New Jersey Disability Lawyer Blog

An error made by the fiduciary to a defined contribution pension plan had to abide by a judgment requiring it to reimburse the plan participant whose funds were incorrectly distributed. In the recent Second Circuit case of Milgram v. The Orthopedic Assoc. Defined Contribution Pension Plan, even if the plan could not recoup the money it had wrongfully paid out, it must still honor its legal obligation to pay the pension participant.

The pension at issue was a Defined Contribution Plan. The plaintiff divorced his wife, and based on a property settlement agreement, the plan administrator erroneously transferred half of the plan funds to her, resulting in an overpayment to her of $763,847.93. The husband sued the plan under ERISA to recoup this money.

The plan argued, it could not distribute the money without first being repaid by the ex-wife, since doing otherwise would reduce the plan assets, which they refer to as alienating the benefits of other plan members.

The Court cited the concurring opinion in LaRue v. DeWolff, Boberg & Assoc., Inc., and explained that "all of the Plan's undistributed assets are legally owned by the trustee and managed for the benefit of all plan participants, with gains and losses shared by them on a pro rata basis. A single participant's 'account' is merely a bookkeeping entry that is used at the time of his retirement to determine what benefits he is entitled to receive." The Court thus distinguished Guidry v. Sheet Metal Workers National Pension Fund, and Kickham Hanley P.C. v. Kodak Retirement Income Plan, 558 F.3d 204 (2d Cir. 2009), as those cases enforced the anti-alienation provision in the face of benefits that members were entitled to.

The plan's final key argument rested on the distinction between defined contribution pension plans and defined benefit plans. A defined contribution plan guarantees that an employer makes a fixed contribution, while a defined benefit plan guarantees the beneficiary a fixed amount of benefits upon retirement. Since the plan at issue was a defined contribution plan which did not guarantee members a fixed payment on retirement, the defendants argued that it would be inequitable to allow those funds to be used to satisfy liabilities. However, the Court rejected this argument, stating that ERISA's anti-alienation provision "does not protect [beneficiaries] against the risk that poor management decisions will expose the plan's assets to liability."

You have specific rights as a member of an employee benefit plan. We at Bonny G. Rafel handle disability matters which often coincide with other benefits. Contact us to provide legal assistance on your claim.

- By Sara E. Kaplan, Esq.

Many health and disability group insurance contracts contain discretionary clauses---clauses that provide the company writing the contract with the discretion to determine the meaning of contractual terms or to determine the insured's eligibility for benefits. If your disability insurance policy is subject to ERISA, meaning it was purchased by your employer as part of a group plan, it most likely includes a discretionary clause. In order to prevail in court against an insurer, the claimant must demonstrate not just that the insurer's decision was wrong, but that the insurer abused its discretion in making that decision. Insurers use these clauses to deny claims, with knowledge of the added difficulty these clauses provide for their customers to succeed in court.

State legislators are reacting to these unfair clauses. California recently enacted a law, making discretionary clauses in disability and life insurance policies void and unenforceable. Starting January 1, 2012, for California residents challenging the denial of disability benefits, that denial may now be subject to de novo review by the court--the court would decide whether given all the evidence the person is disabled.

New Jersey Insurance regulations contain a weaker version of this California prohibition. New Jersey Administrative Code section 11:4-58.3 prohibits provisions that reserve "sole discretion" to the insurer, but permits discretionary clauses as to the insurer's "initial interpretation of the policy." Why did the Department of Banking and Insurance decide to place the word "sole" before discretion? The meaning of the word "sole" is not apparent and could lead to unfair interpretations, such as in Evans v. Employee Benefit Plan, 311 Fed. Appx. 556 (3d Cir. 2009) and Baker v. Hartford Life Ins. Co. This regulation should be revised to unequivocally state that discretionary laws are void as a matter of public policy.

We at Bonny G. Rafel are experienced in interpreting insurance contracts and will continue to pursue fairness and justice by using the New Jersey Regulation and its progeny to protect your rights.
--By Julie Gendel, Esq.

Medical providers often serve as intermediaries between their patients and insurance carriers in order to secure payment for their services. This spares the patient the burden of negotiating the waters of insurer red-tape. The recent District of New Jersey case of Cohen v. Independence Blue Cross makes clear that, in the case of an out-of- network provider, the language in an insurance policy can make all the difference in determining the efficacy of this intermediary role.

In Cohen, the insured underwent spinal surgery by an out-of-network physician, and then issued the surgeon an assignment of benefits under his health insurance plan. The defendants (the insurer, the plan and the plan administrator) paid a fraction of the doctor's bill directly to the insured, but refused to pay the rest of the doctor's bill, which was $143,626.00. This fractional amount represented a substantially higher patient obligation for out-of-network services. The defendants grounded their non-payment on an anti-assignment clause in the insured's policy, which read, in pertinent part, "The right of a Covered Person to receive benefit payments under this coverage is personal to the Covered Person and is not assignable in whole or in part to any person, Hospital, or other entity nor may benefits of this coverage be transferred."

The Court found that the clause was not preempted by ERISA, and distinguished Neuner v. Horizon Blue Cross Blue Shield of New Jersey, 301 B.R. 662 (Bankr D.N.J. 2003) (providers have standing to demand payment in the absence of an anti-assignment clause), and Ambulatory Surgical Center of New Jersey v. Horizon Healthcare Services, 2008 U.S. Dist. LEXIS 13370 (D.N.J. Feb. 21, 2008) (finding that providers could be valid assignees, without addressing whether ERISA permits anti-assignment clauses in insurance contracts). Additionally, the defendants had not waived their right to enforce the anti-assignment clause by corresponding with the doctor directly during the claim process, because Pennsylvania State law, which governed that issue, required a "clear, unequivocal and decisive act" of waiver, which the defendants had not shown.

The Court did not address the doctor's recourse to payment of his full bill. Therefore, the combination of this provision with the procurement of out-of-network services may have created a precarious situation for both the doctor and the insurer in the Cohen case.

Consumers in need of medical care welcome the assistance of their doctors to obtain payment of their medical bills. However, the Cohen case makes clear that there can be problems attendant to placing medical providers in this role. Insureds need to check the language in their policies, as they in fact may not be able to assign their rights to benefits to their doctors.

Fighting insurance company denials can be stressful, but we at Bonny G. Rafel can help.

- Sara Kaplan, Esq.

The Third Circuit is finally catching up to other Circuits in recognizing the importance that a conflict of interest plays in an insurer's decision to accept or deny a disability claim. The Third Circuit in Miller v. American Airlines noted that the claim administrator acted unreasonably by imposing additional requirements under the Plan; failing to include in its denial letter exactly what the claimant needed to provide in order to satisfy the plan requirements, failing to adequately consider all medical diagnoses and even the occupation in evaluating the case.

On the heels of Miller, our New Jersey Courts have issued another well considered opinion. Connor v. Sedgwick Claims Mgmt. Servs., 2011 U.S. Dist. LEXIS 67988 (D.N.J. June 24, 2011) The court in Connor embraced the reasoning of Miller, requiring that the termination letter provide the "precise information necessary to advise" a plaintiff "how to perfect his claim."
The denial letter must detail how the claimant "could achieve a favorable disability determination."

This should improve the quality of denial letters which are necessary to help claimants understand what is really needed to convince the company of their disability.

The Miller also noted that an insurer cannot simply change its mind about paying a disability claim once payments have been issued, unless there is evidence to support their new decision to terminate benefits. The Third Circuit noted "in the absence of any meaningful evidence to support a change in position," a plan administrator's "abrupt reversal" of a prior award of benefits is arbitrary and capricious when the plan administrator justifies its reversal on the same type of medical evidence which it initially used as justification for an award of benefits."

This rationale is ground-breaking in New Jersey, and it will be interesting to see its impact on cases involving long-term disability beneficiaries.

We at Bonny G. Rafel have already been citing these important cases in our briefs to the Court and in our appeals. We can assist you with your pending case, just contact us!

A report from The American Medical Association released in June found an increased inaccuracy in the payment of health claims. This means an astounding 3.6 million claims are being handled incorrectly.

The error rate is 19.3%, an increase of 2% over the last year. The one in five claims is being handled erroneously leads to waste in money spent on health care and administrative costs, as well as frustration for patients and health care providers. AMA Board Member Barbara McAneny, MD stated that these errors wasted an stonishing $17 billion. McAneny goes on to say that "Health insurers must put more effort into paying claims correctly the first time to save precious health care dollars and reduce unnecessary administrative tasks that take time and resources away from patient care."

At Bonny G. Rafel LLC we can help you fight these erroneous denials.

Lower back pain should never be overlooked and can result in disability, especially if surgery fails to permit you to return to full function. We at Bonny G. Rafel review many claims associated with lower back conditions because if you cannot sit for many hours in a day performing your work related duties, you will eventually seek disability benefits.

In a recent article in the Herald Tribune, the author elaborates on the source of lower back pain and the severity of the disorder. The National Institute of Health has stated that lower back pain is their No. 2 neurological disorder, trailing behind headaches.

There are many factors that can increase your risk of developing lower back pain. These factors include being overweight, being in poor physical condition, your age, and even your job. If you have a job that requires constant lifting, bending, or putting any stress on your spine you are more likely to develop back pain. You can also develop this pain by working at a desk and not sitting properly with your back up and straight

It is very important to let your treating physician know when lower back pain is causing discomfort and affecting your ability to perform your job at your full capacity. If the pain continues to interfere with your performance, seek professional treatment immediately.

We at Bonny G. Rafel can provide professional legal advise on your disability related to a back condition.

Whether you have a desk job or perform manual labor, its vital to consider protecting your income with a disability insurance policy in case you become disabled from working. This is different from worker's compensation coverage.

In a recent article published in the Times Free Press, the author examines the "public-private partnership" between insurers and the government. Tom Watjen, the CEO of Unum estimated that in roughly 70% of the households, if the breadwinner were to become injured and not able to work, he would not be able to meet all his household expenses.

That is a very scary idea to think that more than 2/3 of America's workers are not protected. The author of the article notes that more people have fire insurance on their homes and auto insurance on their cars compared to disability insurance even though the odds of getting injured are greater than a house going on fire or a car crash.

There are many disability coverage options available to the public and many available to employees of large companies. Research what your employer offers to you to determine whether investigating personal individual disability coverage would be prudent.

While there are government programs to help those who are injured and not working such as workers' compensation and Social Security Disability Income, these are dependent on the government finding that you cannot work under their guidelines and protocols.

At Bonny G. Rafel we assist consumers to file disability claims.

Many of our clients file for Social Security Disability benefits in addition to filing for employer sponsored private or group disability benefits. It remains unclear why some of our clients receive immediate approval of their claims, while others have to struggle through the appeals process. We have Social Security attorneys to refer our clients to since we do not handle such cases.

Unfortunately, some SSA decisions seem to depend on what Administrative Law Judge is assigned to your case. In April 2011, a class action lawsuit was filed in Federal District Court alleging that five of the eight Queen's County Administrative Law Judges are biased against the applicants appealing their adverse Social Security disability decision.

The suit seeks to bar the five judges from hearing any more claims, and to annul all their decisions since 2005 to deny any benefits. Together the five judges have rejected an average of 63% of the cases they have heard since September, a huge discrepancy from the 36% average held nationwide.

There are also allegations that the judges are prejudiced against applicants that immigrated to the United States (roughly half the borough's population), and have limited English-speaking skills. D. Randall Frye, president of the Association of Administrative Law Judges, says that the allegations of bias were generally sour grapes from clients who failed to receive benefits."

In determining whether bias, in fact, played a role in these cases, a court will likely look to the extent and scope of the alleged legal and factual errors that occurred in each of the eight Plaintiffs' case.

We at Bonny G. Rafel strive to help those whose claims are denied and will refer you to a capable attorney who practices Social Security law.

Over the course of your working career, statistically, you may become disabled at some point before you retire. It is better to be prepared for this possibility rather than face financial ruin if your income evaporates.
Recently in the New York Daily News article, the Social Security Administration states that there is a 25% chance that a 20-something year-old will become disabled before he or she retires. This 25% needs to be able to pay for their household expenses while disabled.

Employees need to be aware if their employer is sponsoring disability coverage and whether it's a long term or short term policy. Another important fact to find out is whether you or the employer pays the premium for this dictates whether the benefits are taxable to you. If the employee pays the premiums on a policy out of their pocket, the benefits will be tax free. If the employer pays the premiums, then the benefits are taxable.

Contact Bonny G. Rafel if you have an employee insurance disability question. We can help!

Each of us knows at least one person who suffers from migraines which often can be managed with medication. For those of you who do not know what it is like to experience a migraine, it is difficult to describe. In a New York Times article titled Migraine Miseries Push Patients to Ways of Coping, the author states that migraines can cause such severe throbbing pain in the head and nausea that the victim may have to retreat to a dark room for a day or more.

Craig Partridge, the chief scientist for a high tech research company, describes a migraine as imagining "someone having driven a nail straight through your head."

The Migraine Research Foundation reported that nearly a quarter of all households are affected by migraines and that migraines are three times more likely to occur with women compared to men. The Foundation also found that more than 10% of adults and children suffer from migraines.

When filing a disability insurance claim citing migraines as the main reason why you cannot perform your normal work duties, it is important to provide your treating physician a list or ledger of the symptoms that affect you and even a migraine journal of the regularity of your migraines and how long they last. When migraines do not respond to medication and cause you to be absent from work on a regular basis, you may be unable to sustain a full time work schedule.

At Bonny G. Rafel LLC, we assist our clients file for disability, and work on appeals to insurance companies to convince them that the restrictions and limitations of migraines can indeed render someone disabled.

New Jersey joins Pennsylvania as a state in the Third Circuit and benefits when a PA case is successful before the Third Circuit. A case in point is Kosiba v. Merck & Co. which found that Unum acted arbitrarily and capriciously in denying benefits to a claimant suffering from fibromyalgia and sarcoidosis. Kosiba v. Merck & Co., 2011 U.S. Dist. LEXIS 23247 (D.N.J. Mar. 7, 2011).

Kosiba addressed the Third Circuit's stance on issues such as scope of review, structural conflict, procedural conflict, selective consideration of medical history, financial conflict of interest, and remedy.

Following our Supreme Court's decision in Metropolitan Life Insurance Co. v. Glenn, the Court gave significant weight to Defendants' "reversal of position", "failure to address one or more of the diagnosis(es) and Defendants' failure to consider the claimant's objective functional capabilities.

The Court in Kosiba noted: "Rather than an initial disability determination, we are faced here with a situation where Defendants found [Plaintiff] totally disabled once, then sought to revisit the determination anew two years later, requiring her to provide entirely new information. Defendants then disregarded the historical medical record, including the portions that led to their own first finding of total disability. When [Plaintiff] provided her doctors' opinions that she was still disabled, Defendants chose to ignore them, and the other information that established her disability the first time, without any supporting information to the contrary. [The IME] opinion obtained during the appeal stage was helpful, but it did not comprise substantial evidence because it failed to address all of her ailments and did not address her functional capabilities."

Viewing the various factors as a whole, the Court found that Defendants' decision to terminate Plaintiff's LTD benefits was not the product of reasoned decision-making and substantial evidence. Rather, the numerous procedural irregularities led them to conclude that Defendants' termination of Plaintiff's benefits was arbitrary and capricious. Kosiba 2011 U.S. Dist. LEXIS 23247 (D.N.J. Mar. 7, 2011).

Adopting the Glenn rationale regarding financial pressures to deny claims, the Court noted that "Where an employer makes fixed contributions to a plan, evaluates claims, and pays claims through a trust...[e]ven in an actuarially grounded plan, the employer provides the monetary contribution and any money saved reduces the employer's projected benefit obligation."

This case will prove an important landmark for the clients of Bonny G. Rafel because the financial conflicts of insurers plainly influence their decisions and new our Courts will permit discovery on how the conflicts impaired the fair judgment on our cases for our disabled clients in New Jersey.

We often are retained once a claim has been denied. All too often, the denial is based on a breakdown in communication between the patient's doctors and the administrator evaluating the claim because the nature and extent of a patient's disability is not communicated clearly by the claimant's treating physicians to the insurance company.

Insurance companies periodically request treatment notes or claim forms to be completed by the claimant's physicians. Even seemingly straightforward questions by the insurance company can be construed to raise questions about the patient's disability. Oftentimes, with limited time to spend per patient, a physician will not list all the symptoms present in the diagnosis, or fails to mention the significance pain has on a patient's abilities.

Physicians constantly express their frustration -- that their priority is spending time treating the patient-- not gearing their notes to please the insurance companies. Unfortunately, insurance companies latch onto any small indication by treating physicians that the patient is doing well enough to return-to-work, or is no longer disabled. A recent New York Times article states, "A doctor's note turns into a cut-and-paste collage instead of an accurate and personalized narrative of illness; and documentation becomes an electronic and potentially dangerous version of the game 'Telephone.'"

Entitlement to disability benefits often turns on the quality of treating doctor's accurate and thorough responses. Too often, New Jersey disabled claimants are denied benefits due to inadvertent statements made by the treating physicians.

To avoid this scenario, provide your doctor with a statement detailing your disability and your symptoms which he or she can reference while completing forms on your behalf. It is also helpful to bring the insurance company's forms to your visit, and together go over any questions that could be misconstrued. Consistency is vital, and an open line of communication with your doctor means less opportunity for mistake.

The Law Office of Bonny G. Rafel, LLC often acts as the liason between the treating doctors and the insurance company and can guide you through a seemingly daunting process.
Contributed by Bonny G. Rafel

Many of our clients suffer from Chronic fatigue syndrome. Several years ago, the Centers for Disease Control and Prevention issued some protocols for establishing that a patient has the condition. Nevertheless insurance companies regularly deny disability claims based on CFS, often using the excuse that there is "no objective evidence" to substantiate the medical condition. There is no diagnostic test, no blood test and no scan, so diagnosis is made by excluding other conditions. The common symptoms, such as severe fatigue, muscle pain and weakness, rely on a patient's perception and are hard to measure. In addition, many of the symptoms are also present in other conditions.
Courts are increasingly recognizing that a medical condition can be disabling even if it is difficult to diagnose and treat.

The Wall Street Journal Reports in "The Puzzle of Chronic Fatigue" notes that patients with chronic fatigue syndrome are focusing on new research. In 2009, researchers published a paper in the journal Science announcing that in 67% of the samples of 101 chronic fatigue syndrome patients, they had found a retrovirus called XMRV. The article notes exciting research by Dr. Bellis and others who believe there is a link to retroviruses. These studies on the link between the family of retroviruses and the disorder are likely to carry significant weight in the scientific community. This will prove quite useful in pending disability cases grounded on CFS.

Notably, The Centers for Disease Control and Prevention believes that of the estimated one million to four million Americans who have it, less than 20% have actually been diagnosed. 1 to 4 million Americans are believed to have the disease. CFS is most common in women (522 cases per 100,000) and minorities.

Interesting to note that the FDA has not made a final decision, but the American Red Cross, the largest supplier of blood in the U.S., no longer accepts blood from people with the disorder.

We at Bonny G. Rafel LLC can assist you with your disability claim based on Chronic Fatigue Syndrome.

A recent article in the Wall Street Journal reports that "loopholes in a federal law intended to protect worker benefits" make it easy for insurers to make erroneous arguments with near impunity. On March 11, 2010, "Death of a loved one can be beginning of hard fight with life insurer"provided a sampling of recent cases where Metropolitan Life Insurance Company, the nations largest insurer, and Prudential, who advertises that it provides disability insurance to the most Americans, play hardball particularly with cases governed by ERISA, because the penalties for erroneous decision making is simply a slap on the wrist. The article reports "since 2008 federal judges have concluded that some insurers cheated survivors by twisting facts, fabricating excuses and ignoring autopsy findings to withhold death benefits."
Unfortunately, under ERISA, employees have no rights to a jury trial and no rights to compensatory or punitive damages. The most the insurer can be forced to pay if they lose, is the benefits they should have paid in the first place and sometimes the counsel fees of the unfortunate claimant who had to hire legal counsel to fight the insurance company. Often the cases take up to two years or more to get to judgment in Federal Court. Meantime, the claimant suffers financial struggles they never imagined would occur when they were convinced to buy the policies from the insurers eager to take the premiums but so reluctant to pay, even bona fide claims without a long battle.

The law firm of Bonny G. Rafel will help even out the playing field by providing you solid advise and counsel on your ERISA claim. It is important to have experienced counsel guide you during this difficult process. As your counsel we will strive to create an administrative record that provides all the evidence needed to convince the reluctant insurer to pay you the benefits due, during the appeal or when faced with litigation.

As Tom Baker, deputy dean of the University of Pennsylvania Law School noted, "if ever a law backfired for the public ERISA is the perfect example."

A Congressional investigation released last month found that the four largest U.S. for-profit health insurers denied policies to one in every seven applicants based on prior medical history. The Wall Street Journal reported the companies - Aetna, Inc., Humana, Inc., UnitedHealth Group, Inc., and WellPoint, Inc. - denied coverage to more than 651,000 people over the three-year period from 2007 to 2009 based on pre-existing medical conditions. The numbers indicated a 49% rise in the number of people who were denied coverage based on a pre-existing condition over the last two years.

Bloomberg reported that while most Americans have health coverage through their employer or Medicare, there is an estimated 15.7 million adults under age 65 who receive coverage through an individual health insurance policy. These are the customers directly affected by pre-existing condition coverage denials. During the same three-year period of 2007 to 2009, the four carriers combined to deny 212,800 medical claims based on the companies' claims that these claims resulted from a pre-existing condition.

While this number is alarming, it is important to note that under the newly passed health-care legislation, insurers will no longer be able to deny coverage because of a pre-existing health condition beginning in 2014.
Contributed by Charles Kellett, Esq. associate with Bonny G. Rafel