This month’s Friday Five explores recent decisions including the standard of review for ERISA benefit denials, whether structural conflict entitles a claimant to conflict-of-interest discovery, whether a “relative value units” analysis warrants equitable tolling, whether the administrative record includes post-exhaustion evidence, and a plan administrator’s discretion to deny claims.
The Saul Ewing ERISA Litigation Team
- Does Loper Bright change how courts review ERISA benefits denials? In Rappaport v. Guardian Life Insurance Company of America, the claimant sought unpaid long-term disability benefits and reformation of his insurance plan to include bonuses and commissions as “insured earnings.” After initially approving benefits in 2015 following Rappaport’s leukemia diagnosis, the insurer terminated payments in 2020, based on insufficient evidence of continued disability. The claimant appealed the decision, and the insurer did not meet the Department of Labor’s (“DOL”) 45-day deadline for issuing a decision. Citing Halo v. Yale Health Plan, 819 F.3d 42 (2d Cir. 2016), the claimant argued that the court should apply a de novo standard of review to the denial due to the noncompliance with claims-procedure regulations. The insurer contended that the court should instead apply a deferential review of its decision, pointing to the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), and asserted that ERISA does not authorize the DOL to influence judicial review standards. The court rejected this argument, holding that Halo remains binding precedent because it does not rely on the deference framework invalidated in Loper Bright. The court determined that the insurer violated the DOL regulations and held that the appropriate standard of review was de novo. Rappaport v. Guardian Life Ins. Co. of Am., No. 1:22-CV-08100 (JLR), 2024 WL 4872736 (S.D.N.Y. Nov. 22, 2024)
- Does a structural conflict alone justify conflict-of-interest discovery in ERISA cases? In Stallman v. First Unum Life Insurance Company, the claimant challenged the insurer’s denial of his long-term disability (“LTD”) claim. The claimant had previously received short-term disability (“STD”) benefits for a pelvic fracture, but was denied LTD benefits for major depressive order and anxiety due to insufficient medical evidence and lack of coverage at the relevant date. After an unsuccessful appeal, the claimant filed suit in federal court and sought additional discovery into the completeness of the administrative record produced by the insurer. Although ERISA discovery is typically limited to the administrative record unless exceptions like a conflict of interest apply, the claimant argued that the insurer’s dual role as both adjudicator and payor of his claims created a structural conflict of interest which justified broader discovery. The insurer countered that the claimant must demonstrate reasonable suspicion of procedural irregularities or misconduct to warrant extra-record discovery. The court ultimately sided with the insurer, holding that a structural conflict does not automatically entitle a plaintiff to conflict-of-interest discovery. While noting that the claimant failed to meet the “minimal” burden of showing reasonable suspicion, the court nevertheless permitted him one interrogatory to assess whether the compensation or performance evaluations of the insurer’s claims personnel were influenced by claim outcomes, as such information could reveal bias related to the structural conflict. Stallman v. First Unum Life Ins. Co., No. CV 23-20975 (JXN) (LDW), 2024 WL 4988603 (D.N.J. Dec. 5, 2024)
- Does an insurer’s “relative value units” analysis justify equitable tolling in ERISA claims? In Myers v. Provident Life & Accident Insurance Company, the claimant, an interventional cardiologist, filed a disability claim in 2009 due to progressive back pain impairing his professional duties. The Defendant insurers requested Current Procedural Terminology (“CPT”) codes to evaluate the claimant’s occupational duties, but the claimant failed to provide all the requested information, causing the defendants to close the claim. More than four years later, the claimant retained counsel, provided the requested CPT codes, and criticized defendants’ reliance on the codes. The claimant requested an alternative relative value units (“RVU”) analysis to assess the value of his procedures. Following the reevaluation, defendants awarded the claimant residual benefits for 2005–2011 and found him totally disabled as of 2012. Dissatisfied with this outcome, the claimant filed suit challenging the claim’s handling. On defendants’ motion for summary judgment, the court examined whether equitable tolling should apply to the claimant’s otherwise time-barred claims. The claimant argued that his diligent pursuit of the claim warranted tolling, pointing to defendants’ use of an external consultant and agreement to conduct an RVU analysis as evidence of extraordinary circumstances. The court disagreed, holding that defendants’ agreement to conduct the RVU analysis did not constitute an extraordinary circumstance and that the claimant failed to show unavoidable reasons for missing the filing deadlines. Concluding that the claims were time-barred, the court granted summary judgment in favor of defendants. Myers v. Provident Life & Accident Ins. Co., No. 8:19-CV-724-CEH-CPT, 2024 WL 5047362 (M.D. Fla. Dec. 9, 2024)
- Can insurers rely on post-exhaustion evidence in ERISA litigation? In King v. Reliance Standard Life Insurance Company, the claimant challenged the insurer’s termination of her LTD benefits. The claimant appealed the insurer’s decision, but eventually filed suit after the insurer failed to issue a decision within the DOL’s 45-day deadline. During the litigation, the insurer sought to introduce evidence it had gathered after the regulatory deadline. The claimant argued that allowing such evidence would violate ERISA’s procedural safeguards and reward the insurer for missing its deadlines. The court sided with the claimant, reasoning that admitting evidence collected after exhaustion would undermine ERISA’s regulatory framework. The court emphasized the distinction between the administrative record and extra-record evidence, and ultimately limited the evidentiary record to materials submitted before the claim was deemed exhausted. King v. Reliance Std. Life Ins. Co., No. 1:23-CV-00443-GSL-SLC, 2024 WL 5165572 (N.D. Ind. Dec. 19, 2024)
- How much discretion do ERISA plan administrators have in denying claims? In Black v. Unum Life Insurance Company of America, the claimant contested the termination of her LTD benefits, which she had been receiving due to complications from surgery and ongoing symptoms. After review, the insurer determined that the claimant no longer met the policy’s definition of disabled. The claimant’s appeal of this decision was initially successful at the summary judgment stage, where the court found that the insurer failed to provide the full and fair review required by ERISA. The case was remanded to the insurer for further evaluation. See April 2024 Friday Five. On remand, the insurer consulted two physicians who both concluded that the claimant did not meet the disability criteria. The conclusion was supported by the claimant’s treating physicians who had cleared her for sedentary work. Upon further judicial review, the court upheld the insurer’s decision and affirmed the termination of benefits, emphasizing the broad discretion granted to plan administrators under ERISA in weighing medical evidence. The court found that the determination was reasonable, based on substantial evidence, and not arbitrary or capricious. Black v. Unum Life Ins. Co. of Am., No. 3:22-CV-2116-X, 2024 WL 4960010 (N.D. Tex. Dec. 2, 2024)
