Autism News Network
Illinois Insurance Law update.
Recent
cases help define the Burden of proof /
Standard of review
In insurance litigation, the outcome often depends on which party has
the burden of proof and which party has the right to interpret the
written terms of the plan and the meaning of the medical evidence
presented by the patient. However, recent cases have made the
task more difficult.
During 2003, the U.S. Supreme Court and the Seventh Circuit discussed
the
deference a plan must give to a treating physician's opinion against a
health plan's witness. The current rule is that the plan is not
required
to give the doctor who actually treats your child deference (a
presumption
that the treating physician's opinion is the best).
Black & Decker Disability Plan v. Nord, 538 U.S. 822 (2003)
(pdf)
More recent cases state however that he treating
physician may have better information than the plan's doctor, and a
plan
cannot refuse to consider the treating physician's opinion.
In Hawkins, the 7th Circuit
overruled a plan which relied on
mere scraps of evidence to counter a treating physician's
evidence.
Hawkins v. First Union Corporation Long-term Disability Plan,
326 F.3d 914 (7th Cir. 2003); see
Govindarajan v. FMC Corp., 932
F.2d 634, 637 (7th Cir. 1991)
(holding that a selective review of medical evidence and a conclusion
based on that selectivity was unreasonable). "Deferential review
is not no review." Hess v. Hartford Ins Co., 274 F.3d
456, 461 (7th Cir. 2001). (See also Elliott v. Metro Life Ins. Co.
(6th Cir. 2006): "Logically, MetLife could have made a reasoned
judgment only if it relied on medical evidence that assessed Elliott’s
physical ability to perform job-related tasks. McDonald, 347 F.3d at 172 (citing
Quinn v. Blue Cross & Blue Shield
Ass’n, 161 F.3d 472, 476 (7th Cir. 1998) (The plan “was under a
duty to make a reasonable inquiry into the types of skills [the
claimant] possesses and whether those skills may be used at another
job.”)).
A 2006 opinion by a Federal New York court also reflects some ot the
earlier reasoning of the Seventh
Circuit with a thorough analysis of the advantages the treating
physician has over
the reviewing physician in evaluating a patient's condition. For
psychiatric cases, an important aspect of the assessment of the
patient's condition comes from observation of the patient's demeanor,
watching affect, evaluating nuances of speech, etc. These types of
factors, and there are many of them, simply cannot be recorded in
written medical records. In addition, the ethics code of the American
Psychiatric Association prohibits a doctor from offering a professional
opinion unless he or she has examined the patient. In Westphal the court
determined that the plan-insurer acted in an arbitrary
and capricious manner by relying on the opinions of non-treating,
non-examining doctors to override the prescription of care offered by
the treating physician. This rationale of this opinion could go a long
way toward tipping relatively balanced scales in close cases in the
provider's and patient's favor.
Westphal v. Eastman Kodak Co,
2006 U.S. Dist. LEXIS 41494 (June 21, 2006, WD NY).
In Mondry
v. American Family Mutual Insurance
Co., (W.D. Wisc., Nov. 21, 2006) the Plan and Cigna six times
stonewalled
the participant's efforts to obtain the written plan documents
determining
when the Plan would cover speech therapy. Only after
lawyers were involved did the plan provide the documents and reverse
its
denial of the service, which it had initially denied under the
habilitation
guise.
Similarly, the Sixth Circuit has ruled that the claims determination
must be a deliberate, reasoned process. Elliott v. Metro Life Ins. Co.
(6th Cir. 2006).
New:
March 6, 2009: The
7th Circuit Court of Appeals reviewed Mondry,
writing
In particular, nothing in the SPD suggests
that therapy must be “restorative” in order to
qualify as
“medically necessary.” In short, CIGNA had
been relying on [its internal criteria manuals] as the
equivalent of plan language, treating the former documents as if they were
dispositive and citing them to Mondry as such....
Because Cigna relied on the documents, ERISA
required the Plan to produce them. The wrinkle was that while
Cigna had these secret documents, American Family was the Plan, and it
was the Plan's duty, and not Cigna's to deliver the documents.
The court found the Plan liable for statutory penalties for not
delivering the documents, suggesting that the Plan should have forced
its claims administrator, Cigna, to deliver the documents which showed
Cigna's position was wrong. While the documents eventually helped
Mondry recover the cost of the speech therapy. the deliver came too
late for her to elect COBRA coverage. Since Cigna misrepresented
that speech therapy was not covered, Mondry did not continue the
coverage. The court ruled that ERISA did not provide a remedy for
this injury, and that topic is beyond the scope of this article.
Mondry-7thCir.pdf
New: The Seventh Circuit
reversed another claims denial:
Because the Plan's determination failed
to consider Ms. Leger's complete medical history and rejected, without
explanation, important aspects of the [Functional Capacity Evaluation],
we believe that the Plan acted in an arbitrary and capricious manner in
terminating Ms. Leger's benefits.
Leger v. Tribune Company Long Term
Disability Plan, March 9, 2009.
A new case, Bard
v. Boston Shipping Assoc., ___ F.3d. ___, 2006 U.S. App. LEXIS
31137
(1st Cir. 2006)
focuses on a variety of violations of ERISA’s claims procedure
requirements
by a multiemployer trust fund:
- the trust fund failed to give Bard proper notice of the initial
denial
of his claim.
- the fund violated the claims procedure requirements when it
allowed the
same individual review Bard’s appeal as had originally evaluated and
denied
Bard’s claim review.
- the fund failed to comply with the time limits outlined in the
claim procedure
regulations for making a decision on Bard’s appeal and notifying him of
that decision.
- the trust fund failed to consult an appropriate medical expert
when reviewing
Bard’s claim.
- the trust fund unreasonably refused to take into account updated
medical
records submitted by Bard’s treating physicians.
The court in Bard summarized
the patient's predicament: "Bard is in a similar position: because of
the Plan's failures to give
proper notice, he did not learn about the Plan's interpretation until
it
was too late. By the time the Plan's interpretation was made clear to
him,
he was forced to argue his case to a Board that lacked the requisite
objectivity,
and that used his earlier submissions against him. Additionally, as in
Glista, the defendant plan has "offered no explanation for why
it
did not explain earlier" its basis for the initial adverse benefit
determination. ...Accordingly, we grant relief similar to what we
ordered in Glista.
Thus we bar the defendant plan from using Bard's earlier medical
evidence
against him. In so doing, we essentially undo the prejudice that
resulted
from Bard's reliance on his initial reasonable interpretation of the
Plan."
In a Feb.27, 2007, case, left unpublished, by the Eleventh Circuit
criticized Aetna's denial of claims (Helms
v. General Dynamics Corp):
Aetna's myopic and
flawed reasoning and its procedural failures to
properly inform Helms of the specific reasons for his denial in a
timely fashion, coupled with the lack of an [Independent Medical Exam]
IME of an admittedly
subjective condition, is arbitrary and capricious.
... there was no evidence other than that of Helms's treating physician
Dr.
Epperson and Helms himself. Put another way, this is not a case wherein
the plan administrator refused to credit the opinions of doctors that
supported disability but instead accorded greater weight to conflicting
opinions of doctors that did not support disability. See, e.g.,
Wangenstein, [unpublished case]... (upholding a plan
administrator's
weighing of multiple neurologists' examinations and reviews but
ultimately crediting neurologists that did not support a finding of
disability). With only Dr. Epperson's medical evaluation in the form of
his office notes, test results, APSs, and narratives, Aetna excised
narrow snippets of Dr. Epperson's notes, while it discredited or
ignored whole tracts of his medical evaluation that supported Helms's
STD claim, all without a peer review or an IME. Aetna's review in this
case was malignant at worst, and arbitrary at best. See Nord, 538 U.S.
at 834, 123 S.Ct. at 1972 ("plan administrators ... may not arbitrarily
refuse to credit a claimant's reliable evidence, including the opinions
of a treating physician.").
Helms-Aetna
The Seventh Circuit, however, is going in a different direction in
2006-07. The Seventh Circuit's rulings would direct ERISA cases
arising out of Illinois, Wisconsin and Indiana. In Davis v. Unun Life Ins. Co., 444
F.3d 569 (7th Cir. 2006), the Court ignored the above cases and
overturned a district court, saying:
The district court and Davis also fault
Unum for relying on "a mere paper review," lamenting the fact that
Unum's doctors did not personally examine Davis or speak with his
doctors. However, neither the district court nor Davis has cited, and
our research has not disclosed, any authority that generally prohibits
the commonplace practice of doctors arriving at professional opinions
after reviewing medical files. In such file reviews, doctors are fully
able to evaluate medical information, balance the objective data
against the subjective opinions of the treating physicians, and render
an expert opinion without direct consultation. It is reasonable,
therefore, for an administrator to rely on its doctors'
assessments of the file and to save the plan the financial burden of
conducting repetitive tests and examinations.
and citing Dougherty v. Indiana Bell
Telephone Co., 440 F.3d 910 (7th Cir. 2006):
"We will uphold a benefit decision so long
as that decision has "rational support in the record." Leipzig, 362
F.3d at 409. " 'Questions of judgment are left to the plan
administrator,' and 'it is not our function to decide whether we would
reach the same conclusion' as the administrator." Sisto, 429 F.3d at
701 [cites]. Put simply, a
decision will not be overturned unless it is
"downright unreasonable."
Finally. the Seventh Circuit backtracked a little, by saying the abuse
of discretion standard was not an absolute win for a plan, in Call v. Ameritech Management Pension Plan (Jan
9, 2007):
But "we have said many times that the term 'abuse of discretion' covers
a range of degrees of deference rather than denoting a point within
that range, and where a particular case falls in the range depends on
the precise character of the ruling being reviewed."
It is true that the plan administrator, who is given discretion to
interpret the plan, adopted the interpretation that the defendant is
urging upon us; to reject his interpretation we must find an abuse of
that discretion. But "we have said many times that the term 'abuse of
discretion' covers a range of degrees of deference rather than denoting
a point within that range, and where a particular case falls in the
range depends on the precise character of the ruling being
reviewed." The deference that we would
normally give to an interpretation by the administrator of a pension
plan, [cite], is overridden in this case by the lack of any reasoned
basis for that interpretation.
Deference is relative to the nature of the issues, including their
complexity. [cite] The more complex, the greater the range of
reasonable
resolutions. In addition, "Deference depends on ambiguity." [cite]. The
points are
related. The more numerous and
imponderable the factors bearing
on a decision, the harder it will be for a reviewing court to pronounce
the decision unreasonable and hence an abuse of discretion. But
the
interpretation of written contracts in cases in which no extrinsic
evidence (that is, no evidence--besides the contract itself) is
presented is usually pretty straightforward. There are the contract's
wording, some commonsensical principles of interpretation, and the
commercial or other background of the contract insofar as that can be
gleaned without taking evidence. When guides to meaning line up on one
side of the case, as they do here, an adjudicator who decides the case
the other way is likely to be acting unreasonably.
Also, given Leger, above,
even the Seventh Circuit will hold the plan fidciaries up to their duty
to review thoroughly the evidence presented to them.
Since medical claims, especially those involving autism, are more
complex than the interpretation of documents, this sliding scale of
deference tilts towards the plan and not the patient.
2007 Update:
The Third Circuit issues a sweeping ruling
that sets out a new framework for how judges should decide cases where the
benefit determinator has a conflict of interest, but still tough going
in the Seventh Circuit.
http://www.ca3.uscourts.gov/opinarch/054927p.pdf
Excerpts from the Court's
opinion:
ERISA does not specify the standard of review that a trial court should
apply in an action for wrongful denial of benefits.
In Firestone Tire & Rubber Co.
v. Bruch, 489 U.S. 101, 113 (1989), the Supreme Court held that
the default standard of review in all § 1132(a)(1)(B) cases is de
novo. The Court noted in a dictum that when a plan by its terms gives
the administrator
discretion, which the plan at issue in Firestone did not, the
administrator’s decisions are upheld unless they abuse thatdiscretion.
Id.
at 115. On the issue of conflicts of interest, the Court noted that “if
a benefit plan gives discretion to an administrator or fiduciary who is
operating under a conflict of interest, that conflict must be weighed
as a ‘facto[r] in determining whether there is an abuse of
discretion.’” Id. (quoting Restatement (Second) of Trusts § 187
cmt. d (1959)). Addressing conflicts of interest in the post-Firestone
era, most courts of appeals have adopted a “sliding scale” standard of
review. This approach grants the administrator deference in accordance
with the level of conflict. Thus, if the level of conflict is slight,
most of the administrator’s deference remains
intact, and the court applies something similar to traditional
arbitrary and capricious review; conversely, if the level of conflict
is high, then most of its discretion is stripped away. Doe v. Group
Hospitalization & Med. Servs., 3 F.3d 80, 87 (4th Cir. 1993).
In Judge Becker’s scholarly opinion in Pinto v. Reliance Standard Life Insurance
Co., 214 F.3d 377, 392 (3d Cir. 2000),
we cast our lot with the sliding scale approach. Among the eleven
courts of appeals that have reported decisions in this
area, six have adopted some version of the sliding scale.4 Id.;Vega v.
Nat’l Life Ins. Servs., Inc., 188 F.3d 287, 296 (5th Cir.
1999) (en banc); Woo v. Deluxe Corp., 144 F.3d 1157, 1161–62 (8th Cir.
1998); Chojnacki v. Georgia-Pacific Corp., 108 F.3d
810, 815 (7th Cir. 1997); Doe, 3 F.3d at 87; Miller v. Metro. Life Ins.
Co., 925 F.2d 979, 984 (6th Cir. 1991). In addition, the
Ninth Circuit Court of Appeals follows a “substantially similar”
approach, though it rejects the sliding-scale metaphor. Abatie
v. Alta Health & Life Ins. Co., 458 F.3d 955, 967 (9th Cir. 2006)
(en banc) (choosing simply to note that “[a] district court, whenfaced
with all the facts and circumstances, must decide in each case how much
or how little to credit the plan administrator's
reason for denying insurance coverage”). In Pinto, we held that the
sliding scale approach was most faithful to Firestone’s
command that the level of conflict be considered as a factor in shaping
arbitrary and capricious review. 214 F.3d at 392.
B. Contours of the Sliding Scale The premise of the sliding scale
approach is that courts should examine benefit denials on their facts
to determine whether the administrator abused its discretion. Id. at
391. To apply the approach, courts first consider the evidence that the
administrator acted from an improper motive and heighten their level of
scrutiny appropriately. Id. at 392. Second, they review the merits of
the decision and the evidence of impropriety together to determine
whether the administrator properly
exercised the discretion accorded it. Id. at 394. If so, its decision
stands; if not, the court steps into the shoes of the
administrator and rules on the merits itself. At its best, the sliding
scale reduces to making a common-sense decision based on the evidence
whether the administrator appropriately exercised its discretion. This
theme, rather than getting bogged down in trying to find the perfect
point on the sliding scale, should be district courts’ touchstone.
In sharp disagreement, the Court of Appeals for the Seventh Circuit
holds that it is improper to label those situations “conflicts of
interest.” See Rud v. Liberty Life
Assur. Co. of Boston, 438 F.3d 772, 776 (7th Cir 2006) (Posner,
J.). The problem, it argues, is that we generally assume that parties
to a contract are self-interested, and it is inimical to the law of
contracts to confuse self-interest with a conflict of interest. Id.
This is no doubt logical, yet the Supreme Court has held that ERISA
places us in the realm of trust law, not contract law. Firestone, 489 U.S. at 110–11.
Moreover, were we to apply contract law, we would review plans de novo
from the start, for there is no analog to fiduciary discretion in the
common law of contracts. But we are not, and our position, in strict
accordance with Supreme Court precedent, follows the common law of
trusts.
2008 starts with more confusion between the circuits
Evans v. Eaton Corp. Long Term Disability Plan, — F.3d —-, (C.A.4 (S.C.)) (January 8, 2008)
". . . the district court, faced with
substantial conflicting medical
evidence and a good case on both sides, concluded that Evans’s position
was the stronger one. But Eaton was entitled to an abuse of discretion
standard of review, and the district court’s judgment, though abuse of
discretion in name, was de novo in fact. . . . But the delicate balance
persists. The district court lost sight of this balance. We therefore
reverse the district court’s award of benefits to Evans and remand with
directions that judgment be granted to Eaton."
Saffon v. Wells Fargo & Co. Long Term Disability Plan, — F.3d —-, (C.A.9 (Cal.)) (January 9, 2008)
As we read Abatie, when reviewing a
discretionary denial of benefits by a
plan administrator who is subject to a conflict of interest, we must
determine the extent to which the conflict influenced the
administrator’s
decision and discount to that extent the deference we accord the
administrator’s decision. In so doing, we seek to overcome the “serious
…
danger of conflicted plan decisionmaking” illustrated by the
Unum Provident scandal. Langbein,
supra, at 1335.
In Abatie, we explained that
a reviewing court must always consider the
“inherent conflict that exists when a plan administrator both
administers
the plan and funds it.” Id. at 967. We “weigh” such a conflict more or
less “heavily” depending on what other evidence is available. Id. at
968.
We “view[ ]” the conflict with a “low” “level of skepticism” if there’s
no
evidence “of malice, of self-dealing, or of a parsimonious
claims-granting
history.” Id. But we may “weigh” the conflict “more heavily” if there’s
evidence that the administrator has given “inconsistent reasons for
denial,” has failed “adequately to investigate a claim or ask the
plaintiff for necessary evidence,” or has “repeatedly denied benefits to
deserving participants by interpreting plan terms incorrectly.” Id.
In explaining what it means to “weigh” a conflict of interest, Abatie
“conscious[ly]” rejected the “sliding scale” approach adopted by other
circuits:
[W]eighing a conflict of interest as a factor in abuse of discretion
review requires a case-by-case balance …. A district court, when faced
with all the facts and circumstances, must decide in each case how much
or
how little to credit the plan administrator’s reason for denying
insurance
coverage. An egregious conflict may weigh more heavily (that is, may
cause
the court to find an abuse of discretion more readily) than a minor,
technical conflict might.
Doyle v. Liberty Life Assur. Co. of Boston, — F.3d —-, (C.A.11 (Fla.)) (January 7, 2008)
“applying a burden shifting analysis to a claims administrator’s
factual determinations poses unique difficulties.”
In 2008, look for the Supreme
Court to accept a case to resolve the
differences between the approaches taken by the Circuit Courts of
Appeals.
Court rules that a plan's guidelines do not have to be revealed
when they are not used by the insurer.
The court in Brooks decided
whether an insurer's claims management guidelines should have been
provided to an ERISA plan participant who unsuccessfully appealed the
insurer's termination of her disability benefits. Under the claims
procedure
regulations, plan participants and beneficiaries have a right to
receive copies of "relevant" documents when appealing a denied claim.
The participant Brooks argued that the guidelines were relevant within
the meaning of the regulations because they were either (1) relied on
in making the benefit determination or considered in the course of the
determination, or (2) demonstrated compliance with
administrative processes and safeguards required under the regulations.
The insurer countered that it had not considered the guidelines when it
review the participant's appeal, and that, as a matter of practice, any
reference to the guidelines would have been specifically noted in the
participant's claim file. The court agreed with the insurer, based on
the evidence submitted by the insurer, that since the guidelines were
not considered in any way in the course of the appeal, the insurer did
not have to produce them to the participant. This insurer avoided
having to provide its guidelines only because there was clear evidence
that they were not implicated in any way with this particular appeal.
Other plans may attempt to obtain the same result by adopting a
procedure which requires adding a note to the claim file when
guidelines were consulted. However, as the court acknowledged, other
court cases have read the relevant document rule differently and might
require production of this kind of guideline as a general rule.
The Court stated:
Brooks also asserts that the CMG is
relevant because it demonstrates compliance with the administrative
processes and safeguards that plans must adopt pursuant to ERISA's
implementing regulations. See 29 C.F.R. §
2650.503-1(m)(8)(iii);
Id. §2560.503-1(b)(5).
Brooks reads the regulations too broadly. The Department of Labor (DOL)
has made clear that the disclosure requirement Brooks seeks to invoke
is limited to materials specifically generated connection with a
particular adverse benefit determination:
"[S]ubparagraph (m)(8)(iii) provides that, among the information that a
plan must provide a claimant... is any information that the plan has
generated or obtained in the process of ensuring and verifying that, in
making the particular determination, the plan complied with its own
administrative processes and safeguards[.]" 26 Fed.Reg. at 70,252.
(Emphasis supplied). See also
Palmiotti
v. Metropolitan Life Ins. Co., 2006 WL 510387 (S.D.N.Y.).
http://www.mdd.uscourts.gov/Opinions152/Opinions/Brooks100907.pdf
2560.503-1 Claims procedure.
(h)(2) Full and fair review. Except as provided in paragraphs (h)(3)
and (h)(4) of this section, the claims procedures of a plan will not be
deemed to provide a claimant with a reasonable opportunity for a full
and fair review of a claim and adverse benefit determination unless the
claims procedures--
(i) Provide claimants at least 60 days following receipt of a
notification of an adverse benefit determination within which to appeal
the determination;
(ii) Provide claimants the opportunity to submit written comments,
documents, records, and other information relating to the claim for
benefits;
(iii) Provide that a claimant shall be provided, upon request and
free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant's claim for
benefits. Whether a document, record, or other information is relevant
to a claim for benefits shall be determined by reference to paragraph
(m)(8) of this section;
(m)(8) A document, record, or other information shall be considered
``relevant'' to a claimant's claim if such document, record, or other information
(i) Was relied upon in making the benefit determination;
(ii) Was submitted, considered, or generated in the course of making
the benefit determination, without regard to whether such document,
record, or other information was relied upon in making the benefit
determination;
(iii) Demonstrates compliance with the administrative processes and
safeguards required pursuant to paragraph (b)(5) of this section in
making the benefit determination; or
(iv) In the case of a group health plan or a plan providing
disability benefits, constitutes a statement of policy or guidance with
respect to the plan concerning the denied treatment option or benefit
for the claimant's diagnosis, without regard to whether such advice or
statement was relied upon in making the benefit determination.
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