We have been following the Courts’ treatment of mental or nervous disorders limitations in group long term disability policies. (See blog, Disability Caused by Physical Impairment, July 2015)  Recently, the 6th Circuit Court of Appeals joined other courts holding that a claimant is disabled by physical conditions alone, then the mere presence of a psychiatric component does not justify application of a mental health limitation to a claim.  In Okuno v. Reliance Std. Life Ins.Co., 2016 U.S. App. LEXIS 16423 (6th Cir. Sept. 7, 2016),  Reliance applied the one year limit on benefits because there was the presence of a psychiatric component to her claim regardless of the physical component to her disability. The court rejected Reliance’s rationale that as so long as there is a comorbid psychiatric condition the limitation applies.

Every federal circuit court to consider the meaning of the phrase “caused or contributed to by” has read it to exclude coverage only when the claimant’s physical disability was insufficient alone to render him totally disabled. See George v. Reliance Standard Life Ins. Co, 776 F.3d 349 (5th Cir. 2015).  The insurer bears the burden to show that the exclusion applies to the case.  “The effect of an applicant’s physical ailments must be considered separately to satisfy the requirement that the review be reasoned and deliberate.”  See Okuno . In order to overcome the insurers’ application of this mental health limitation to continued benefits, the claimant must claim total disability as the result of a purely physical condition.

What if a physical condition is covered, but the symptoms include depression, which is a mental illness? Courts caution that policy terms and precise medical facts of the claim must be examined.  See, for example, Leight v. Union Sec. Ins. Co. 2016 U.S. Dist. LEXIS 68412 (D.Or. May 24, 2016).   Leight’s Aspergers’ Disorder is expressly exempt from the definition of “mental illness” in the policy but Union Security attempted to apply the mental illness limitation, since the disorder produces disabling symptoms of anxiety and depression.   The court determined that the mental illness limitation did not apply since Aspergers was a ‘covered condition.”


Insurers often balk at paying a disability claim for a condition that has existed for a long time before the individual stops working.  It seems that people that struggle to continue working despite progressive medical impairment are not rewarded for their heroism. An interesting case was recently published in California regarding a woman suffering from pain from chronic migraines.  In Leetzow v. Metro. Life Ins. Co., 2016 U.S. Dist. LEXIS 173698 (C.D. Cal. Dec. 5, 2016), the court recognized that long absences from work show that her condition worsened over time and that it is likely that she was unable to perform with reasonable continuity the substantial and material acts necessary to perform her job, leading up to her disability claim.   The court found it unnecessary for Plaintiff’s condition to abruptly change on that particular day, for her to be disabled for the entirety of the elimination period.

Ms. Leetzow suffered from migraines for 20 years getting more severe, more frequent, (2-5 per week) and more resistant to treatment. Metropolitan Life challenged the viability of the claim, since there was no “objective evidence” of her crippling pain.  Another roadblock to recovering disability benefits is if the impairment is based on a claim of chronic pain.  The court laid the groundwork for a claim such as this.  Since there are no neurological exams for migraines that are likely to be positive, claimant’s personal accounts of her migraine related pain are to be credited, “migraines are an invisible illness and there is often no objective medical evidence to confirm their existence, patients’ personal accounts are the strongest, and often only, evidence of disability in such cases”.

The frequency of medical visits to the doctor was less critical to the Court, since Ms. Leetzow stated that her disability makes it harder for her to initiate and arrange and attend doctors appointments. And she had in the past tried all reasonable treatment for her condition. The court noted,


Many physicians in private practice are offered group discounts for signing up for disability insurance through their medical practice.  While the policies seem to be private contacts, when it comes time for file for benefits, often the insurers assert that the contract is governed by ERISA which grossly limits the rights of policyholders to benefits and suitable, just relief in Court if benefits are denied or terminated.  The Department of Labor’s safe-harbor provision (29 C.F.R. Section 2510.3-1(j).) exempts from ERISA any group-type insurance program an insurer offers to employees or members of an employee organization if all of certain criteria are met.  This fact sensitive analysis requires consideration of who pays the premiums, who collects them; whether the employer endorses the plan whether the employer receives consideration in connection to the program and how involved the employer is in the program administration. In Gooden v. Unum Life Ins. Co. of Am._ 2016 U.S. Dist. LEXIS 75363 (E.D. TN 3/30/16) the court analyzed the facts and determined, against Unum’s objection that the plan qualified under the safe harbour provision.  The clinic received correspondence from UNUM as a request for updated income information. The court determined that a plan that gives group discount solely on the basis that a group of doctors used their employer’s payroll deductions in a  “Flex-bill” arrangement to pay insurance premiums is not considered to be an employer financial contribution.  Here the clinic, the doctor’s employer’s organization did not endorse the program  but remained neutral.  Allowing an insurer to publicize its program is permitted under safe-harbor.  The court explained, “[T]he safe-harbor nowhere requires an employer to stay out of the arrangement altogether-remaining neutral does not require an employer to build a moat around a program or to separate itself from all aspects of program administration”. Finally merely completing a claim form for an employee seeking disability benefits is not a strong indication of endorsement of the policy.

Here at Bonny G. Rafel, LLC  we litigate against the application of ERISA when the facts justify safe harbor protection.  Our clients deserve the right to access to the justice system, and all available remedies, not blunted by the constricts of ERISA regulation.   Bonny G. Rafel, Esq.


Disability insurers love to deny claims based on their medical consultant’s conclusion that the claimant has “sedentary capacity.” The insurer’s vocational counselor swiftly identifies various jobs that the claimant can allegedly perform without performing a full or fair investigation of the transferable skills. Does the inquiry end at the point it is established that the individual can sit in a chair at a desk for a period of time?

Just as important is whether the individual has marketable skills to perform a “desk job”, since virtually every “sedentary” job requires strong computer skills.  In our experience, the qualifications related to real time computer and technology use are under investigated in the insurers’ rush to deny.

We have seen some changes in the collateral information the insurers collect regarding our clients.  For instance. on the “activities of daily living” forms they must complete, our disabled clients are asked whether they own a computer, whether it is a desktop or laptop, what they use the computer for (pay bills, read news, facebook).  Be prepared for these are not innocent questions. It’s direct purpose is to establish that the claimant has full use of a computer and a skill that is “transferable” to the workforce.   In short, claimants should not overstate their computer use at home.


In  a groundbreaking decision that coincides with the ruling from our Third Circuit Court of Appeals in Mirza v. Insurance Administrator of America, Inc., 800 F.3d 129 (3d Cir.2015) the First Circuit Court of Appeals decided that ERISA regulations require a plan administrator in its denial of benefits letter to inform a claimant of the deadline for filing a lawsuit.

ERISA itself does not contain a statute of limitations for bringing a civil action. 29 U.S.C. § 1132(a)(1)(B), so federal courts usually “borrow the most closely analogous statute of limitations in the forum state.” The Supreme Court has already held enforceable a contractual limitations period that commenced when the proof of disability was due, instead of the date of the final denial letter. Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604, 610 (2013).

Insurers have been allowed to establish oppressive deadlines for lawsuits that are almost impossible to meet.  Short deadlines even six months has been enforced by the court. However, when the plan fails to inform clients of impending deadlines for litigation, the claimant may mistakenly think that they have plenty of time to find counsel to file suit on their behalf if their benefits are denied.


There are two basic types of insurance coverage available for a disability that impairs ones’ ability to continue working, total disability or residual disability. “Residual disability” pertains to those participants who cannot perform all of their pre – disability material and substantial duties on a full time basis, but can perform them part -time, or can perform some of their pre-disability duties.

Residual disability benefit payments are based on what the individual is earning from engaging in their occupation. When our disabled clients return to work, and make a claim for residual disability, their earnings offset what the disability insurer continues to pay them. In cases where individuals are on a set monthly salary, the monthly benefits can be easily calculated. All policies require that the insured sustain a loss of at least 20% of their pre-disability earnings to qualify for the benefits. For a person earning periodic “bonuses” usually the insurer will give the participant the choice of either averaging the “bonus” over the course of the year, so each month the income is increased, or charge the bonus offset all at once, which may cause that monthly loss of income to be below the 20% minimum. For a professional, such as physicians, their monthly income relates directly to the payments by third parties. This may cause a significant problem in continuing residual disability benefits.

A recent case points out an example of how earnings during a residual disability claim can end a claim. In Safdi Md. v. Covered Employer’s Long Term Disability Plan Under the Union Central Employee Security Benefit Trust 2015 WL 7434695 (6th Cir. 2015) his Union Central policy provided that “benefits are terminated if a participant is either no longer disabled or exceeds the earnings threshold of 20%.” Dr. Safdi reduced his work hours after treating for prostate cancer. He lost income due to fewer hours billed. Once in a while, due a spike in collecting payments, his income did exceed the 80% threshold.  Once an audit occurred Union Central stopped benefits and demanded a repayment of over $500,000. It was accurate that Safdi did earn over 80% of his pre-disability earnings on certain months, due to the payment of collectables. However, on average, he still sustained a loss which would have justified the continued payment of the claim under the policy if it did not have this “all or nothing clause.” Safdi claimed that participants will be “victimized” by a one-time spike in current monthly earnings which is an acute risk under a plan designed for professionals because “payments from professional services (through insurance reimbursements and government benefits) are normally significantly in arrears after provision of the … services.” The court rejected his plea that the variability of professional earnings inures to the benefit of the insurer more than often than not and applied the policy terms as written.


Insurance coverage is based on the provisions of the contract and the proofs submitted by the claimant. In medical claims, a full and fair investigation of the facts concerning the particular claim requires the insurer to consult with medical professionals who are supposed to independently apply their expertise to the case facts and determine if the medical treatment is covered.

When coverage is improperly denied, the claimant will seek information about the denial, including the investigation of the claim and the rationale of the medical professional involved in the decision. Often the insurers rely on third party vendors who provide medical doctors to review the cases. These doctors have no direct contact with the claimant, and simply review medical records. Of course these doctors are paid for their time, but the question becomes, can they afford to be independent if they rely on this stream of income from a vendor who is unlikely to continue to hire them if their decisions do not support the insurers’ decision. The insurer must take steps to reduce potential bias. See Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 116, 128 S. Ct. 2343, 2351; 171 L. Ed. 2d 299 (2008).

Discovery into the medical reviewers is a basic necessity, but insurers often hide behind ERISA laws and fail to disclose information about the reviewers. We who represent the consumers in these cases, seek the identity of the reviewers, their credentials, how much they are paid for their services, how often they are used by the insurer, whether they see any patients of their own, and basically, if financial incentives skewed their decision.


One of the only saving graces of disability cases falling under the ERISA regulation, is that if the Court decides that we have had “success on the merits” of the claim on behalf of our clients, the Court may, in its discretion order that our counsel fees must be paid by the insurer. This is so important, because without that happening, when we win cases in litigation in federal court, our client pays our contingency fee from the settlement or judgment.
On June 26, 2015 we blogged on the issue of counsel fee awards in ERISA claims and explained how the court may decide that a claimant’s attorney’s fees are paid by the insurer. To receive attorney’s fees from the insurance company rather than our client, the court must conclude that we have achieved “some degree of success on the merits.” Then it must then determine the appropriate amount which is based on our timekeeper records of our legal work on the case multiplied by a lodestar, an hourly rate. Keep in mind that our clients only pay us for litigation on a contingency basis; that means, if we win the case, they pay a set percentage of the award, not by the hour.
Over the years, courts have awarded our firm, particularly, Bonny G. Rafel, Esq., counsel fees to be paid by the insurer. This obviously reduces our client’s burden of paying our fees. We would love nothing more than to get our clients all of the disability benefits they deserve, and be paid for our efforts by the insurance company who terminated or denied the benefits in the first place.
Even when we are successful in litigation, the insurer has argued that the fees should be reduced for one reason or another. They have often tried to reduce fees based on what they think would be fair, and sometimes even try to get a “southern NJ” rate, (if our cases are in Federal Court in Trenton) suggesting that lawyers working in south New Jersey charge less than the northern NJ, Manhattan corridor amount.
On May 20, 2015 the Third Circuit Court of Appeals heard oral argument in one of our cases, and after deciding in favor of our client, ordered that the insurance company, Liberty, pay all of our legal fees associated with the Third Circuit Appeal. Moreover, the Third Circuit determined that the hourly rate for counsel, Mark Debofsky, Esq. counsel from Chicago, Illinois should be $600.00 per hour and the hourly rate for counsel, Bonny G. Rafel, counsel from Florham Park, New Jersey should be $500.00 per hour.
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Multiple sclerosis is a serious and unpredictable medical condition which effects the central nervous system (brain and spinal cord). Most people are diagnosed between the ages of 20 and 50. Worldwide, more than 2.3 million people are affected by MS and every week approximately 200 people are diagnosed. Over 400,000 Americans live with MS. The National Multiple Sclerosis Society recognizes that “Symptoms range from numbness and tingling to blindness and paralysis. The progress, severity, and specific symptoms of MS in any one person cannot yet be predicted, but advances in research and treatment are moving us closer to a world free of MS.” While the root causes of MS are still being researched and debated, it is believed that some form of virus or environmental trigger causes the body’s immune system to target benevolent cells in the myelin sheath.  The myelin sheath is a protective fatty tissue around the nerve fibers that serves as a form of insulation to protect the electrical impulses traveling the nerves of the CNS. The Institute for Neurodegenerative Disorders explains how with MS, the myelin is destroyed, and “forms scar tissue (sclerosis), which gives the disease its name”, appearing in the CNS and bringing with it an abundance of symptoms.

There is no known cure for MS. The National Multiple Sclerosis Society recommends that people with MS begin treatment with Avonex, Betaseron, Copaxone, or Rebif as these “drugs help to lessen the frequency and severity of MS attacks, reduce the accumulation of lesions in the brain, and slow progression of disability.” Many therapies are also available to treat MS symptoms.

Many individuals can continue to work for a long time before the symptoms associated with this disease, often fatigue, cognitive deficits, pain, spasticity, bladder problems, and muscle weakness impair their ability to continue working. People with MS may request work accommodations, such as: moving a workstation closer to the bathroom, allowing for longer breaks, allowing to work from home, allowing a flexible work schedule, parking closer to the work-site, adjusting desk height if a wheelchair or scooter is used. Once symptoms progress, many people with MS are unable to continue working and file for disability benefits.


Debra Rose worked for a company which provided health benefits to its employees. Due to severe illness, she needed a liver transplant. The company handling the health claim required Debra to sign an authorization; with that authorization, the claim management continuously notified Debra’s employer of her health status without her express permission. Once Debra’s employer learned of her dire medical condition and the increased expense they would incur to continue coverage of her health benefits, she was fired. Debra brought a claim against the claim management company for invasion of privacy and unfair business practices. The case is pending in the district court in California. Rose v. HealthComp, Inc., 2015 U.S. Dist. LEXIS 104706 (E.D. Cal. Aug. 10, 2015).

Debra’s claim was brought under state law but the claim administrator tried to dismiss it as preempted by ERISA. Debra alleged that the claim management company received private health information while performing case management duties under the health plan and improperly disclosed them to her employer. She alleges that by providing personal health information to her employer the claim administrator did not act solely in the interest of the employees and the beneficiaries but rather in the “competing interest of the employer, to provide the employer with notice that the employee would likely be incurring high medical costs”. The court agreed that Debra’s privacy and unfair business practice cause of action could be brought as a breach of fiduciary duty under ERISA but decided that California’s Constitution providing a right of privacy was violated and this violation is not preempted by ERISA because it arises independent of ERISA or the plan.
This case is reminiscent of another right of privacy case for a disabled employee, brought in California, Dishman v. Unum Life Insurance Company of America, 269 F. 3d 974 (9th Cir. 2011). In that case, while on claim, Dishman’s privacy was invaded by an investigative firm who conducted surveillance, elicited private information about Dishman’s employment status by falsely claiming to be a Bank Loan Officer, solicited information from neighbors and friends, obtained credit information by impersonating him and committed other false acts. The 9th Circuit Court of Appeals in Dishman decided that this conduct was an independent tort committed by this company and thus Dishman could continue her lawsuit against them in state court. The court’s turning point was use of the “but for” test, which means that if the cause of action would remain independent of a claim for benefits under ERISA then the state law cause of action was proper. In this case, the state law cause of action for disclosure of plaintiff’s medical information would exist regardless of the case management undertaken in administering the health plan.

The takeaway from these cases is that ERISA does not provide a cloak of protection against a third party’s tortious actions. If the surveillance company, investigator, or even third party claim administrator violates your rights, an action separate from the ERISA claim may be viable. We at Bonny G. Rafel, LLC as the Voice of the Disabled, often uncover actions by third parties performing investigations of our disabled clients that shocks us. It is wonderful that the courts are recognizing this private cause of action is not preempted (or prevented) by ERISA. While we keep a close watch on authorizations signed by our clients, and cross out items such as “bank statements”, “driving records”, which is completely irrelevant to a disability claim and invasive! We inform our clients to keep social networking to a minimum as investigators can be relentless in their pursuit of some evidence to malign the credibility of our clients.

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