was] established.” The Court noted that Defendant explained in its final denial letter, “the presence of a diagnosis or symptom alone does not represent functional impairment resulting in Disability as defined by the Policy.” Artz v. Hartford Life & Accident Insurance Company, 2024 WL 1986000 (Seventh Circuit U.S. Ct. Appeals, May 6, 2024)
4. Did Plaintiff’s complaint adequately plead the existence of a federal question such that defendant’s notice of removal was untimely? Sara A. Puskaruch (“Plaintiff”) filed a declaratory judgment action alleging that a disability insurer was not entitled to a portion of the proceeds she received in a settlement following a lawsuit for personal injury damages against her former employer. Equian, LLC as subrogee of Metropolitan Life Insurance Company (“Defendant”), claimed a right to $134,684.40, because of the long-term disability benefits paid by MetLife under the disability policy issued to Plaintiff. One year after Plaintiff filed the declaratory judgment action against Defendant, Defendant moved to remove the case to federal court – citing Plaintiff’s recent responses to interrogatories as revealing diversity of citizenship grounds for federal jurisdiction. The Defendant further argued that the Plaintiff had not adequately alleged a claim that would trigger federal question jurisdiction in her original complaint (despite alleging the violation of a federal statute) because an injury in fact was not alleged. Plaintiff filed a Motion to Remand, arguing Defendant's untimeliness resulted in a waiver of the right to removal because the complaint should not be narrowly read. The Court granted the Motion to Remand and found that Plaintiff adequately alleged an injury in fact under a federal statute, as to implicate the Court’s federal question jurisdiction. The Court found that Defendant did not timely file its notice of removal and therefore waived its right to remove. Sara A. Puskaruch v. Equian, LLC, as subrogee of Metropolitan Life Insurance Company, United States District Court, 2024 WL 2273616 (S.D. Illinois, May 20, 2024)
5. Whether the insurance company satisfied its fiduciary duty as mandated under ERISA to consider Plaintiff’s claim fully and provide specific reasons for denial. Rebecca Wonsang (“Plaintiff”) was employed as a Physical Therapist Assistant at Legacy Healthcare Services and a participant in an LTD policy insured by Reliance Standard Insurance Company (“Defendant”). Plaintiff alleged disability due to arthralgia, back and neck pain, fibromyalgia, chronic fatigue, Epstein Barr virus, IBS and migraines. Defendant paid her LTD claim for the duration of the Regular Occupation period of the policy. Reliance thereafter determined that Plaintiff did not appear to have any cognitive deficits sufficient to preclude working in any occupation. Defendant therefore terminated her LTD benefits. Both parties filed cross-motions for summary judgment. The Court held that Defendant’s failure to reconcile the conflicts of its reviewing nurses’ reviews of Plaintiff’s file and her treating physicians was a failure that satisfies even the less-stringent abuse-of-discretion standard. The Court noted that Defendant cannot seek shelter in opaque medical statements in the face of considerable medical evidence to the contrary. The Court granted Plaintiff’s motion for summary judgment as it pertained to her total disability under the Plan and denied Defendant’s motion on the same. Wonsang v. Reliance Insurance Company, 2024 WL 1559292, United States District Court, (E.D. Virginia, Alexandria Division, April 10, 2024)