Trial Magazine

The Employee Retirement Income Security Act of 1974 (ERISA) expressly authorizes several causes of action and requires private employers offering employee benefit plans to adhere to an array of rules designed to protect plan b enefits and participants.¹ People seeking to recover disability benefits owed under an employee benefit plan, to enforce their rights under the plan, or to clarify their rights to future benefits often must bring a civil action under ERISA §502(a)(1)(B).² These benefit claims come with a complex set of idiosyncrasies that attorneys need to prepare for before bringing these cases.

Prelitigation Considerations

ERISA supersedes state laws as they “relate to any employee benefit plan,” expressly preempting breach of contract and bad faith claims.³ Therefore, an ERISA disability claim is a federal question claim for federal court.

ERISA also contains a saving clause providing that nothing in the statute “shall be construed to exempt or relieve any person from any law of any state which regulates insurance, banking or securities.”⁴ As a result, many state insurance regulations are saved from preemption, meaning that these regulations intended to protect consumers may still apply to an ERISA disability case and afford a plaintiff with disabilities some advantages when litigating his or her case.⁵

Although ERISA does not require a plaintiff to exhaust administrative appeals before filing a claim in court,⁶ the terms of the specific plan may require exhaustion, and federal appellate courts have uniformly required that participants exhaust internal review before bringing a claim for judicial review under §502(a)(1)(B).⁷ Courts most frequently decide ERISA disability cases on cross motions for summary judgment under Federal Rule of Civil Procedure 56, although they also can be resolved by a bench trial on the papers.⁸ ERISA claimants do not have a right to a jury trial.⁹

Claim file review. Courts often treat §502(a)(1)(B) disability claims like Social Security Disability administrative review cases because claimants seek benefits based on the specific definition of disability set out in the plan. Courts and insurers also commonly refer to the insurance company’s claim file as an “administrative record.” But don’t forget that ERISA disability claims are not administrative review actions: A decision has not been rendered by an agency, and no hearing has been held. You must consistently communicate to the court that the relevant issue in an ERISA disability claim involves a violation of an insurer’s promise to pay disability benefits. This strategy helps reinforce that the court should be analyzing the case like a breach of contract claim.

Although an insurer’s claim file is not an administrative record, much of what a plaintiff relies on must come from that file. During prelitigation review, confirm that the claim file includes enough documentation to prove your client’s case. Before litigation, a plaintiff can request a copy of all documents and other items relevant to the disability claim.¹⁰ For example, an insurer should produce a copy of the plan, any riders or schedules, and the summary plan description; documents that the insurer relied on when making the benefit determination; and all investigators’ reports and notes.¹¹

When reviewing this information, remember that later supplementation of the claim file with other documents for the court’s review may not be permitted. Research the parameters for supplementing the file in your jurisdiction, as the law varies greatly from district to district. If supplementation is not permitted, the court’s review will be limited to what’s in the claim file.

Standard of Review

Early on determine what standard of review applies to your case. The de novo standard generally applies to ERISA claims.¹² But review the plan language for an express grant of discretion to a plan administrator or insurer, which can result in an arbitrary and capricious standard of review. Under this abuse of discretion standard, the court, with deference, reviews the insurer’s actions adjudicating the claim and reaching a decision.

To give insureds the benefit of de novo review, 25 states have banned these express grants of discretion as related to health or disability claims.¹³ Although state bans have been challenged by disability insurance carriers, many have been upheld.¹⁴

If express grants of discretion are valid in your jurisdiction, analyze whether the plan—not just the summary plan description—includes one.¹⁵ The grant of discretion language also must be “adequate,” and each circuit has defined this standard.¹⁶

Also confirm whether the entity that granted discretion is the same one that decided the claim. If discretion was granted but another entity made the determination, then the matter should be reviewed under a de novo standard. For example, the company Matrix Absence Management frequently adjudicates group long-term disability claims for insurer Reliance Standard. Even if a long-term disability plan grants discretion to Reliance Standard, nothing gives that same authority to Matrix and, as a result, a reviewing court would not need to apply an abuse of discretion standard to review Matrix’s decision-making.

Common scenarios. Your client’s case may involve employees and employers in different jurisdictions. To figure out whether a ban on discretion applies, ask the following:

• Who issued or delivered the policy?
• To whom are the documents issued or delivered? To the plan sponsor? Employee?
• Where are the documents issued or delivered?

This additional information helps you determine whether a specific state ban on discretion applies based on the specific language of the state regulation.

When the employee works in a state with no express grant of discretion ban, but the employer’s headquarters are in a state with a ban, then courts likely will hold that the ban should apply.¹⁷

When the employee moves to a state with a ban after filing a disability claim but worked in a state without a ban when he or she became disabled and the employer is headquartered in a state without a ban, then courts likely will find that the ban does not apply.¹⁸

So far, case law is less clear regarding other common scenarios: for example, when an employee works in a state with a ban, but the employer is headquartered in a state with no ban. District courts analyzing this scenario have reached mixed results, and most circuit courts have not ruled on this issue.¹⁹ If this scenario applies to your client, include an argument that the public policy interest motivating the ban—protecting workers—should mean that the ban applies to state citizens working in the state even if the employer is headquartered elsewhere.²⁰

Many courts have not yet ruled on the situation when the policy is issued to a trust in a state with no ban, but the employer and employee are both in a state with a ban. At least one district court has found that the ban applied in this type of scenario.²¹ Like in the example above, if this scenario applies to your client, argue that the public policy interest motivating the ban means that the ban should apply to state citizens working in the state even if the policy insuring the plan was issued elsewhere.²² You also might reference any legislative or regulatory history citing the intention to protect consumers.

Look for other cases in which the insurer or plan has already conceded that the ban applies to the given plan at issue.²³ You also can try to find cases in which the insurer has conceded application of a ban to plans generally.²⁴ Both types of cases can be persuasive evidence to a court that a ban applies.

Retroactivity. Most state bans on discretionary provisions apply as of the effective date of the regulation or statute and are not retroactive.²⁵ So if your client’s disability policy under an employee benefit plan was renewed or amended after the effective date, then the state ban should apply.²⁶

Discovery

Expect to engage in motion practice to get the discovery you need. Point out procedural deficiencies in how the insurer handled the claim, such as missing documents. Or look for deficiencies in the evidence contained in the claim file, such as a lack of evidence of an insurer’s medical or vocational “expert” qualification to give the opinions relied on when making the decision.

Detailing for the court how specific additional information can help the court reach a decision can be very persuasive. For example, deposing a medical file reviewer whose opinion allegedly supported the insurer’s decision to deny benefits should help the court weigh that reviewer’s credibility and the authority of her opinions. Illustrating for the court that this is the same theory governing expert discovery helps focus how the court is going to be able to consider complex medical opinions and evidence.

Insurers usually take the position that a plaintiff in an ERISA disability case is not entitled to any discovery, but in most circuits, the applicable standard of review dictates what, if any, discovery a plaintiff can seek. This is another reason to resolve the standard of review issue early—raise it in a separate motion or include it in a motion defending your right to seek discovery.

The circuits have established different standards for what level of discovery is appropriate when the de novo standard of review applies. The First, Third, Fourth, Fifth, Sixth, Tenth, and Eleventh Circuits permit only limited discovery.²⁷ More expansive discovery under de novo review may be permitted in the Second, Seventh, Eighth, and Ninth Circuits.²⁸

When the arbitrary and capricious standard of review applies, it may open the door for “conflict discovery.”²⁹ “Conflict” in this context refers to the inherent tension between an insurer’s goals of profitability and its duties to adjudicate claims fully and fairly. Most circuits permit narrowly tailored discovery on this conflict, proportionate to the case.³⁰

Policy renewals. Many courts conclude that the question of when a policy is renewed is an evidentiary issue. Some evidence to consider collecting includes 

• plan documents from the plan administrator, including requests for renewal documentation
• state insurance filings regarding the policy at issue
• IRS Form 5500 (includes the contact information for the plan administrator and the plan’s effective date, which can be relevant to the application of state regulations).³¹

Consider naming the plan administrator in the suit and including allegations in the complaint regarding the policy’s issuance and renewal. This may make obtaining discovery on the issue of policy renewal easier. If you do not name the plan administrator, you may want to issue a subpoena for the information.

Interrogatories and requests for production. You may issue interrogatories or requests for production to obtain evidence as described above in either discovery requests or associated with a subpoena. Sample interrogatories include: 

• “Please identify all effective dates for the Policy.”
• “Please identify all dates on which any renewal notices were generated, created, or issued between [effective date of state ban] and [final determination from insurer].”
• “Please identify and state the content of any Policy proposals or renewal Policy proposals for the Policy, issued at any time between [effective date of state ban] and [final determination from insurer].”

Knowing some of the unique challenges that come along with handling these cases will help you better fight for your clients’ benefits.

Jennifer Danish is managing partner of Bryant Legal Group in Chicago. She can be reached at jdanish@bryantlg.com.

Notes

1. Employee Retirement Income Security Act of 1974, 29 U.S.C. §§1001–1461 (West current through P.L. 116-5). ERISA contains exceptions for certain plans, such as government or church plans. Id. at §1003.
2. Other potential claims may be brought under ERISA but are not the subject of this article.
3. ERISA §514(a), 29 U.S.C. §1144(a); see Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987).
4. ERISA §514(b)(2)(A), 29 U.S.C. §1144(b)(2)(A). 
5. See, e.g., Fontaine v. Metro. Life Ins. Co., 800 F.3d 883, 887 (7th Cir. 2015).
6. See 29 C.F.R. §2560.503-1 (West 2019).
7. Heimeshoff v. Hartford Life & Accident Ins. Co., 571 U.S. 99, 105 (2013) (citing LaRue v. DeWolff, Boberg & Assoc., Inc., 552 U.S. 248, 258–59 (2008)).
8. Parties may recover attorney fees under ERISA’s general fee-shifting statute if they establish some degree of success on the merits. 29 U.S.C. §1132(g); see also Marcin v. Reliance Standard Life Ins. Co., 199 F. Supp. 3d 94, 103–04 (D.D.C. 2016); In re Unisys Corp. Retiree Med. Benefits ERISA Litig., 579 F.3d 220, 239 (3d Cir. 2009).
9. See 29 U.S.C. §1132(a)(1)(B); Plaintiff’s Right to Jury Trial in Civil Action Under §502(a)(1)(B) of Employee Retirement Income Security Act (29 U.S.C.A. §1132(a)(1)(B)), 56 A.L.R. Fed. 880 (1982 & Supp. 2018).
10. See ERISA §104(b), 29 U.S.C. §1024(b); 29 C.F.R. §2560.503-1(h)(2)(iii), (m)(8).
11. Id.
12. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112 (1989).
13. These states are Alaska, Arkansas, California, Colorado, Connecticut, Hawaii, Idaho, Illinois, Indiana, Kentucky, Maine, Maryland, Michigan, Minnesota, Montana, New Jersey, New York, Oregon, Rhode Island, South Dakota, Texas, Utah, Vermont, Washington, and Wyoming. See, e.g., Idaho Admin. Code r. §18.01.29.011 (2019); R.I. Gen. Laws §§27-18-79; 27-20.1-21; 27-34.2-22 (2019). 
14. Orzechowski v. Boeing Co. Non-Union Long-Term Disability Plan, Plan No. 625, 856 F.3d 686, 695 (9th Cir. 2017); Fontaine v. Metro. Life Ins. Co., 800 F.3d 883, 887 (7th Cir. 2015).
15. The plan language will govern, not the language of the summary plan description. CIGNA Corp. v. Amara, 563 U.S. 421, 437–38 (2011).
16. See, e.g., Herzberger v. Standard Ins. Co., 205 F.3d 327, 331 (7th Cir. 2000); Viera v. Life Ins. Co. of N. Am., 642 F.3d 407, 413–15 (3d Cir. 2011).
17. See, e.g., Ravannack v. United Healthcare Ins. Co., 2015 WL 2354186, at *2 (E.D. La. May 15, 2015); Tikkanen v. Liberty Life Assur. Co. of Bos., 31 F. Supp. 3d 913, 920–22 (E.D. Mich. 2014); Paquin v. Prudential Life Ins. Co. of Am., 2017 WL 3189550, at *2 (D. Colo., July 10, 2017).
18. See, e.g., Carberry v. Metro. Life Ins. Co., 2011 WL 2887842, at *2 (D. Colo., July 19, 2011); Tobin v. Hartford Life & Accident Ins. Co., 233 F. Supp. 3d 578, 582 (W.D. Mich. 2017).
19. See, e.g., Brake v. Hutchinson Tech. Inc. Grp. Disability Income Ins. Plan, 774 F.3d 1193, 1196 (8th Cir. 2014); Flaaen v. Principal Life Ins. Co., Inc., 226 F. Supp. 3d 1162, 1167 (W.D. Wash. 2016).
20. See, e.g., Curtis v. Hartford Life & Accident Ins. Co., 2012 WL 138608, at *8 (N.D. Ill. Jan. 18, 2012).
21. Id.
22. See, e.g., Flaaen, 2016 WL 7407227, at *4.
23. See, e.g., Pfenning v. Liberty Life Assurance Co. of Bos., 282 F. Supp. 3d 1027, 1030 (S.D. Ohio 2017).
24. See, e.g., Chamness v. Liberty Life Assurance Co. of Bos., 234 F. Supp. 3d 885, 888 (W.D. Mich. 2017).
25. See, e.g., Rustad-Link v. Providence Health and Servs., 306 F. Supp. 3d 1224, 1234–35 (D. Mont. 2018).
26. See, e.g., Felix v. Metro. Life Ins. Co., 2015 WL 3866760, at *4 (C.D. Cal. June 19, 2015); Pierzynski v. Liberty Life Assurance Co. of Bos., 2012 WL 3248238, at *3 (E.D. Mich. Aug. 8, 2012).
27. Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 520 (1st Cir. 2005); Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1025 (4th Cir. 1993); S. Farm Bureau Life Ins. Co. v. Moore, 993 F.2d 98, 102 (5th Cir. 1993); Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 618 (6th Cir. 1998); Jewell v. Life Ins. Co. of N. Am., 508 F.3d 1303, 1309 (10th Cir. 2007). The Third and Eleventh Circuits use the same test outlined in Quesinberry, 987 F.2d at 1025. 
28. See, e.g., Garban v. Cigna Life Ins. Co. of N.Y., 2011 WL 3586070, at *3 (S.D.N.Y. Aug. 11, 2011); Shepherd v. Life Ins. Co. of N. Am., 2012 WL 379775, at *4 (N.D. Ill. Feb. 3, 2012); Sloan v. Hartford Life & Accident Ins. Co., 433 F. Supp. 2d 1037, 1038 (D.N.D. 2006), aff’d, 475 F.3d 999 (8th Cir. 2007); Opeta v. Nw. Airlines Pension Plan for Contract Emp., 484 F.3d 1211, 1218 (9th Cir. 2007).
29. See, e.g., Baxter v. Sun Life Assurance Co. of Can., 713 F. Supp. 2d 766, 773 (N.D. Ill. 2010).
30. See, e.g., Curtis v. Metro. Life Ins. Co., 2016 WL 687164, at *4 (N.D. Tex. Feb. 19, 2016); Demer v. IBM Corp. LTD Plan, 835 F.3d 893, 900 (9th Cir. 2016); Sumpter v. Metro. Life Ins. Co., 2016 WL 772552, at *3 (S.D. Ind. Feb. 29, 2016); Rickaby v. Hartford Life & Accident Ins. Co., 2016 WL 1597589, at *2 (D. Col. Apr. 21, 2016).
31. The employer maintaining the plan or the plan administrator of a pension or welfare benefit plan covered by ERISA generally must file the Form 5500 to report information concerning the qualification of the plan, its financial condition, investments, and operations.