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Your ERISA Watch – Court Reverses Prudential’s Termination of Long Term Disability Benefits for Claimant Disabled by West Nile Virus Exposure

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Good morning, ERISA Watchers!  Today’s report is lighter than usual due to the extra mid-week report sent out this past Wednesday.  My radar has not picked up another notable Circuit decision since then but today I want to highlight a district court opinion, Paquin v. The Prudential Insurance Company of America, 2018 WL 3586397 (D. Colo. July 26, 2018), because it involves a claimant prevailing on a long-term disability claim and those are my favorite kinds of cases!

In Paquin, the plaintiff contracted encephalitis from a mosquito infected by the West Nile virus and sustained brain damage and cognitive difficulties that interfered with his job as a Business Development Director.  Prudential paid Paquin both short term disability benefits and long term disability benefits, until he attempted, unsuccessfully, to return to work for a trial period in 2004.  Fortunately, Paquin was able to get Prudential to reverse its termination of benefits and it paid him for another eleven years.  During this time, Prudential regularly reviewed his claim and found him entitled to benefits.  But, seemingly bent on terminating Paquin’s claim, Prudential had Paquin undergo an independent neuropsychological test and concluded that there was no “valid evidence of a continuing impairment that would prevent Mr. Paquin from performing the duties of his regular occupation.”  Paquin submitted two unsuccessful appeals to Prudential before filing suit.

The court determined that the abuse of discretion standard of review applies to Paquin’s long-term disability denial.  Though many claimants fare poorly under this standard of review, the court saw through the muck.  The court explained:

“I find that the evidence in the administrative record overwhelmingly supports the conclusion that Mr. Paquin’s cognitive ailments caused by West Nile virus are permanent and disabling under the terms of the insurance policy. The evidentiary scoreboard, if you will, reads as follows: 16 healthcare professionals (all doctors of medicine or neuropsychology, aside from one occupational therapist and one speech-language pathologist, and including one doctor who was hired by Prudential) support a finding that Mr. Paquin is disabled; three doctors hired by Prudential found that Mr. Paquin is not disabled under the terms of the policy. In addition, per ERISA case law the Court views the fact that Prudential paid Mr. Paquin LTD benefits for 11 years while conducting regular reviews as favorable to Mr. Paquin’s claim. As recently as February 2014 Prudential Claim Manager Mary Stratton noted in Mr. Paquin’s file that his cognitive issues were not likely to improve, and that there were no gainful employment options for Mr. Paquin based on the evidence in Prudential’s record.”

The court ordered Prudential to pay Paquin past due LTD benefits through the date of judgment, with interest, and to reinstate his claim going forward.

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.

Attorneys’ Fees

Third Circuit

Patterson v. Aetna Life Insurance Company, No. CV 15-8156, 2018 WL 3601227 (D.N.J. July 27, 2018) (Judge Madeline Cox Arleo).  The court “awarded attorney’s fees in the amount of $38,610.00, past due benefits in the amount of $219,767.42, prejudgment interest in the amount of $3,518.62, post-judgment interest beginning as of the date of this opinion, and costs in the amount of $400.00.”  The court rejected Aetna’s argument that 22 hours of time should not be compensated because it was spent on discovery for information outside of the administrative record.  “Awarding Plaintiff’s anything less than his full request would force him to bear the burdens and costs of fees associated with the merits of this case. Such a decision would discourage thorough examination of all issues and would place an undue burden on attorneys and clients.”

Disability Benefit Claims

Tenth Circuit

Paquin v. The Prudential Insurance Company of America, No. 16-CV-02142-RBJ, 2018 WL 3586397 (D. Colo. July 26, 2018) (Judge R. Brooke Jackson).  See Notable Decision summary above.

ERISA Preemption

Third Circuit

Peterson, M.D. PC v. Cigna Health and Life Insurance Company, No. CV 18-4764-SDW-LDW, 2018 WL 3586273 (D.N.J. July 25, 2018) (Judge Susan D. Wigenton).  In this dispute by a provider against an insurance company for outstanding payments for surgical services, the court determined that “Plaintiff is not challenging the type, scope or provision of benefits due under the Workers Union’s insurance plan, but rather the amount that was paid. ERISA does not pre-empt disputes over the amount of reimbursement.  . . . Because Plaintiff does not have standing to bring a colorable claim for benefits under § 502(a), there is no need to address the second prong of the Pascack test. Based on the foregoing, remand is appropriate in this matter.”

Life Insurance & AD&D Benefit Claims

Circuit

The Prudential Insurance Company of America v. Bailey, No. CV 616-060, 2018 WL 3551996 (S.D. Ga. July 24, 2018) (Judge J. Randal Hall).  The court granted Prudential’s request to deposit the accidental death benefits into the Court’s Registry.  On the life insurance benefits that Prudential attempted to deposit with the court previously, the court explained that the motion was procedurally improper because Prudential did not give notice to the other parties.  If Prudential wants to request to re-deposit the life insurance benefits under Rule 67then it must request that action in the form of a motion.  On Prudential’s request for a preliminary injunction prohibiting Bailey from spending any of the disputed insurance proceeds, the court determined that “Prudential ceased to be a fiduciary once it established the Account in Sherry Bailey’s name, and it may not seek equitable relief under § 1132(a)(3).”  The court denied Prudential’s request for an injunction pursuant to § 1132(a)(3).  Prudential has also not met the requirements for a preliminary injunction pursuant to Rule 65.

Medical Benefit Claims

Sixth Circuit

Int’l Union v. Honeywell Int’l Inc., No. 11-CV-14036, 2018 WL 3574718 (E.D. Mich. July 25, 2018) (Judge Denise Page Hood).  The court determined that the Plan language does not constitute a promise to continue providing healthcare coverage or minimum healthcare premium contributions to retirees after the CBAs expired.  “Plaintiffs’ Motion for Summary Judgment is denied, and Defendant’s Motion for Summary Judgment is granted.”

Ninth Circuit

Nathaniel W. v. United Behavioral Health, No. 17-CV-06341-PJH, 2018 WL 3585180 (N.D. Cal. July 26, 2018) (Judge Phyllis J. Hamilton).  This case involves a dispute over the coverage of Plaintiff’s treatment at Pacific Quest residential treatment center, which Defendant denied on the basis that the treatment was not medically necessary.  On Section 502(a)(1)(B) claim, the court determined that the claims for services rendered in 2013 and 2014, and not submitted until 2017, were outside of the Plan’s twelve-month limitations period.  In addition, the lawsuit was filed outside of the Plan’s limitations period, one year from Defendants’ letters providing the final decision.  The court rejected the argument that the limitations period should be tolled because Defendants never informed Plaintiffs that a limitations period existed.  “The court will not toll the limitations period because defendants failed to repeat information already available to plaintiffs in the SPDs.”  The court dismissed this cause of action with prejudice.

Remedies

Ninth Circuit

Kerns v. Wenner, No. 16CV2438-WQH-AGS, 2018 WL 3602402 (S.D. Cal. July 24, 2018) (Judge William Q. Hayes).  In this case, “Plaintiff seeks relief based on the denial of benefits owed to him under the Retirement Benefit Plan of the GCIU Employer Retirement Fund between 2003 and 2016. Plaintiff seeks three million dollars in punitive damages from Defendant, the administrator of the Retirement Plan, based on the delay in receiving his benefit under the Retirement Plan.”  The court found this claim arises under ERISA and that Plaintiff cannot recover punitive damages as a matter of law.

Retaliation Claims

Ninth Circuit

Barker v. Insight Global, LLC, et al., No. 16-CV-07186-BLF, 2018 WL 3548911 (N.D. Cal. July 24, 2018) (Judge Beth Labson Freeman).  The court dismissed Plaintiff’s § 510 claim with leave to amend because the Third Amended Complaint (TAC) “alleges only in conclusory fashion that Insight Global terminated Barker’s employment with the ‘specific intent’ to interfere with Barker’s rights to receive benefits under the Plan” and “conclusory allegations are ‘not entitled to be assumed true.’”  Plaintiff’s opposition relies on allegations not contained in the TAC so the court may not consider them in deciding Defendant’s motion to dismiss.

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