Reliance Standard Life Insurance Company Discovery Problems - UPDATED

Update: Reliance Standard is very, very unhappy about this blog post. Through their attorneys, they first asked me to take this information down, claiming it was false and defamatory. When I did not do so, Reliance Standard filed a motion in the Jordan case seeking to have the judge order me to take it down. That motion was denied. Now, they have renewed their request that I take it down, again claiming that I am telling untruths and defaming them.

Notably, Reliance Standard does not claim that any of the facts I have reported are false. They only quibble with my terminology and the completeness of my statements. They have three main complaints:

1. My claim that they have been "routinely excluding evidence from its ERISA claim files for years" they say is false. They admit they have been excluding what they claim are "ministerial" emails pertaining to claims from their claim files, but they argue that such emails are not evidence because they do not pertain to the decisionmaking on the claim.

2. Reliance's second concern is my statement that “one could be forgiven for assuming there were attempts to hide or destroy evidence.” They say nothing was destroyed, and that they offered an innocent explanation for their use of "white redaction."

3. Finally, Reliance complains that I did not mention their later discovery responses, only their initial responses. They essentially say that denying the existence of emails and then admitting the existence of emails only after Plaintiff was forced to file two motions to compel is just a normal part of the discovery process, and because everything came out eventually, there's no harm, no foul.

I believe that it is very important for this information to remain available to claimants and their attorneys for future cases, and that it is my responsibility to share unprotected information of this nature as widely as possible. However, I do not want it to be said that I have unfairly maligned Reliance Standard. Their actions speak for themselves, in my opinion. To that end, I have revised the original blog post at the bottom of this post, and I will provide contextual responses to Reliance's concerns below.

Regarding Reliance's claim that "ministerial" emails are not evidence, and that they therefore have not been excluding evidence from claim files, I believe that is an incorrect statement of the law. Even “ministerial” emails, as Reliance describes them, are relevant documents in an ERISA case. The ERISA claims regulations state that all “relevant” documents must be provided to claimants, and defines “relevant” as follows:

A document, record, or other information shall be considered “relevant” to a claimant's claim if such document, record, or other information
(i) Was relied upon in making the benefit determination;
(ii) Was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination;[...]

29 C.F.R. Sec. 2560.503-1(m)(8). This is a broad definition of relevance that fairly includes any documents, emails included, which were created as part of the handling of a claim.

Reliance argues instead that the phrase “in the course of making a benefit determination,” such as is found in subparagraph (ii), means that a document is not “relevant” if it did not have a direct impact on the claim decision itself. That interpretation is not supported by a reading of the rest of the section. That would essentially strip away subparagraphs (ii) - (iv), and limit relevance only to subparagraph (i). Subparagraph (i) states that documents “relied upon in making the benefit determination” are relevant, but is then followed by subparagraph (ii), which states that every other document which was “generated” in the course of the claim, “without regard to whether such document... was relied upon in making the benefit determination...” is also relevant. As such, I believe Reliance is incorrect in claiming its internal emails are not “evidence.”

When it moved to have my blog taken down, Reliance's attorneys did not cite any cases supporting their narrow interpretation of what constitutes evidence in an ERISA case. For my argument, I cited Miller v. MetLife, 925 F.2d 979, 986 (6th Cir. 1991), in which the Court stated that “In reviewing a final decision, this court must consider what occurred during the administrative appeals process.” I argued that this means the entire administrative appeals process is on review, including what Reliance would choose to characterize as “ministerial.”

Furthermore, even if Reliance's narrow definition of “evidence” was correct, it still withheld evidence from the claim file it originally produced. Ms. Dickerson’s email - the one that Ms. Brunner ordered her to delete - was absolutely related to the determination of Ms. Jordan's claim. Therein, Ms. Dickerson laid out her rationale for the final denial of the claim to her supervisor, Ms. McGill. Reliance has never offered an explanation for why that email was not included in the claim file. 

Responding to Reliance's second concern, I will make clear in the edited blog below that it is only my opinion that Reliance intended to hide evidence in this case. I have no direct proof of it, but neither do I accept their explanation that the "white redaction" was an innocent mistake. That, however, is my opinion, not a fact I can prove. The verifiable fact is that they provided me with discovery materials from which information was withheld, and did not disclose that withholding until after a second order from the court compelled them to. Future litigants should present this information honestly and let a judge decide if Reliance should be required to double-check its discovery responses.

Finally, regarding Reliance's concern that I am not taking into consideration their later discovery responses, I do not see how that matters. The fact remains that their original discovery responses were deficient, and if I had not filed not one, but two motions to compel complete and accurate discovery responses, I do not believe I would have received any of this additional material. The point I am making with this blog is that future litigants should be very cautious in accepting what Reliance provides with its initial discovery responses in all cases. Whether you chalk it up to carelessness or actual bad behavior, this case demonstrates that Reliance may have much, much more it is not telling you in its initial responses.

Without further ado, the edited original blog post follows. I am also attaching an updated version of my affidavit for use in litigation. If anyone using this information has any questions for me, feel free to contact me through this website.

---

I rarely post about ongoing cases, not because there's anything wrong with that, but because there's usually nothing interesting to say until we actually receive a decision at the end of the case. However, based on one insurer's conduct in one case, I think it is worth making an exception. It has become apparent to me, based on the conduct of Reliance Standard Life Insurance Company in the case of Jordan v. Reliance Standard, that this insurer has been routinely excluding certain emails from its ERISA claim files for years. Also, while I have no direct proof, I believe Reliance Standard attempted to hide and destroy evidence in this case.

Because discovery in ERISA cases is so severely limited, many ERISA plaintiffs and their attorneys would be unable to uncover such omissions by Reliance Standard in its discovery disclosures without permission from the presiding judge to engage in deeper discovery than is usually allowed. One of the things that can support such a request for deeper discovery is evidence of discovery abuses in other cases. To that end, I am sharing the attached affidavit, in which I lay out what happened in my client's case. For any attorneys or claimants who find this document on my website, know that it is yours to use in your case in any way you see fit. None of the information in this document is privileged or protected in any way. If Reliance Standard has told you you received a complete claim file in court, and you don't see any internal emails in it, then I encourage you to ask your judge to force Reliance Standard to look again, and to provide a complete and proper ERISA Administrative Record.

Click here to download my Affidavit, with supporting exhibits.

- Jeremy Bordelon

p.s., Since the original posting of this blog and affidavit, there have been many developments in this case which are available on PACER, including affidavits from Mr. Cate and Mr. Bachrach offering their explanations of what happened during the discovery process, as well as briefs and an order related to Reliance's attempt to have this blog taken down. I encourage anyone with a PACER account to log on to the Court's website and read those affidavits, as they are also unprotected and available for download. This additional knowledge changes none of the facts described in my affidavit.

Make your Voice Heard next Tuesday (and not just in the Presidential Election)!

Next Tuesday, November 8, 2016, is a big, big day. Yes, it's the day of the Presidential Election, but you've already heard plenty about that, and I'm not going to talk about it here. It's ALSO the last day to comment on a huge set of rule changes proposed by Social Security!

For the non-lawyers in the audience, if you're not familiar with the way federal agencies make their rules, there's a process called "Notice and Comment Rulemaking." Basically, Congress writes and passes laws in the form of statutes, then the Agencies that are tasked with enforcing or administering those laws write regulations (which also have the force of law) through the Notice and Comment process. Before making or changing regulations, the Agency is required to publish a "Notice of Proposed Rulemaking" (NPRM) in the Federal Register (which is available online), and then the public gets to submit comments about what they think about the rule. The Agency is then required to consider those comments, and explain how it considered them, before actually enacting the final rule. There's no hard-and-fast rule, but generally, the more comments an Agency gets in opposition to a rule, the less likely they are to adopt it.

Recently, Social Security issued a Proposed Rule that has a comment deadline of next Tuesday, Election Day. The rule changes they are proposing make broad, sweeping changes to the way evidence of disability is considered in Social Security claims. First and foremost, they are proposing to do away with what many consider to be the cornerstone of Social Security disability law - the "treating physician rule." For many, many years now, the rule in Social Security has been that the opinion of a claimant's own treating doctor must carry the most weight, as long as it is consistent with the medical evidence. Under the proposed new rule, that would be done away with. Social Security's back-room doctors, who never meet the claimant, could be the controlling opinions on future claims if this rule is adopted.

The other major issue, of particular concern to Veterans, is a rule regarding decisions by other entities or agencies. Currently, Social Security is required to consider (but not necessarily adopt) decisions by other governmental and non-governmental entities, such as worker's compensation insurers, long term disability insurers, and perhaps most importantly, decisions of disability by the U.S. Department of Veterans Affairs. Here out West (areas under the authority of the 9th Circuit Court of Appeals), VA decisions are required to be given "great weight" by a Social Security judge, unless the judge can explain why the VA decision was made under different rules than Social Security's rules. There are similar rules, requiring various levels of analysis, across the country. For more on how this works, and some of the cases involved, you can check out an article I wrote on the subject here.

Social Security claims in its proposed rule that it shouldn't have to pay attention to what the VA says because the rules for determining disability are different under the two programs, and that's partially correct. For example, a finding by the VA that a Veteran has a 20% disability because of facial scarring might receive little weight in a Social Security claim, and rightfully so, because that finding has little to do with what Social Security is tasked with deciding, which is vocational disability (an inability to perform full-time work because of a medical condition). 

But Social Security's explanation of the law on this topic is misleading, because it is incomplete. Many Vets are found to have very high ratings of disability due to PTSD, traumatic brain injuries, or other physical injuries suffered in the line of duty. Many of these ratings contain within them implicit findings by the VA about the individual's ability to work. For PTSD, in particular, a rating of 70% means, by law, that VA has determined the individual to have significant problems in a workplace environment. A rating of 100% due to PTSD means that the Veteran can barely function at all, at home or at work, etc. Then, there are issues of "Total Disability due to Individual Unemployability," or "TDIU," where a Veteran who does not have a combined rating of 100% can still be paid as if he did, if he can prove to the VA that he is completely unable to work due to his service-connected disabilities. 

So TDIU means a Veteran has been found by an independent government agency to be completely unable to perform sustained, gainful work. That's the same question Social Security is trying to answer, and under their current rules, they are supposed to give those decisions "great weight." Now, they are proposing to eliminate that rule, and under the proposed rule, would specifically state that they find such outside decisions to be unhelpful, and will neither give them significant weight, nor will they even be required to explain their analysis of those decisions or explain what weight they were given, if any.

In addition to these rule changes, the proposed rule would significantly lower the requirements that Social Security judges explain their decisions in writing, so that they can be understood by the claimant and by the federal courts, if a denial is appealed. Under current rules, Social Security judges have a legal duty to explain what weight they gave to various types of information, and how they reached those decisions. Those are often called "articulation standards," and they are one of the most common reasons that disability denials are overturned in federal court on appeal - judges often simply fail to explain how they evaluated the evidence, so the claim is sent back to them with instructions to explain it better. If these proposed rules are adopted, judges can get by with, essentially, a summary dismissal of Social Security disability claims. On appeal, the federal courts will be largely unable to figure out whether Social Security's decision is correct, because of the lowering of these standards.

It's not all bad news, though - there are some good ideas in the proposed rules, which I would encourage Social Security to adopt, including changing the definition of what is an "acceptable medical source." Currently, only an M.D., D.O., or Ph.D., is a "real doctor" in Social Security's system, and everyone else, including highly-qualified counselors and nurse practitioners, is classified as an "other medical source." Their opinions can be given some weight, but they cannot be ones to diagnose a condition for the first time, and their opinions generally do not receive much weight from Social Security's judges. The current proposed rule would expand the definition of who is an "acceptable medical source" to include those sorts of highly-qualified non-doctors, which would be a good thing for claimants, who often don't get (and don't necessarily need) access to "real doctors."

So, I am encouraging everyone I can reach to file comments about these various aspects of Social Security's NPRM before next Tuesday's deadline. You can find the proposal and the comments that have already been submitted here: https://www.regulations.gov/docket?D=SSA-2012-0035.  You can either upload a separate document, if you want to get "fancy," or you can submit your comments right there in the web interface. [edit: I have added sample language that you are free to use below, if anyone wants something to "go by" when making their comments].

Use your voice! Let Social Security know what you think!

--Jeremy Bordelon

***EDIT/UPDATE***

I encourage everyone to make their voices heard on this issue, but if you would like somewhere to start, I will include a proposed draft comment below. Edit and change and use as much or as little as you like, no need to attribute anything to me.

Carolyn Colvin
Acting Commissioner
Social Security Administration
6401 Security Boulevard
Baltimore, MD 21235-6401

RE:     Revisions to Rules Regarding the Evaluation of Medical Evidence (Docket No. SSA-2012-0035)

Dear Acting Commissioner Colvin,

As a concerned citizen, I write to voice my general opposition to your Agency's proposed rule change. It is very clear from the data that Social Security makes available to the public that the process of obtaining Social Security disability benefits has gotten more delayed and more difficult in recent years, and these rule changes would only make that problem worse.

First and foremost, the treating physician rule should be kept. It has long been recognized that a person's own treating physician has the best knowledge of their condition, and their opinions should continue to receive controlling weight. Other than making it easier to deny people benefits, there is no good reason in the proposed rule for making this change, so it should not be adopted. However, I encourage you to adopt your proposed rule expanding the definition of acceptable medical sources. Not only should treating doctors' opinions receive controlling weight, so should treating nurse practitioners and other highly-skilled medical professionals. As your Agency has recognized in the past, the way people receive medical treatment has changed drastically in the last 15+ years, and many people do not see an M.D. for their treatment at all.

You should also keep the rule requiring consideration of other governmental agency decisions, particularly those of the Department of Veterans Affairs. Your current rule already takes into account the differences between VA disability and Social Security disability. Veterans with relatively minor disability ratings are not being automatically approved for Social Security disability benefits under the current system, so it is not clear what problem you are trying to solve with these proposed rules. You should keep the current rules, which require Social Security to consider findings of other Agencies like the VA. In fact, you should adopt a rule stating that when a Veteran is found 100% disabled by the VA, or found to be unemployable because of his or her service-connected disabilities (TDIU), they are presumed to be disabled under the Social Security system. This would not only promote uniformity across federal benefit systems, but it would encourage efficiency and ensure that disabled Veterans promptly receive the benefits they have earned.

Finally, you should also continue to require that Social Security judges explain their decisions in a manner that can be fully understood by claimants and by the federal courts. Your proposed rule would lower these standards significantly, and this would be unfair. If a claimant cannot tell how the Social Security judge made his or her decision, and the federal court cannot tell how the Social Security judge made the decision, how is there going to be any meaningful review of those decision, to ensure that they are correct?

I urge you to withdraw this proposed rule, aside from the expansion of acceptable medical sources.

[signature]

What's the Deadline for a Long Term Disability Lawsuit?

In pretty much every other area of the law, figuring out when a lawsuit has to be filed is relatively easy. First, you figure out what the "bad action" that you're suing over was, and when it happened, and then you look up the law that says what the deadline is (called a "statute of limitations"), put the two together, and voila! That's your deadline! So for a personal injury case, you just figure out what your state's statute of limitations is for a personal injury claim (often, it's one year), and make sure you sue within a year of the injury.

Unfortunately, it's not nearly that easy in the world of ERISA long term disability claims. First of all, there is no statute of limitations - not one written into the ERISA law for a benefits claim, anyway. You might ask, then, "does that mean there's no deadline, and I can sue anytime?" Of course not! 

First of all, if an ERISA benefits claim has only been denied once, you probably can't sue yet. The courts have decided that since ERISA requires plans to offer you an appeal, you're required to "exhaust" those appeals before going to court. If you sue after a first denial, and never even try to appeal, you'll usually be thrown out of court. If you're lucky, they'll send you back to do the appeal, but many times they'll just dismiss your case, and you have no way to go back and pursue the appeal. So that's the first thing - making sure you exhaust all of the necessary* appeals. (*Note: There can also be optional appeals, that you can skip, but it's sometimes hard to tell which is which.) I'm not going to discuss the pre-lawsuit appeal process in this article, but just know that you do have the right to hire an attorney for help with those appeals, and it is a very, very good idea to do so. If you do the appeal without an attorney's help, there could irreparable holes in your case later on.

But say you have gotten a final denial, and there are no more appeals left - what then? What's the deadline to sue, if there's no statute of limitations in the ERISA law? The courts have decided that if the plan documents don't say anything about a deadline, then they will use the state law deadline for similar types of cases. It's not always easy to figure out which state law deadline is "most similar," but that's not usually a problem, because almost always, the employee benefit plan will have it's own deadline written into it. Sometimes, attorneys will call that deadline the "contractual period of limitations," since the employee benefit plan document works like a contract.

Unfortunately, for reasons that are too complicated to get into here, most benefit plans say the deadline is something like this:

"You can start legal action regarding your claim 60 days after proof of claim has been given and up to 3 years from the time proof of claim is required, unless otherwise provided under federal law."

That's a real example from an LTD policy in a case I've worked on recently, and is typical of hundreds of other plans I've reviewed over the years. What does it mean? Can you really sue 60 days after your claim is filed? Do you have 3 years from a claim denial to sue?

No and No! As we discussed above, first you have to exhaust the appeals (sometimes called "administrative remedies") before you can sue, so if you did what the quoted provision said, and sued 60 days after you gave proof of your claim, you'd likely be thrown out of court. You don't necessarily have 3 years from a denial to sue, either, because that deadline is measured "from the time proof of claim is required." So how long do you have?

Most of these policies say that "proof of claim" or "proof of loss" is required 90 days after the end of the benefits waiting period (which is usually called an "elimination period"). For most long term disability policies, that waiting period is 180 days, or roughly 6 months. So if you stop working on January 1st, the waiting period goes through around the end of June, and then you have to provide proof by around the end of September. Add 3 more years, and the deadline to file a lawsuit, according to the policy, is around the end of September 3 years later, about 3 years and 9 months after you stopped working. I cannot stress enough - this goes for many policies, but NOT ALL! Some policies have wildly different language, and it's the language of YOUR particular policy that determines your deadline.

For someone who's claim is denied from the very beginning, this usually isn't a hard deadline to meet. If someone stops working January 1st, as in the example above, files their claim for LTD benefits in the summer, it gets denied in the fall, they hire me to work on the appeal, and all the appeals are denied by the end of the next year, that still leaves roughly 2 years to file the case in court, and there's no reason it should take that long. 

Where it gets really tricky is with people who aren't denied in the beginning. What happens if you get paid LTD for a few years, then you get denied? Often, LTD carriers will pay someone for 2 years because they're disabled from their "own occupation," then deny them after that because they are not disabled from "any occupation." This is allowed under the terms of most LTD policies, but what's the lawsuit deadline then? 3 years from that denial?

Well, that would be the fair and rational thing to do, but that's not what the Supreme Court says. In 2013, the Supreme Court said in case called Heimeshoff v. Hartford Life & Accident Insurance Company that you just do what it says in the policy, even if the "lawsuit clock" is running before someone's claim is even denied! So under the example policy language above, you could have this timeline:

• Stop working due to a disability on January 1st, 2014
• Claim approved by LTD carrier, start getting paid July 1, 2014
• Get paid for disability from your "own occupation" from July 1, 2014 - June 30, 2016
• Claim denied June 30, 2016 because they say you could do other work
• You appeal within the statutory 6 month deadline, on December 20, 2016
• Your LTD carrier takes 90 days to decide your appeal, denying you again on March 20, 2017

What's your deadline to sue? You probably only have about 6 months from the "final denial" to get into court, under this scenario. That's a lot less than the 3 years you might think you have if you look at the policy! And this example is when everything goes relatively smoothly, and no one receives any extra extensions beyond the norm. Quite often, the process takes longer than that, meaning you could find yourself with even less time after a final denial to get into court.

Sometimes, the court deadline can come and go before you're even done with the mandatory appeals! What do you do then? If you have an attorney who's experienced in this field, he or she might ask the LTD carrier to enter into a "tolling agreement," as I have in a few cases. A tolling agreement is just a short contract between you and the LTD company that says that even if the deadline to sue technically passes while you're working on the appeals, the LTD carrier will let you take the case to court after the appeals are done. The LTD companies will usually consent to these agreements, in my experience. That's good, because aside from it being required by the courts, you generally don't want to short-circuit the appeals process in these cases, because it's usually your only opportunity to submit evidence of your disability.

Long story short - when people ask me what the "statute of limitations" or "SOL" is on an ERISA benefits claim, I have to give them a lawyer's favorite answer: "It depends!"

--Jeremy Bordelon

Self-Employment During a Disability

For people with disabilities, the easiest way to get back to work is often to be self-employed, which may allow the kind of flexibility in terms of hours and job duties that no other employer would offer.  If you're receiving Social Security Disability Insurance benefits, though, there are rules that must be followed, both in terms of reporting work activity and in terms of how much you can earn before you risk being cut off.

For example, consider someone making crafts and selling them on the internet (through Etsy or eBay). Social Security looks at their earnings in that business as self-employment earnings. For self-employment, the most important number is the NESE (net earnings from self-employment, i.e., what the business earns after expenses), multiplied by .9235 (giving credit for the extra taxes self-employed people pay that a normal wage-earner's employer usually pays). There are some other work incentives under Social Security's rules that may wipe out more earnings, but that's a good number to start with. 

$1,130 per month is what Social Security considers "gainful" employment (they adjust the number every year for inflation) - if you earn more than that in a month, you are considered to be "gainfully" employed, and not disabled for the purposes of Social Security disability. However, even earnings less than that can cause problems for those already on claim with SSA. Earnings of more than $810 in a month will trigger what is known as the "trial work period." Nine months of such earnings (not necessarily in a row) will complete your trial work period. After that, you enter the "extended period of eligibility," which is the 36 months (consecutive, this time) after your trial work period ends. During the extended period of eligibility (EPE), you can continue to receive your full disability benefit if you remain disabled, but Social Security will take away the payments you would receive for any months in which your calculated self-employment earnings (under the formula I described above) are more than $1,130 per month. At the end of the EPE, you risk being cut off altogether if you earn more than $1,130 per month in any single month. 

This is all assuming that you are receiving Title II Social Security Disability Insurance (SSDI) and not Supplemental Security Income (SSI). Keep in mind that even if you follow all of the rules above, SSA sometimes screws this whole thing up, and may cause hassles for you down the road, despite their own rules. 

--Jeremy Bordelon

When Should You Hire An Attorney?

Many times, people who get a disability insurance denial will not know what to do next.  Do you appeal on your own?  Hire an attorney now?  Hire one later?  Sometimes, the first thing they do is to contact their State's Insurance Commissioner, asking for advice.  Unfortunately, the advice people get from those departments is not always good.  Sometimes it's very, very bad. Consider this question I received from someone online:

I have a group LTD plan with Standard. I have been on LTD for 12 months. I was notified last week that I am no longer eligible for coverage (despite restrictions and limitations assessed by two of my doctors!)  My state insurance commissioner said I could not use an attorney until after my appeal was denied and even then it would be difficult to find someone willing to take this kind of case.  He said with ERISA laws if I lost the appeal and wanted to pursue legal action that I would sue my employer NOT Standard.

Thankfully, this person thought to ask a lawyer before following that advice!  Here was my answer:

Your insurance commissioner, or whoever you spoke to in his office, is wrong. Dead wrong. Dangerously, woefully wrong. About the only thing he was right about is that it can indeed be difficult to find an attorney to work on an ERISA LTD case. Those of us who do work on them have to be very picky about what cases we take, both medically and financially, because we typically charge a percentage of the person's benefits, only if they win or settle. 

A couple of things to know about ERISA - first, it's a Federal law, and it trumps most State laws, so I suppose it's not surprising that the State insurance commissioner doesn't know much about it. I believe the proper defendant in your case probably WOULD be Standard. You live in Virginia, which is in the 4th Circuit's jurisdiction (for Federal courts). Last I checked, the 4th Circuit had not made a clear pronouncement about who the proper defendant was in an ERISA case, but the lower courts within the 4th Circuit have followed the rule that the proper defendant is the entity which has responsibility for making decisions under the plan. For you that's Standard, not your employer. 

The other thing the commissioner was wrong about is when you should hire an attorney. Do it BEFORE the final denial. One of the other things about ERISA is that when these cases do go to court, they generally do so on a closed record. What I mean is that anything not submitted to Standard will probably be excluded from the court's consideration. You will not get to testify. Your doctors will not get to testify. There will be no jury. It's generally just Standard's claim file, plus arguments from both sides' attorneys, so if there's any good evidence you want to use in the future, you have to make sure it's in Standard's claim file BEFORE the final denial, otherwise you may not be able to use it. That's why you hire an attorney before the final denial - so he or she can help you build that record. 

Find a competent employee benefits attorney who understands ERISA and get his or her help on your appeal. It may be difficult to find someone in your area, but you do not need to limit yourself to your local area. Because ERISA is a federal law, the rules don't change much from place to place, and those of us who work on these cases can often do so from a distance. Also, because there isn't a traditional trial if the case goes to court, attorneys have a little more leeway about where they can practically file the case. For example, I'm in Portland, Oregon.  I have had people hire me from all over the country, to work on cases with several different insurance companies, but when I get hired on a case involving Standard Insurance, no matter where the client lives, I can file those cases here in Portland, because that's where Standard is headquartered!  The same goes for Unum - until recently, I practiced in Chattanooga, Tennessee, which is Unum's headquarters.  A woman in Hawaii hired me to represent her, and I could have filed her court case there in Chattanooga. In most of these cases, there are two or three different options available for where to file the case, and you want to hire an attorney that can make the best choice for your case.

I encourage everyone to look around on the web, talk to people in the know, and find someone you're comfortable with, no matter where their office is located. ERISA is too complicated to go it alone, and too specific to take the advice of those who don't understand it (like your insurance commissioner, apparently).

--Jeremy Bordelon

Disability, or Retirement, or Both?

Most people know that Social Security offers both disability and retirement benefits. For disability, you have to prove you’re disabled, but for retirement, you just have to be the right age. What happens, though, if you’ve reached (or are close to) retirement age, and you’re also disabled?

Even if you haven’t reached your normal (full) retirement age, you can retire as early as age 62 and receive a reduced retirement benefit. The amount of the reduction varies depending on how long you have until your normal retirement age. For the first 36 months you’re retiring early, the reduction is 5/9 of 1% for each month you’re retiring early. For each additional month more than 36 months early, the reduction is 5/12 of 1%.

Here’s how that works in practice: Say you were born in 1954, and you want to retire at age 62, in the year 2016. Your normal/full retirement age is 66, so you’d be retiring 4 years, or 48 months early. The first 36 months get you a 5/9 of 1% reduction each month, and the other 12 months get you a 5/12 of 1% reduction each month.

36 months x 5/9 of 1% per month = 20% benefit reduction

• 12 months x 5/12 of 1% per month = 5% benefit reduction

48 months total 25% total reduction

So in the end, if you retire 48 months early, you get a 25% benefit reduction. You only receive 75% of what you would have received if you waited until your full retirement age of 66. And that’s locked in forever – it doesn’t go back up to the full 100% once you hit your full retirement age.

However, there is a way out. Say you’re not retiring at age 62 because you want to, but you have to stop working because you’re disabled – you have medical problems that prevent you from doing your job anymore, and would prevent you from doing other jobs, as well. Applying for Social Security disability benefits is one option, but that’s often a long, drawn-out process that takes years to apply, appeal, and finally get those benefits. In the meantime, you’ve got no income.

What you can do in that situation is to apply for both early retirement benefits and disability benefits. You will start receiving the retirement benefits (subject to the reduction formula above) almost immediately, and that will provide you some income while you’re going through the process of proving your disability. And the reduction to your retirement benefits – if you’re eventually approved for disability, the Agency will “undo" your early retirement and re-classify you as disabled instead of retired.

There is an another way filing for disability can protect your eventual retirement benefits, because of the way Social Security calculates those benefits. Retirement benefits are based on your Average Indexed Monthly Earnings, or “AIME." Social Security calculates your average earnings per month over your whole life, and adjusts them for inflation. If you had several years with no earnings, simple math would say that’s going to bring your average monthly income down, and your retirement benefits down with it. If those years with no earnings fall during a period of disability, though, Social Security will not count those years in your average, leaving your average earnings higher, and therefore giving you a higher retirement benefit. So if you’re not working because of a disability, it’s always a good idea to apply for Social Security disability, not just for the benefits it provides now, but also for the benefits it provides when you eventually reach retirement age.

Once you reach your full retirement age, even if you’ve been found disabled, you are converted over to “retirement benefits" by Social Security. No one is considered “disabled" by the Agency after they reach their full retirement age. If you applied for early retirement, but were later found disabled, you may not have any reduction to your retirement benefits because of the early retirement election, but there might still be a small reduction if there were any months where you received “early retirement" benefits that you did not eventually receive disability benefits for, those months would still reduce your retirement benefits.

For example, if someone became disabled right on his 62nd birthday, and started receiving early retirement benefits right then, and applied for disability, he would have about 6 months during which he receives early retirement, but is not eligible for disability benefits. That’s because Social Security disability benefits have a waiting period, but retirement benefits do not. Under that scenario, the claimant would have a 5/9 of 1% reduction to his eventual retirement benefits for each of those 6 months. In other words, when he reaches age 66, his benefit will go down by about 3% because of those early retirement benefits. If his benefit should have been $1,000, it would be reduced about $30.

Most people would say that having money to live on while they’re pursuing Social Security disability benefits is well worth a $30 reduction, four years down the road. But these are the things you need to think about when you’re deciding what to do with retirement and disability benefits. Know your rights, and protect your benefits!

--Jeremy Bordelon

If Your LTD Carrier Offers a Settlement, What Should You Do?

Recently, someone contacted me to ask this question:

"I have been on disability for just over 10 years, because of fibromyalgia and migraines.  My disability insurance company just completed a review, and said that I'm still disabled, but then they offered to settle my claim!  They are offering 66% of the current value and are using an interest rate of 4.37%. I also have Social Security Disability.  I wanted to make sure this would not effect my social security disability payments.  Also I wanted to make sure that I will not have to pay taxes on this lump sum.  According to UNUM, since my monthly payments are not taxable neither is this, but their letter denies any tax claims.  Is this a good deal? I am afraid they will deny my claim if I don't take this."

It's tough to know what to do in a situation like this.  I have helped people through several of these negotiations, though, so I can offer some advice.  First of all, what they claim is 66% of the value of your case may actually be more like 50% - they throw a lot of extra factors in there, like "mortality and morbidity," that in my opinion don't matter when calculating the "full value" of a case.  If you're OK with the amount they're offering, though, that's what matters.  Usually, if you negotiate with them, they will go up a little, but not a lot.

As far as the taxability goes, nobody but a tax professional ever wants to give tax advice, but I can tell you generally that settlement does not change the taxability of anything. So if something was properly untaxable as a monthly benefit, it's still untaxable as a lump-sum settlement.  Unfortunately, whether your monthly payments are truly, properly untaxable - that really is a question for a tax pro.

But you can rest assured, this will not affect your Social Security disability benefits.  If you've been receiving both Social Security disability and LTD for 10 years, I'm pretty certain you're on SSDI, not on SSI.  SSI is need-based, and settling a claim for a lump of cash could mess up those SSI benefits.  SSDI benefits are not need-based, so you could settle this LTD claim, inherit money from someone, or even win the lottery with no worries.

Would Unum deny your case if you turn down the settlement?  Probably not immediately, and maybe never, but you can never be sure.  In my experience, Unum and the other LTD insurers don't typically offer to settle unless there's a good reason to think the person might stay disabled (and draw benefits) for a long time.  If there was a good reason to deny you now, you'd better believe they'd be denying you, not offering to settle.  So on one hand, that might mean you should reject the deal and stay on claim, receiving more money in the long run.  On the other hand, you never know what they're going to do, and if you settle, there's no more worrying about what they might do.

Please keep in mind that you don't have to do this alone - you can hire an attorney to help you through this.  I've even had Unum and some other companies offer to pay part of the attorney's fees if you tell them you want an attorney's help with this.  The attorney can then help you deal with Unum, make sure you get as much money as possible, give you specific, individualized, private answers to any questions you may have, and make sure the terms of the deal are right for you.

-Jeremy Bordelon

What Do You Mean, “My Disability Policy Doesn’t Cover That?”

As complex as it can be, there's one simple thing about Social Security claims - they all follow the same rules.  Someone can come to me to talk about Social Security benefits, and I'll know the rules that apply because the same rules apply to everyone. The same is not true for private disability insurance policies – these often have sneaky little exceptions and exclusions that nobody told you about when you signed up for long term disability (LTD) coverage at work, or purchased a disability policy from an agent. Knowing about these exceptions ahead of time may help you avoid a nasty surprise later.

One of the most common differences between Social Security’s disability program and employee LTD plans is the “pre-existing conditions" exclusion. Most LTD policies contain a clause that says that if you leave work with a disability less than one year after you signed up for LTD coverage, then any medical conditions you received treatment for in the months before your coverage took effect are excluded. Most of the time, this hits new employees, but sometimes strange circumstances cause it to affect long-time employees, too. Recently, I reviewed the case of a woman who had worked in the same place, and had LTD coverage there for years. However, in the last year she worked before becoming disabled, her office became a division of a larger company. Along with that change, everyone got enrolled into the new company’s benefit plans. Because they were new enrollees, they were subject to the new company’s pre-existing conditions clause, and there was no way around it. This was something the woman’s employer could have avoided, if the company had been thinking about it and asked for the right exceptions to be put into the policy, but because they didn’t, this woman had to abandon a benefit she’d been paying for for years.

Pre-existing conditions exclusions hit any kind of condition, as long as it falls within the timeline described in the policy. One other type of exclusion that’s becoming more and more common in LTD policies is a specific exclusion for so-called “hard to prove" conditions. For years, most LTD plans have limited “mental and nervous conditions" to two years of benefits – i.e., if you’re disabled because of a bad back, you may be able to receive benefits until you turn 65, but if you’re disabled because of depression, or bipolar disorder, or schizophrenia, you can only get two years of benefits. Some people ask me how this can be legal when it’s so unfair. The answer, unfortunately, is that fairness has nothing to do with it. Except for a few key terms having to do with appeal rights, the law doesn’t regulate the terms of these plans.

Many LTD policies now also have duration limits or complete exclusions for “subjective symptoms," which, when interpreted the way some companies do, would exclude just about everything short of an amputated limb. A “subjective symptom" is anything you tell your doctor about that he can’t definitely prove with a test or procedure. Pain is the prime example of a subjective symptom – if you have a herniated disc in your back, your doctor can see the disc on an MRI, and he knows that such a condition is likely to cause pain, but the pain itself can’t be measured or proven. The same goes for pain due to other conditions, like migraines or fibromyalgia.

One recent court case from Georgia had an employee challenging a limit on “neuromusculoskeletal or soft tissue disorders" (which probably encompasses the majority of disability claims). The challenge was based on the fact that the employee had no opportunity to negotiate or change the terms of the LTD plan (that’s called an “adhesion contract"), and that the coverage was not what a “reasonable employee" would expect to get when he signed up for LTD coverage. The court recognized the truth of those arguments, but held that it didn’t change the terms of the plan. “The fact that the Plan is a contract of adhesion or that … employees would be surprised to learn that their disability coverage is not what a reasonable employee would think, is of no consequence. [The Employer] is the master of its plan and no … provision [of the law] bars it from excluding coverage for neuro-musculoskeletal disorders."In other words, these policies can contain all sorts of exclusions that may be unfair or surprising to employees, but the courts will enforce them as they're written in most cases.

Insurance companies are getting more creative with these exclusions, and employers don’t seem to care what they’re offering to their employees, so it falls on the employees themselves to make sure they’re being adequately protected. Anyone who has disability insurance, whether through work or purchased from a private insurance agent, should carefully review the exclusions and limits in those policies. In certain cases, it may be best not to count on the coverage you got from work and get your own, better, policy from a private agent. Other people may be able to avoid the application of certain terms, like pre-existing condition exclusions, by hanging on and staying at work a few months longer before filing a disability claim. In any case, forewarned is forearmed. Everyone should know what his or her policy does and does not cover before they need to file a claim.

--Jeremy Bordelon

ERISA-governed Healthcare Claims

With limited exceptions, almost all employee benefits claims are governed by the Employee Retirement Income Security Act of 1974 (ERISA). This includes group health insurance obtained through your employer. ERISA claims can be very complicated, and if your ERISA healthcare claim is denied, you should immediately educate yourself before jumping into filing any appeals, and, if you can find one, consult with an attorney who handles these types of cases.

In all ERISA benefits claims, the internal appeals process must be completed before filing suit. If the denial is upheld through the mandatory appeals process, there may be additional, voluntary appeal levels available. In court, however, there are only limited remedies available. There will likely be no jury trial, no medical testimony, and no depositions or documents obtained from the insurance company. The court will probably review the insurance company’s claim file, and not much else. Normally, you cannot recover more than the benefits you were owed in the first place. So, for a $50,000 surgery that the medical insurer refused to pay for, the most you will recover in court is likely $50,000. Some courts will allow pre- and post-judgment interest on top of the recovery, but not all. There will not be any punitive damages, pain-and-suffering, mental anguish, or anything like that in an ERISA case.

Healthcare claims are divided into three different categories by the Department of Labor’s ERISA claims regulations: urgent care claims, pre-service claims, and normal post-service claims. 29 C.F.R. § 2560.503-1(m)(2-4). Post-service claims must be decided by the insurer within 30 days, but the insurer is allowed one 30-day extension. Pre-service claims must be decided within 15 days (with a one-time 15 day extension available), and urgent care claims must be decided within 72 hours. No extensions are available for urgent care claims, but if the insurer determines that it does not have sufficient information to decide the claim, it must notify you of the deficiency within 24 hours of receiving the claim, and give you 48 hours to provide the requested information.

Although extensions are only supposed to be taken if necessary “due to circumstances beyond the insurer’s control," in practice these extensions are taken frequently, with little explanation, sometimes late, and often due to purely internal delays. Technically, the insurer’s failure to comply with the regulations in this manner could give you a right to sue without pursuing any further internal appeals. 29 C.F.R. § 2560.503-1(l). In practice, it is usually best to overlook these minor technical violations and complete the mandatory appeals. Usually you will want to avail yourself of the full 180 day appeal window to develop the medical record. You must be given at least 180 days to appeal the denial.

An outright denial is easy to recognize, but in the healthcare arena especially, there are varying degrees of “denial." An exhaustive definition is available at 29 C.F.R. § 2560.503-1(m)(4), but in essence, anything less than a complete approval of the claim can (and usually should) be appealed as if it was an outright denial. For example, health insurers may use “post-payment audits" to demand partial refunds of fees paid to providers. While beyond the scope of this brief article, these practices are “adverse benefit determinations" (denials), and have generated large-scale class action ERISA litigation by medical providers.

So, if you have been denied, and have exhausted the mandatory appeals process, then the window in which you can file an ERISA § 502 suit has opened. When that window closes, however, is a more difficult question. The ERISA law itself does not contain a statute of limitations for § 502(a) claims for benefits. If there is no clause in the policy stating a limitations period, the courts will look to analogous state statutes of limitations, such as for contract actions. Where the insurance contract itself contains a contractual period of limitations, courts will usually uphold those provisions, even if they are shorter than the relevant state-law periods, if they allow people a reasonable amount of time to sue. Limitations periods as short as 90 days have been upheld by the courts in healthcare claims. E.g., _ Northlake Regional Medical Center v. Waffle House System Employee Benefit Plan, 160 F.3d 1301, 1303-04 (11th Cir. 1998). These periods are not necessarily tolled while the claimant exhausts the mandatory appeals, either. _See, e.g., Rice v. Jefferson Pilot, 578 F.3d 450 (6th Cir. 2009).

Once your case is filed in court, that's it as far as new evidence is concerned. At that point, if you haven’t done everything you needed to do earlier, it will all come back to haunt you. The court will likely only be looking at the record that the insurance company had when it made the denial decisions, so if your best medical evidence was never submitted to the insurance company in support of the claim and/or the appeal, then the court will likely never see it. This is part of what makes these cases so difficult. You need to consult an experienced attorney when denied, rather than filing a simple appeal letter with no evidentiary support, and your attorney must know to fully develop the evidence before saying the magic words, “I appeal." Once the insurance company issues its “final denial," the record might be closed forever.

--Jeremy Bordelon

What does "disabled" really mean?

People often do not realize that in the legal world, “disability" is a term of art, with a very specific meaning. In fact, it has several different specific meanings, depending on the context. “Disabled" has one meaning for the purposes of the Americans with Disabilities Act, another for the purposes of worker’s compensation, still another when talking about things like exemptions from jury duty or from testifying in court, and there are probably a dozen others. Not surprisingly, “disabled" has a very specific meaning in the context of a Social Security Disability or Long Term Disability benefits claim. In most circumstances, though, in order to be considered “disabled," and entitled to disability benefits, a person need not be comatose, or bed-ridden, or entirely unable to care for themselves. A disabled person, for the purposes of disability benefits, may be able to live a relatively normal life – he is just unable to work – sometimes not at all, sometimes just at his or her last job.

In some cases, the question of just “how disabled" someone needs to be gets even narrower. What about part time work? Some jobs are available part time, others aren’t. Even if a disabled person could, theoretically, do his old job on a part time basis, could he keep it up for the long term? Could he live on what he earns part time? How many hours per week do you need to be able to do before you are “not disabled?" These are often questions that come up in disability benefits cases, especially for people who are right on the cusp – they aren’t able to work enough to support themselves, but they aren’t completely incapable of work, either.

The Social Security Administration has its own definition of disability and its own set of regulations detailing the disability process, which I won’t discuss in this post. But many people have purchased short-term and long-term disability insurance, either through an employer or through a private insurance broker, in an attempt to protect their income from disability even more. That is what insurance is designed to do, after all. Insurance protects something. If the insured thing ever fails, the insurance pays you money. If you get in a car crash, auto insurance pays. If your house burns down or is damaged in a storm, homeowner’s insurance pays. If something happens to your body, medical insurance pays. And if something happens to your ability to earn a livelihood, and your working income disappears or significantly drops, then disability insurance should pay.

Most group disability insurance policies (the ones people typically sign up for at work) will pay 60% of a disabled person’s pre-disability income if they are unable to work. Most policies contain a definition of disability that states that, at some point during the claim (either in the beginning or after a few years of benefits) the claimant must be disabled from “any occupation." I.e., you must be “unable to perform any occupation" to receive your disability benefits. If that is the case, and the claimant is theoretically capable of some part-time work, then what happens? Should someone be denied all of their 60% LTD benefit because they could still theoretically earn 10% of their pre-disability income? No, of course not. That would be contrary to the purpose of the insurance plan, which was designed to protect 60% of the person’s income. It would be similar to your car insurance carrier refusing to pay for any repairs to your car after an accident if it is “still driveable."

The disability insurers themselves do not always agree with this. Many times, a person will be denied benefits in just the manner I described above – e.g., a former lawyer who suffers a traumatic brain injury is no longer able to work as a lawyer, but might be able to work as a parking lot attendant. Since he can still do something, the insurer might say that he is not disabled from “any occupation," and might refuse to pay anything. Similarly, consider the example of an airplane mechanic who can still do his job, but can only do it for a few hours per week. He might also be denied by his disability insurer because he can still do something. Both denials would be wrong, because they are contrary to the purpose behind the insurance plan – protecting a certain amount of income.

When faced with these types of cases, the courts have intuited that “any occupation" is not a literal term. For example, in one court case, the disability plan language stated that a person is disabled when she “is prevented from engaging in any occupation or employment for remuneration or profit." Analyzing this language, the court said that the “any occupation" standard should not be interpreted in an excessively literal manner, but must mean an occupation that allows the claimant to earn a reasonable income:

Analogous insurance cases consistently agree that the term “total disability" does not mean absolute helplessness on the part of the insured. The insured can recover benefits if he is unable to perform all the substantial and material acts necessary to the prosecution of some gainful business or occupation. Gainful has been defined by these courts as profitable, advantageous or lucrative. Therefore, the remuneration must be something reasonably substantial rather than a mere nominal profit.

Helms v. Monsanto Co., Inc., 728 F.2d 1416, 1420 (11th Cir. 1984). This holding has been expressly adopted by other courts, as well. In another case, the disability plan defined total disability as the inability “to be gainfully employed anywhere." Following Helms, the court held this required a “reasonably substantial income":

We now further adopt the holding in Helms that gainful employment is that employment from which a claimant may earn a reasonably substantial income rising to the dignity of an income or livelihood, even though the income is not as much as he earned before the disability.

Tracyv. Pharmacia & Upjohn Absence Payment Plan, 195 Fed. App’x 511, 519 (6th Cir. 2006). See also Demirovic v. Building Service 32 B J Pension Fund, 467 F.3d 208, 215 (2nd Cir. 2006) (“any gainful employment" means employment allowing a claimant to earn a reasonably substantial income from it, rising to the dignity of an income or livelihood, though not necessarily as much as she earned before the disability"); Torix v. Ball Corp., 862 F.2d 1428 (10th Cir. 1988) (similar finding).

One court pointed out that a disability benefit plan should be construed "with a view toward effectuating its general purpose." Wulf v. Quantum Chemical Corp., 26 F.3d 1368, 1374 (6th Cir. 1994). As an example of how this should work, assume a plan is designed to replace 60% of a worker’s pre-disability income if she is no longer able to work. She files a claim under that plan, and her doctor says that she might be able to work up to two hours per day at her old job, but could not sustain full-time work. Two hours per day is one quarter of a full eight hour work day, so the worker might be able to earn up to 25% of her pre-disability income, assuming her doctor is correct about her abilities, and assuming she could actually find a job that would allow her to work that schedule for the same hourly wage she used to earn. The LTD policy requires her to be disabled from “any occupation," and the terms of the policy do not delve deeper into nuances of partial disability and part-time work. Nevertheless, it would be wrong for the insurer to deny her the 60% disability benefit under the policy just because she has a theoretical capability to earn 25% of her pre-disability income. That would make no sense, and would defeat the purpose of the insurance.

“Any occupation," in the context of a disability benefits plan, is not literal, but implies an occupation providing a reasonably substantial income under the circumstances. An employee benefit plans,in particular, should be construed with a view toward effectuating its general purpose. So when a long-term disability insurance plan is designed to protect, for example, 60% of a worker’s pre-disability income, it is contrary to the purpose of the plan to deny benefits because the worker could earn 10%, 20%, or even 50% of her pre-disability income. The insured interest – the thing the insurance was designed to protect – was 60% of the worker’s income. If she is unable to earn that much, then an ability to engage in part-time work should be insufficient to render her “not disabled" under the LTD plan. Just “how disabled" does she need to be? Look to the terms of the plan to find out.

--Jeremy Bordelon