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The Supreme Court of the United States recently granted certification in the matter of Heimeshoff v. Hartford Life & Accident Ins. Co., 496 Fed. Appx. 129 (2d. Cir. 2012), in which the Second Circuit determined that Heimeshoff, who had been denied disability benefits in 2005, had no remedy against Hartford because she was in violation of her policy’s three-year time-limit–known as a statute of limitations–for bringing suit to contest the denial of her benefits. The applicable policy contained a statute of limitations requiring Heimeshoff to file suit within three years of after her “proof of loss” was required to be given. Heimeshoff applied for and was denied Short Term Disability benefits in 2005. She filed an administrative appeal contesting the denial as required under the policy, and received a final denial in 2007. She filed suit in 2010, less than 3 years after the final denial. Although Heimseshoff contended that the three years did not begin to run until she received the final denial and her right to sue was triggered, the Second Circuit read the limitations provision literally and concluded that “it does not offend the statute to have the limitations period begin to run before the claim accrues.”

The Supreme Court will resolve a split in the law amongst Circuit Courts nationwide. For example, recent cases in the Third Circuit have held that in the case of an insurance company denying disability benefits upon a finding that the insured is not medically disabled under the terms of the policy, the statute of limitations does not accrue until the plaintiff receives a final denial of benefits on administrative appeal. In Whittaker v. Hartford Life Ins. Co., 2012 U.S. Dist. LEXIS 166983 (E.D. Pa Nov. 26, 2012), the court found Whittaker’s claim timely by holding that the statute of limitations began to run at the time of Hartford’s final denial. Among other considerations, the court explained, “Although Whittaker’s benefits were first terminated on August 7, 2008, her case would have been dismissed for failure to exhaust her administrative remedies had she filed this lawsuit before her administrative appeal was denied on June 2, 2009. To start the running of the limitations period before the conclusion of the administrative appeals process would encourage plan administrators to drag their feet in deciding administrative appeals so as to minimize the amount of time a plaintiff has to prepare her case.” In Rumpf v. Metropolitan Life Ins. Co., 2010 U.S. Dist. LEXIS 74388 (E.D. Pa. Jul. 23, 2010), the initial denial of Rumpf’s benefits stated that she had the right to appeal the denial and to file an ERISA suit in the event the appeal was denied. The letter upholding the denial on appeal stated that Rumpf had the right to file an ERISA suit at that time. When Rumpf filed suit four years after the final denial, the defendants claimed that the statute of limitations had lapsed by calculating from the time of the initial denial. The court disagreed, finding that Rumpf’s claim did not accrue until the final denial and was therefore timely. The court explained, “In this case…the Court concludes it would be unfair and inequitable to hold Plaintiff to any disadvantage because she followed the instructions in the letter she received…denying her benefits. Consistent with the Plan, this letter specifically noted that Plaintiff could appeal, and stated that…she would…have the right to bring a civil action [if her appeal was denied]; in turn, Plaintiff justifiably filed the internal appeal on January 13, 2004, which was denied on February 16, 2005. Plaintiff, meanwhile, received no document mentioning any limitations period or any specific timetable within which she must file her lawsuit.”

As is evident from Heimeshoff and other similar decisions, ERISA is full of traps for the unwary, such as time limitations and various other contractual provisions that a typical consumer would be unaware of. Do not handle your claim on your own and simply trust the insurance company to “do the right thing.” Contact us at Bonny G. Rafel for a consultation to ensure that your ERISA rights are protected.

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Disability insurance policies provide benefits if you cannot perform the duties of your occupation. How does this apply to nurses working in a specialty? The insurer may categorize nurses as a registered nurse and overlook the demands of the medical specialty. A neonatal nurse or emergency room nurse needs mobility and exemplary multitasking skills to engage in their specialized nursing field. By categorizing these nurses as general RN’s the insurer erroneously disregards the special skill set required of these nurses.

In the recent case of Samper v. Providence St. Vincent Med. Ctr., 675 F.3d 1233 (9th Cir. 2012) the Ninth Circuit Court of Appeals offered some commentary on this issue. Samper, although focused on the Americans with Disabilities Act (ADA) and not specifically on long term disability insurance, dealt with a neonatal nurse who worked in the NICU of a hospital. The issue was the denial of Samper’s request for additional accommodations under the ADA. The court notes that the patient population that a neonatal nurse interacts with “cries out for constant vigilance, team coordination and continuity.” Id. at 1238. It is further acknowledged by the court that “NICU nurses must have specialized training, and it is very difficult to find replacements.” Id.

In Peck v. Aetna Life Ins. Co., 495 F. Supp. 2d 271, 274 (D. Conn. 2007) Aetna applied a generalized RN job description to the claimant who was an operating room nurse at a hospital. Aetna chose to freely interpret “own occupation” since no definition was contained within the policy but the court stated that when “own occupation” is not defined, it “shall be a position of the same general character as the insured’s previous job, requiring similar skills and training, and involving comparable duties.” Considering Peck to be a generalized RN was arbitrary and capricious because her role required a different skill set and her duties included “10-hour shifts, spending nearly all of her time on her feet, and assisting everyone in a particular operating room,” vastly different than the responsibilities of a general RN.

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As a general rule, litigation over matters of insurance coverage should take place in the Federal or State forum in which the insurance contract is signed. However, disabled claimants are sometimes surprised to learn that their policy contains a “forum selection clause”–a provision in the policy dictating that any litigation regarding the contract must take place in a specific jurisdiction, regardless of where the contract was signed or where the claimant lives.

In the groundbreaking decision of Coleman v. Supervalu, Inc. Short Term Disability Program, 2013 U.S. Dist. LEXIS 13372 (N.D. Ill. Jan. 31, 2013), the Northern District of Illinois recently held that forum selection clauses in ERISA policies are per se invalid. Coleman resided in Illinois, yet her disability policy contained a forum selection clause requiring all litigation related to her policy to be filed in the United States District Court for the District of Minnesota. The Court found the clause unenforceable, emphasizing ERISA, 29 U.S.C. 1132 (e)(2)’s provision that litigation under the Act may be brought in the district where the alleged breach of contract occurs (meaning where the individual denied benefits resides). The Court noted that this “is not a neutral provision,” since ERISA’s policy declaration states that ERISA is meant to protect the interests of plan participants by providing “ready access to the Federal courts” and Congress’ intent as expressed in the legislative history was “to remove jurisdictional and procedural obstacles which in the past appear to have hampered effective enforcement of fiduciary duties.” Citing 29 U.S.C. § 1104(a)(1)(D), which provides that “[A] fiduciary shall discharge his duties with respect to a plan…(D) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of [ERISA],” the Court concluded that since forum selection clauses deprive claimants of ready access to the Courts, they are unenforceable as inconsistent with the provisions and rights provided by ERISA.

The Coleman decision departs from caselaw in other jurisdictions upholding forum selection clauses in ERISA contracts. In Klotz v. Xerox Corp., 519 F. Supp. 2d 430 (S.D.N.Y. 2007), the court upheld the clause in Klotz’s disability policy, stating that the clause furthered ERISA’s public policy objectives by mandating litigation take place in the Western District of New York, since it “allows one federal court to oversee the administration of the LTD Plan and gain special familiarity with the LTD Plan Document, thereby furthering ERISA’s goal of establishing a uniform administrative scheme.” The court in Smith v. AEGON USA, LLC, 770 F. Supp. 2d 809 (W.D. Va. 2011) reached the same result, finding that mandating jurisdiction in the Northern District of Iowa where the company’s headquarters were located “was [not] fixed as a way to discourage potential plaintiffs from pursuing legitimate claims.” Hopefully the Federal Courts– including the Third Circuit–will embrace the outcome in Coleman based on the court’s novel and in-depth rationale.

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If you are suffering from fibromyalgia or chronic fatigue syndrome (CFS) and need to go on disability, chances are that you will receive push back from your short term or long term disability insurer. Insurers often resist claims based on fibromyalgia and CFS. More often than not, insurers will require claimants to provide “objective evidence” of these conditions and evidence of the symptoms experienced. As these are conditions that cannot be proven through traditional clinical testing, it is important to take steps to protect yourself to present the strongest case possible to your insurer.

Third Circuit courts have repeatedly held that it is arbitrary and capricious for an insurer to require that a claimant provide “objective medical evidence” in the context of a claim for LTD benefits when that claim is due to fibromyalgia or CFS. Balas v. PNC Fin. Servs. Group, 2012 U.S. Dist. LEXIS 26027 (W.D. Pa. Feb. 29, 2012); See Mitchell v. Eastman Kodak Co., 113 F.3d 433, 442-443 (3d Cir. 1997); Steele v. Boeing Co., 225 Fed. Appx. 71, 74-75 (3d Cir. 2007); Kuhn v. Prudential Ins. Co. of Am., 551 F. Supp. 2d 413, 427 (E.D. Pa. 2008). It is well known that both fibromyalgia and CFS are diseases that cannot be verified through traditional objective testing and therefore requiring a claimant to do so creates an impossible hurdle that cannot be overcome. Id. Other Circuits have reached a similar consensus that it is improper for an insurer to require objective evidence to justify fibromyalgia and CFS. See Burkhead v. Life Ins. Co. of N. Am., 2012 U.S. Dist. LEXIS 52040 (D. Colo. Apr. 13, 2012); Ayers v. Life Ins. Co. of N. Am., 2012 U.S. Dist. LEXIS 55814 (D. Or. Apr. 19, 2012); Solomon v. Metro. Life Ins. Co., 628 F. Supp. 2d 519 (S.D.N.Y. 2009); Holler v. Hartford Life & Accident Ins. Co., 737 F. Supp. 2d 883, 891 (S.D. Ohio 2010); Rodriquez v. McGraw-Hill Companies, 297 F.Supp 2d 676 (S. D. NY 2004).

In Balas, the court distinguished between requiring objective proof of a condition and requiring objective proof ofa loss of functional capacity causing the claimant to be disabled. Balas, 2012 U.S. Dist. LEXIS 26027 at *25. However, as the court in Heim v. Life Ins. Co. of N. Am., 2012 U.S. Dist. LEXIS 38257 (E.D. Pa. Mar. 21, 2012) points out, there is an inherent problem “in requiring objective evidence of the symptoms or bases of diagnoses for which there are no objective tests.” The Heim court found it improper when the insurer sought objective evidence that the claimant’s symptoms of fatigue and pain rendered her unable to work. Id. at *28.

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As disability attorneys, we often meet with individuals who have continued working after developing a disabling condition for various reasons, both financial and professional. Insurance companies will often refuse to find a claimant disabled until he or she stops working entirely. However, some individuals may have a legitimate disability claim that begins prior to leaving work, which can potentially increase the amount of benefits payable.

The Courts have recognized that an individual who works while disabled is not necessarily precluded from collecting total disability benefits. See Rabbat v. Standard Life Ins. Co., 2012 U.S. Dist. LEXIS 142336 (D. Ore. Oct. 1, 2012). The court ruled that Rabbat was disabled by these symptoms despite continuing to work for a period of time, based on his doctors’ reports of the severity of his condition; his frequent need to miss work when having a flare-up; and his supervisor documenting Rabbat’s observable severe symptoms and increasing difficulty performing his job during his final year at work. The court stated, “A desperate person might force himself to work despite an illness that everyone agreed was totally disabling. . . . Yet even a desperate person might not be able to maintain the necessary level of effort indefinitely. The claimant may have forced himself to continue in his job for years despite severe pain and fatigue and finally have found it too much and given it up even though his condition had not worsened. A disabled person should not be punished for heroic efforts to work by being held to have forfeited his entitlement to disability benefits should he stop working.” Similarly, in Bray v. Sun Life & Health Ins. Co., 838 F. Supp. 2d. 1183 (D. Co1. 2012), the court found that Bray was disabled prior to leaving work due to a then undiagnosed brain tumor, as it was clear from his performance that his symptoms prior to diagnosis severely impeded his work performance such that it could not be said he was truly capable of performing his job.

Caselaw aside, some disability income policies contain a partial disability provision for a continued percentage of benefits while the insured is disabled but working in a limited capacity. While this typically applies to residual rather than total disability, it is an alternative avenue to explore for individuals who are ill but continue to work in a certain capacity due to their particular circumstances.

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As the Wall Street Journal recently discussed, residual benefits might be a useful option in the case of a professional who becomes ill and, after a period of recovery returns to work on a reduced schedule and therefore loses incomes. If the policy was issued in the 80’s or 90’s, it may even compensate for a loss in income until the insured reaches ages 65.

However, the Wall Street Journal article fails to address the potential pitfalls of purchasing a disability income policy with a residual benefit provision. A strict total disability policy will pay the insured a flat monthly benefit upon disability, regardless of whether he or she suffers a loss of income due to disability. Such a policy will generally pay benefits so long as the insured is restricted from performing one or more material duties of his or her occupation. However, residual disability provisions–while seemingly offered to benefit the insured in the event of partial disability–generally provide that an insured will qualify as residually disabled if he or she can perform some of the duties of his her occupation, but not all. As residual benefits compensate the insured only for income lost due to disability and not the full monthly benefit available under the total disability provision, an insured may be left with a lower benefit amount as a result of paying extra premium dollars for residual coverage.

We have frequently challenged insurance companies classifying our client’s claims as residual. The dispute often centers on the terms of the particular policy. In Klay v. AXA Equitable Life Ins. Co., 2010 U.S. Dist. LEXIS 10288 (W.D. Pa. Sept. 28, 2010), Klay was a cardiothoracic surgeon who ceased performing cardiac surgeries due to his disability. The policy in question defined residual disability as an inability to “do one or more of the main duties of your occupation,” and total disability as an inability to “do the main duties of your occupation.” The Court found that since Klay continued working in a reduced capacity as a vascular surgeon, his claim could only be classified as residual. By contrast, the policy in Bybel v. Metropolitan Life Ins. Co., 2010 U.S. Dist. LEXIS 122367 (E.D. Pa. Nov. 18, 2010) contained language very similar to that in Klay, yet the court determined that Bybel could be entitled to total disability benefits. Bybel was an OB/GYN who was forced to cease her obstetrical practice when she became disabled, and the Court reasoned that since she was terminated from her position as an OB/GYN and unable to deliver babies on her own, a refusal to find her totally disabled “would contradict the intent of the parties and the purpose of a disability insurance policy.”

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Often employees are offered individual disability policies at a discounted rate if purchased with other employees. The employee may deal directly with a broker or the insurance company to purchase the policy, with the only employer connection a payroll deduction for premiums. The employees expect they have purchased an individual disability policy that is not part of an employer benefit plan. Only when their claim is denied or they are forced into litigation against the insurer due to a denial of benefits does the employee learn that the litigation may be governed under ERISA and not state law.

The recent case of McCann v. Unum Provident, 2013 U.S. Dist. LEXIS 13132 (D.N.J. Jan. 31, 2013), illustrates this situation, and how courts in the Third Circuit apply the safe harbor provision of ERISA. In McCann, a medical fellow purchased a policy that was offered to him at a discount through his employment. McCann paid the premiums directly. The policy took effect when his fellowship had ended. Benefits were denied and Unum argued that ERISA applied. The court ultimately agreed with Unum and held that the policy in question fell under ERISA and the “safe harbor provision” did not apply.

The safe harbor provision of ERISA removes a disability insurance plan from ERISA coverage if:

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In December 2012, we posted a blog regarding laws protecting Long Term Care Insurance consumers. Long Term Care is becoming an increasingly important area of focus as our population ages. However, the data inescapably indicates that LTCI is far more of a women’s issue than a men’s issue.

The New York Times recently published an article highlighting the special issues that women face as LTCI consumers. From a financial perspective, the Long Term Care Insurance market has been shrinking–with many carriers ceasing to sell policies altogether and others raising premiums by significant amounts–as the aging American population has increasingly come to call on benefits and insurers realize the true cost of the policies to their bottom lines. This issue is magnified in the case of women, who statistically live longer than men and consequently cost insurers the majority of money in LTCI benefits. Genworth Financial, the top LTCI carrier in the country, has announced that it will be raising premiums by up to 40% for single women applying for coverage. This “gender-distinct” pricing is legal in 48 states, including New Jersey. Statistics cited in favor of such pricing increases center around the fact that women have, on average, longer life spans than men. They are therefore more likely to be widowed and living alone by the time they are elderly, or to reside in nursing homes whose costs are covered by LTCI. These difficulties are in addition to increasing stringencies in the underwriting process, including home visits rather than telephone interviews, reduced inflation protection, and longer elimination (waiting) periods. More cynical speculators opine that the true reason is lower interest rates set by the Federal Reserve, which reduces insurers’ returns on invested premiums.

Despite the intensified shift toward gender-distinct pricing and stricter underwriting, insurers in New Jersey are bound by the terms of the New Jersey Long Term Care Insurance Act, which regulates the underwriting and pricing schedules of LTCI policies.

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The issue of whether a claimant with a relapsing and remitting condition is entitled to benefits arises fairly frequently in the disability context. Insurance companies often justify a denial of benefits on the fact that a claimant is in remission, or on the fact that a claimant’s variable symptoms have abated for a period of time.

In Colby v. Union Security Insurance Company & Management Company for Merrimack Anesthesia Associates Long Term Disability Plan, the First Circuit affirmed the District Court’s ruling that Colby, who suffered from opioid dependence, was entitled to LTD benefits due to her risk of relapse. Colby was an anesthesiologist whose practice allowed her ready access to opioids. Both her own doctors and several of the insurance company’s physicians had concluded that she was at a severe risk of relapse and that her returning to work would exacerbate this risk due to her occupation as an anesthesiologist and her comorbid back pain and mental health conditions. These opinions were supported by Colby’s continued struggle with addiction after leaving a treatment facility. The court concluded that, since the disability policy in question did not contain an exclusion for risk of relapse and that such a risk was a presently disabling condition, the District Court acted properly in awarding her benefits.

The risk of relapse is an issue in cases based on physical illnesses as well, particularly in cardiac cases where the stress of one’s occupation threatens to precipitate another cardiac event. See Dimsdale, “Psychological Stress and Cardiovascular Disease.” The Third Circuit addressed this issue in Lasser v. Reliance Standard Life Ins. Co., where Lasser, an orthopedic surgeon, had a diagnosis of coronary artery disease and had suffered a heart attack. Lasser argued that the stress of his occupation, including on-call and emergency duties would put him at risk for another heart attack. The Court agreed, finding that Lasser’s risk of relapse was a present disability under his policy based on his treating doctors’ opinions on the gravity of the risk.

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Fibromyalgia remains an enigmatic condition, as its symptoms are entirely self-reported and there is no objective testing that can confirm the presence of the disease. See MD Guidelines. This often makes it extremely difficult for claimants with fibromyalgia to get their disability carriers to pay their claims.

Fortunately, the Social Security Administration came out with a ruling this summer that provides guidance in determining whether a claimant is functionally impaired due to fibromyalgia. See SSA Ruling of July 25, 2012. Instead of the objective testing–such as x-rays and lab reports–which can substantiate other diagnoses, the SSA will here focus on the quality of the evidence documented by a claimant’s treating physicians. The SSA has provided that proofs may come in the form of medical records, so long as the physician conducts a physical exam and documents symptoms of fibromyalgia as prescribed by the American College of Rheumatology including pain, tender points, and the absence of any other objectively diagnosable disorder. The SSA will then look to see whether the pattern of the symptoms the physicians document is consistent with a diagnosis of fibromyalgia.

The SSA’s emphasis on the importance of treating physician’s opinions and documentation in fibromyalgia disability cases buttresses the holdings of many federal courts in ERISA cases who have maintained that an insistence on objective symptoms and the rejection of consistently documented subjective symptoms is an inappropriate basis on which to deny a fibromyalgia claim. See Brown v. Continental Casualty Co., 348 F. Supp. 2d 358, 369-70(E.D. Pa. 2004) (even if an ERISA administrator may sometimes impose a requirement for “objective” medical evidence that does not appear explicitly in a plan’s terms, it would be unreasonable to do so here . . . Such a requirement would effectively preclude any fibromyalgia patient from qualifying as totally disabled on the basis of the disease . . . Such a requirement would merit reversal here even if CNA’s administrative decisions were entitled to deference); Duperry v. Life Ins. Co. of North America, 2009 U.S. Dist. LEXIS 83532, *40-1 (E.D.N.C. Aug. 10 2009), aff’d at 632 F. 3d 860 (4th Cir. 2011) (finding the administrator’s denial arbitrary and capricious where it relied on the report of a physician who “recognize[d] plaintiff’s diagnoses of rheumatoid arthritis and fibromyalgia…[but went] on in each report to summarily state that pain associated with plaintiff’s fibromyalgia is not disabling”).

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