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Your ERISA Watch – Firm Victory in Long-Term Disability Dispute Against Cigna Life Insurance Company of New York

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I’m pleased to report that this week’s notable decision is a Kantor & Kantor victory in the matter of Sangha v. Cigna Life Ins. Co. of New York, No. 17-CV-05158-HSG, __F.Supp.3d__, 2018 WL 3023514 (N.D. Cal. June 18, 2018), involving a termination of long-term disability benefits.  Sangha sought long-term disability (“LTD”) benefits relating to chronic pain secondary to cervical degenerative disc disease and C4 to C7 spinal fusion surgery.  Under the governing LTD policy, Sangha was entitled to benefits if she is “unable to perform the material duties of any occupation for which he or she may reasonably become qualified based on education, training or experience,” and if “solely due to Injury or Sickness…she is unable to earn more than 60% of…her Indexed Covered Earnings.”  Cigna paid Sangha for several years, though during the course of that time it denied her claim on three occasions and required her to go without benefits while she appealed those denials.  On its most recent denial, however, after the Social Security Administration found Sangha disabled, and she reimbursed Cigna for overpaid LTD benefits, Cigna refused to reinstate her claim.  That is, until now.

In finding that Sangha meets the definition of disability, the court made a number of findings that will help claimants in the future.  Those include the following:

  • Though Plaintiff’s doctor checked the “frequently” box for sitting tolerance and frequently was defined as anywhere between 2.5-5.5 hours, the court was persuaded that Plaintiff’s sitting capacity falls in the lower half of this spectrum given the other consistent prior findings and the doctor’s “subsequent opinion that Plaintiff could only ‘sit or stand for less than 2 hours in an 8-hour working day’.” Id. at *6.
  • Plaintiff’s doctors’ evaluation of Plaintiff, including his reviews of her MRIs, corroborates her account of pain. “Irrespective of corroboration, the consistency and severity of Plaintiff’s complaints and her pursuit of medical treatment over time support her claim of disability.”  Id. at *7.
  • The Functional Capacity Evaluation/Job Simulation Assessment that Plaintiff underwent, “though not required,” provides objective evidence of disability. The court rejected Cigna’s arguments that it is based on Plaintiff’s self-reports and contradicted by time-concurrent records.  “First, the FCE contains numerous objective measurements of functional capacity. Second, for the reasons discussed, Defendant’s presentation of Plaintiff’s medical records lacks credibility.”  Id. at *8 (internal citations omitted).
  • The two-day FCE/JSA is more reliable than Cigna’s one-day FCE because it takes into account Plaintiff’s “pain behaviors, unscheduled breaks, compromised body mechanics,” and gives “meaning to the functional data, which was not contained” in Cigna’s FCE. Id. at *8.
  • The Independent Medical Evaluation report from Dr. Donald Lee suffers from methodological deficits and inconsistencies. Cigna does not dispute Plaintiff’s claim that he just spent three minutes physically examining Plaintiff.  His findings are inconsistent with those of her treating doctors and his “report contains obvious internal errors that cast doubt on its credibility.”  For instance, he refers to a testicle examination that did not occur during the IME (As a side note, Sangha is female and does not have testicles.  I highlighted this fact in the appeal to Cigna and it made no effort to have Dr. Lee correct his report).  Id. at *9.
  • The court found that surveillance of Plaintiff did not contradict the restrictions and limitations that render Plaintiff disabled under the Policy. Id. at *9.
  • The court considered Plaintiff’s award of Social Security Disability benefits “for its persuasive value.” Id. at *9.  The ALJ awarded benefits based on the finding that Plaintiff’s allegations were “consistent with the medical evidence of record, which corroborates her allegations of disabling neck and back pain and significantly reduced right handed dexterity.”  Id.
  • The court found that Plaintiff’s statement and the statements of third-party witnesses support a finding of disability. They describe “Plaintiff’s debilitating chronic pain, the incapacitating side-effects of her medications, and the impact of these ailments on their lives.”  Id. *10.  Cigna did not dispute the substance of Plaintiff’s self-reports; rather Cigna just claimed that her reports are self-serving and not corroborated.  The court found otherwise.

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

Attorneys’ Fees

Ninth Circuit

Nagy v. Group Long Term Disability Plan For Employees Of Oracle America, Inc., No. 16-16160, __F.App’x__, 2018 WL 3061966 (9th Cir. June 21, 2018) (Before: THOMAS, Chief Judge, FRIEDLAND, Circuit Judge, and ZILLY, District Judge).  In this long-term disability dispute, the court affirmed the award of “own occupation” benefits but vacated the award of attorney’s fees with instructions to the district court to exclude all work performed in connection with administrative proceedings and to calculate the fee award using a lower hourly rate.

Breach of Fiduciary Duty

Fifth Circuit

Chavez v. Plan Benefit Services, Inc., No. AU-17-CA-00659-SS, 2018 WL 3016925 (W.D. Tex. June 15, 2018) (Judge Sam Sparks).  The court determined that Plaintiffs have constitutional standing to pursue their claims.  The court dismissed the prohibited transactions claim under § 1106(a) “because neither the initial contract between the plan fiduciaries and Defendants nor the subsequent payment of fees to Defendants pursuant to that contract qualify as prohibited transactions.”  The court found that Plaintiffs have plausibly alleged Defendants acted in a fiduciary capacity when carrying out at least some of the actions complained of by Plaintiffs and declined to dismiss the claims for prohibited self-dealing in violation of § 1106(b) and breach of fiduciary duties under § 1104(a).

Eighth Circuit

Dormani v. Target Corporation, et al., No. 17-CV-4049 (JNE/SER), 2018 WL 3014126 (D. Minn. June 15, 2018) (Judge Joan N. Ericksen).  The court granted Defendants’ motion to dismiss this lawsuit alleging breaches of fiduciary duty by Target’s 401(k) Plan Investment Committee and related defendants stemming from Target’s “ill-fated venture into Canada in 2013 and 2014.”  The court held that Plaintiffs’ claims are not time-barred because although the limitations period was not tolled during the pendency of In re: Target Corporation ERISA Litigation, 275 F. Supp. 3d 1063 (D. Minn. 2017), Plaintiffs did not have actual knowledge of the breach or violation before August 30, 2014.  On the merits, the court found that Plaintiffs’ proposed six alternative actions do not satisfy the “very tough” Dudenhoeffer standard.

Disability Benefit Claims

Third Circuit

Prezioso v. Bayer Corp., No. CV 14-3140 (SRC), 2018 WL 3054681 (D.N.J. June 20, 2018) (Judge Stanley R. Chesler).  Plaintiff claimed disability due to cervical radiculopathy.  The court found that Defendants adequately demonstrated that the denial of LTD benefits was reasonable and supported by substantial evidence and that Plaintiff has not raised a genuine issue of material fact.  The court found that the operative disability plan has not changed during the court of litigation and Defendants have not impermissibly reclassified Plaintiff’s job requirements in order to deny long term disability benefits.  The court granted summary judgment on Plaintiff’s equitable relief claim under Section 502(a)(3) because his injuries are recoverable under Section 502(a)(1)(B).

Sixth Circuit

Moody v. Liberty Mut. Life Assurance Co. of Boston, No. 3:17-CV-255-DJH-CHL, 2018 WL 3058880 (W.D. Ky. June 20, 2018) (Judge David J. Hale).  The court determined that Liberty Life’s decision to deny Plaintiff’s long-term disability benefits was neither arbitrary nor capricious.  It is not arbitrary and capricious for a plan administrator to ignore a treating physician’s subsequent finding where the finding conflicts with the physician’s earlier opinion or is contradicted by overwhelming evidence in the record.  Thus, it was not arbitrary or capricious for Liberty to refuse to credit Plaintiff’s subsequent submissions on appeal.

Eighth Circuit

Conner v. Ascension Health & Sedgwick, No. 4:17-CV-00021-AGF, 2018 WL 3036433 (E.D. Mo. June 19, 2018) (Judge Audrey G. Fleissig).  Plaintiff claimed disability due to pain and medication side effects following a car accident causing injuries to her neck, shoulder, and arm.  The court noted that Defendant’s reviewing doctor, Dr. Martin Mendelssohn, cited to medical records documenting that Plaintiff was prescribed MS Contin and Norco but he never addressed Plaintiff’s assertion that the side effects of her medication caused cognitive impairments such that she was disabled, nor did he explain his conclusion that Plaintiff lacked functional or neurological deficits, which is contrary to the opinions of her doctors.  The court remanded the claim to Defendants to consider the side effects of Plaintiff’s medications on her ability to perform any work and the impact on her ability to reach.

Ninth Circuit

Sangha v. Cigna Life Ins. Co. of New York, No. 17-CV-05158-HSG, __F.Supp.3d__, 2018 WL 3023514 (N.D. Cal. June 18, 2018) (Judge Haywood S. Gilliam, Jr.).  See Notable Decision summary.

Tenth Circuit

Dardick v. Unum Life Insurance Company Of America, No. 17-1412, __F.App’x__, 2018 WL 3078239 (10th Cir. June 21, 2018) (Before BRISCOE, MATHESON, and EID, Circuit Judges).  The court affirmed the district court’s decision in favor of Unum in its denial of long term disability benefits for Plaintiff claiming entitlement to plan benefits due to coronary artery disease.  Unum did not arbitrarily rely on the opinions of Dr. Chris Bartlett and Nurse Susan Grover.  Unum’s review of Plaintiff’s occupation was not arbitrary and capricious where it considered how his position is normally performed in the national economy.

ERISA Preemption

Fourth Circuit

Charlotte-Mecklenburg Hospital Authority v. Kinsinger, No. 3:18-CV-38-FDW-DCK, 2018 WL 3069178 (W.D.N.C. June 21, 2018) (Judge Frank D. Whitney).  The court remanded for lack of subject matter jurisdiction the hospital’s lawsuit against its patient for payment of services after her employee health care plan was retroactively cancelled.  The court found that the third prong of the ERISA preemption analysis is not met for two reasons. “First, one of the medical treatments involving the dispute between Plaintiff and Defendants occurred prior to time period in which Defendants held their ERISA healthcare plan. Second, the latter treatment occurred during a time period in which the plan had been retroactively cancelled by a third party. Whether or not this cancellation was valid is not before the Court in this case.”

Ninth Circuit

Kernan v. Health Care Service Corporation Dba Blue Cross And Blue Shield Of Illinois, No. 218CV02491ODWSKX, 2018 WL 3046961 (C.D. Cal. June 19, 2018) (Judge Otis D. Wright, II).  The court determined that the removal was timely since the Complaint did not make clear on its face that it raised a federal question.  Even though Plaintiff is an owner or the business, he is an “employee” of the business as far as ERISA is concerned.  Plaintiff’s claim for payment of health insurance benefits is under an ERISA employee benefit plan and his breach of contract claim is preempted by ERISA.  The court deferred ruling on whether the claim for violations of Cal. Ins. Code 790.03 is preempted or saved by ERISA’s insurance savings clause.  The court denied Plaintiff’s motion for remand.

Exhaustion of Administrative Remedies

Fifth Circuit

Swenson v. Lincoln National Life Insurance Company, et al., No. CV 17-0417, 2018 WL 3028954 (W.D. La. June 18, 2018) (Judge Elizabeth Erny Foote).  In this dispute over the payment of life insurance benefits, where Lincoln denied benefits on the basis that “Swenson was too old to qualify for an Extension of Death Benefit and because the Lincoln Plan terminated prior to his death” and where United denied benefits because “Swenson had not actively worked for Eldorado during the policy period and because United had received no premiums for Swenson,” and where Plaintiff filed her lawsuit without first appealing the denial of benefits, the court granted Lincoln and United’s motion for partial summary judgment.   The court previously dismissed Plaintiff’s lawsuit without prejudice for failure to exhaust administrative remedies.  Thereafter, Defendants denied her appeals as untimely.  Because Plaintiff did not timely appeal and “can never exhaust her remedies,” the court dismissed her Section 502(a)(1)(B) claim with prejudice.

Pension Benefit Claims

Sixth Circuit

Pearce v. Chrysler Grp. LLC Pension Plan, No. 17-1431, __F.3d__, 2018 WL 3040760 (6th Cir. June 20, 2018) (Before: MOORE, THAPAR, and BUSH, Circuit Judges).  In this dispute over the payment of supplemental retirement benefits, the Sixth Circuit affirmed in part, reversed in part, and remanded the district court’s grant of summary judgment for the plan.  The court held that:  (1) the extent of the injury suffered by Plaintiff as well as any benefit the plan derived from denial, had to be analyzed to determine whether the plan engaged in either fraudulent or inequitable conduct as required to reform provision for benefits under plan; (2) fraud or inequitable conduct did not have to arise in the drafting of the plan document in order to seek reform; (3) Plaintiff had the ability to calculate his true benefits, and therefore he could not invoke equitable estoppel to recover supplemental benefits under unambiguous plan provisions; and (4) the ability of Plaintiff to calculate his true supplemental benefits under the plan had to be determined by looking at the plan, rather than the SPD, in order to invoke equitable estoppel.

Plan Status

Fifth Circuit

Rome v. HCC Life Insurance Company, No. 3:16-CV-02480-N, 2018 WL 3046256 (N.D. Tex. June 20, 2018) (Judge David C. Godbey).  The court determined that a disability policy established pursuant to a collective bargaining agreement between the National Hockey League (“NHL”) and the National Hockey League Players’ Association (the “NHLPA”) meets all of the requirements of an ERISA plan.  The terms of the plan are clearly ascertainable with respect to the intended benefits, class of beneficiaries, source of financing, and procedures for receiving benefits.  It only meets one of the four requirements necessary to be within ERISA’s Safe Harbor provision.  Because it is an ERISA plan, ERISA preempts Plaintiff’s state law causes of action.

Meadows v. Unum Group Corp. et al., No. 2:17-CV-214-KS-MTP, 2018 WL 3015253 (S.D. Miss. June 15, 2018) (Judge Keith Starrett).  The court determined that the disability benefit policy offered under the Supplemental Income Protection Plan to a physician employed by a Clinic is part of an ERISA plan because the Clinic paid all the premiums.  “The Fifth Circuit has held that an individual policy issued to a beneficiary can still be part of an overarching ERISA employee welfare benefit plan.”  It does not matter whether or not the benefit plan is in compliance with any ERISA regulation.

Provider Claims

Third Circuit

Kaul Sanjeev MD FACS, LLC v. Northern New Jersey Teamsters Benefit Plan, et al., No. 13-CV-1078, 2018 WL 3019883 (D.N.J. June 18, 2018) (Judge Claire C. Cecchi).  The Plan did not abuse its discretion by completely excluding “coverage for treatment or services rendered by non-network providers, without qualification or exception as the NNJ Plan has consistently done.”

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