This month’s Friday Five covers federal guidelines for extension of ERISA claim deadlines due to the pandemic, as well as cases relating to: whether an expert witness who changes their opinion throughout the course of the claim review and appeal process should be deemed credible; the extent to which courts rely upon the Dictionary of Occupational Titles; dismissal of an LTD claim based on failure to exhaust administrative remedies, despite a plaintiff’s argument that filing an ERISA claim would have been futile; and an analysis of whether an insurer’s claim against a claimant for fraudulent misrepresentation and concealment during the claim review process is preempted by ERISA.
1. When will the extension for claim deadlines due to the pandemic end? Last year, the IRS, DOL and Department of Treasury announced extensions of certain deadlines affecting ERISA governed plans due to the impact of the COVID-19 outbreak. The notice requires plans to “disregard the period from March 1, 2020 until sixty (60) days after the announced end of the National Emergency or such other date announced by the Agencies in a future notification (the ‘Outbreak Period’)” for a claimant to “file an appeal of an adverse benefit determination under the plan’s claims procedure.” On February 26, 2021, the Department of Labor issued the Employee Benefits Security Administration (“EBSA”) Disaster Relief Notice 2021-01, entitled “Guidance on Continuation of Relief for Employee Benefit Plans and Plan Participants and Beneficiaries Due to the COVID-19 (Novel Coronavirus) Outbreak.” This Notice clarifies that extensions will last until the earlier of one year from the date an individual or plan was first eligible for relief, or 60 days after the announced end of the National Emergency. In no case will a disregarded period exceed one year. Notice 2021-01 also instructs that fiduciaries should “make reasonable accommodations to prevent the loss of or undue delay in payment of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.” Notice 2021-01 explains that this may entail affirmatively sending notice regarding the end of the relief period “where the plan administrator or other responsible plan fiduciary knows, or should reasonably know, that the end of the relief period for an individual action is exposing a participant or beneficiary to a risk of losing protections, benefits, or rights under the plan.” EBSA Disaster Relief Notice 2021-01.
2. Should a doctor’s opinion be given less credence when the doctor offers varying opinions about the plaintiff’s ability to work? In order to reach a claim determination, claim administrators must sometimes weigh a peer reviewer’s opinion with a claimant’s treating provider’s opinion about whether or to what extent the claimant is able to work. In Tabakian, the District Court for the Southern District of Georgia affirmed the defendant’s decision to give less weight to a treating provider’s opinion that the claimant was disabled when that opinion changed at varying points in the claim review and appeal process. The plaintiff’s endocrinologist had provided a statement in support of the plaintiff’s long-term disability claim stating that her ability to work was limited by certain physical conditions. However, during a discussion with a peer reviewer retained by Lincoln, the treating provider concurred with the reviewer’s recommendation that the plaintiff could perform sedentary work with certain restrictions in place. Subsequently, during a discussion with a different reviewer, the same treating provider “agreed loosely” that the plaintiff may be capable of a full day of light level function provided that she have the ability to take occasional breaks if continuous activity were required for function. During the litigation, the treating provider had opportunity to, but did not refute, the assertion that he agreed with the peer reviewers. The court distinguished these facts from those in Glenn v. MetLife, 461 F.3d 660 (6th Cir. 2006) where the treating physician checked two boxes on a form indicating that the plaintiff could perform sedentary work, but later submitted two letters stating that the plaintiff could not work. The Sixth Circuit concluded that information provided by the checked boxes was so inconsistent with the rest of the doctor’s evidence that it was “aberrational,” and that the claim adjudicator acted arbitrarily by favoring it over the other medical evidence. Conversely, the treating provider in Tabakian gave two verbal statements indicating his agreement that the plaintiff could work, which the court stated made it harder to view them as aberrations. Tabakian v. The Lincoln National Life Ins. Co., No. 4:19-CV-00073, 2021 WL 1168698 (S.D. Ga. Mar. 26, 2021).
3. Will courts accept vocational analyses that contradict the Dictionary of Occupational Titles? Courts can use the Dictionary of Occupational Titles (“DOT”) to make vocational determinations in ERISA claims. The District Court for the Central District of California did so in Sandoval, and rejected the plaintiff’s request to use a different source. In Sandoval, a Reliance Standard claims administrator conducted a Residual Employability Analysis (“REA”) to determine whether the plaintiff qualified as totally disabled under the any occupation standard, and identified one position – Gate Guard – for which the plaintiff remained reasonably suited in light of his education, training and experience. The REA included as an attachment a document entitled, “Occupational Data,” which listed, in addition to the Gate Guard job as defined in the DOT, a Security Guard job defined in a separate occupational classification system, O*NET. The Security Guard job description required physical tasks that the plaintiff could not perform. Thus, the plaintiff asserted that the results of the REA confirmed that he could not work. The court, however, concluded that whether the plaintiff could perform the duties of a Security Guard was not at issue. First, the administrative record made abundantly clear that the position Reliance identified as a suitable alternative was not Security Guard under the O*NET definitions but Gate Guard under the DOT. Second, the DOT is a source on which courts regularly rely in ERISA cases. Third, the plaintiff offered no explanation as to why Gate Guard under the DOT should not be considered a separate occupation from Security Guard under O*NET. The court rejected the plaintiff’s argument that the DOT has an older pedigree and takes the form of a book rather than a database. Other courts have criticized “blind acceptance” of DOT descriptions in cases applying the regular occupation standard, but the Sandoval court reasoned that those cases involve a failure to consider other evidence. Accordingly, the Sandoval case was distinguishable because Reliance was applying the any occupation standard, and the plaintiff failed to offer any evidence to suggest that the DOT definition of Gate Guard could not be considered an independent occupation from the O*NET Security Guard position. Consequently, the court held that the plaintiff was not totally disabled if he could perform the duties of the Gate Guard position that Reliance identified and evaluated in rejecting the plaintiff’s disability benefits claim. Sandoval v. Reliance Standard Life Ins. Co., No. 2:20-cv-03061-SVW-KS, 2021 U.S. Dist. LEXIS 51173 (C.D. Cal. Mar. 5, 2021).
4. Can a plaintiff bypass administrative exhaustion arguing futility to assert an ERISA claim? An ERISA plaintiff is required to plead that they have exhausted their administrative remedies before bringing suit in federal court. In Ruderman, the plaintiff conceded in her cross-motion for summary judgment that her state law claims were preempted by ERISA and acknowledged that she did not exhaust her administrative remedies by appealing the claim administrator’s denial of benefits. Even so, the plaintiff argued that she should be permitted to amend her complaint to assert an ERISA claim because exhaustion would have been futile. The District Court for the Northern District of New York rejected the plaintiff’s argument. The court explained that the mere fact that Liberty Mutual might have been likely to deny the claim does not excuse exhaustion. Further, the futility exception does not apply where there is no evidence in the record that the ERISA plaintiff even notified the plan administrator of any disputed claim. In other words, the mere denial of a claim is not de facto evidence of the futility of filing a formal appeal. The court emphasized that even when a plan administrator evinces an intent to refuse a claim, a plaintiff must still exhaust their remedies, for it is not the place of the court to predict how a plan administrator would decide a claim upon review. Accordingly, the court denied as futile the plaintiff’s motion to amend and dismissed her complaint. Ruderman v. Liberty Mut. Grp., Inc., No. 1:20-CV-945, 2021 WL 827693 (N.D.N.Y. Mar. 4, 2021).
5. Are fraudulent misrepresentation and concealment claims brought by an insurer against a claimant for conduct during the claim review process preempted by ERISA? In McKeown, the claimant filed an ERISA claim challenging Sun Life’s denial of her benefits claim. One year later, after the Social Security Administration (“SSA”) determined that the plaintiff was disabled, Sun Life reversed its denial, finding that the plaintiff suffered from psychological impairments which entitled her to benefits up to twenty-four months, pursuant to a policy limitation for psychological conditions. When the plaintiff petitioned the court to review the twenty-four month cap, Sun Life filed a counterclaim for fraudulent misrepresentation and fraudulent concealment. Sun Life alleged that, in an attempt to avoid the twenty-four month limitation, the plaintiff falsely stated that she did not have her SSA documents which Sun Life repeatedly requested from her during the claim review process. Sun Life further alleged that had the plaintiff provided the requested documentation, it could have approved her claim based on a psychological impairment and avoided protracted litigation. On the plaintiff’s motion to dismiss the counterclaim, the District Court for the Northern District of Illinois determined that Sun Life’s fraud claim was not preempted by ERISA. The court reasoned that the plaintiff’s argument was identical to the one rejected in Trs. of AFTRA Health Fund v. Biondi (“AFTRA”), 303 F.3d 765, 773 (7th Cir. 2002), where the Court of Appeals held that regardless of any contractual duties the participant owed the benefit fund under the terms of the plan, the plaintiff still “had a separate and distinct duty” under state tort law not to misrepresent or conceal material facts. The AFTRA court further held that “ERISA’s civil enforcement provisions … neither address nor provide a remedy for situations where a[n] employee benefit trust fund has been defrauded by a non-fiduciary.” Relying on AFTRA, the McKeown court concluded that Sun Life’s fraud claim was not preempted by ERISA and denied the plaintiff’s motion to dismiss the counterclaim on this ground. McKeown v. Sun Life Assurance Co. of Canada, No. 16 C 748, 2021 WL 916079 (N.D. Ill. Mar. 10, 2021).