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ERISA Watch – September 21, 2015

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There was an interesting trifecta of notable appellate decisions last week involving withdrawal liability and the ACA’s contraception mandate. The Third Circuit ruled that the annual withdrawal liability payment should be based on the single highest contribution rate, rather than an average rate, but that it should not include the 10 percent surcharge. In two separate opinions, the Eighth Circuit affirmed injunctions enjoining the government from enforcing certain provisions of the ACA against religious organizations that challenge the contraceptive mandate and its accommodations.  We will abstain from giving our personal viewpoint on that one…

In the disability benefit arena, there were two notable district court decisions in favor of the disability claimants. In Healy v. Fortis Benefits Ins. Co., the court found that the denial of long-term disability benefits after a switch in the definition of disability was de novo wrong because the evidence established that the plaintiff was more likely than not disabled under the plan’s terms continuing after the change in definition date. In Cowern v. Prudential, the court found that Prudential’s termination of the plaintiff’s long-term disability benefits was arbitrary and capricious but remanded the claim to Prudential for further proceedings. These two cases highlight the judicial inefficiency caused by abuse of discretion review. In the latter case, the insurer will get another chance to do what it should have done in the first instance. Given the facts of Cowern, had it been de novo review, it’s more likely than not that the court would have awarded the prevailing plaintiff benefits. Instead, she “wins” the opportunity to go through the administrative review process again. Given how most of abuse of discretion review decisions come out against the claimant, a second chance is apparently as good as it gets.

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