June 03, 2022

The Friday Five: Five Current ERISA Litigation Highlights - June 2022

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This month's Friday Five covers cases relating to an award of attorney's fees (but not) costs, class certification in an ERISA benefits case, a court finding that a physician claimant was disabled from his own occupation, a claimant paying into insurance he thinks he has, and an insurance company using interpleader and jurisdiction to its advantage.

  1. Court Awards Attorney's Fees for Preparation of Rule 59(e) Motion But Denies Costs Because of Failure to Comply with Local Rules. In a recent life insurance dispute, the court granted the insurer's motion for judgment on the pleadings uncontested after the claimant failed to file a timely response. But, a few days after dismissing the case, the claimant asked for a second chance, which the court allowed. Apparently, the claimant's counsel marked the incorrect response deadline on the calendar, which resulted in the missed filing. The court, in a rather colorful opinion, noted that "[m]istakes happen. That's true in life, and it's true in the practice of law (to the extent that's not real life)." As such, the court refused to detriment the client for counsel's inadvertent mistake and reopened the case to allow a decision on the merits. The plaintiff in an accidental death and dismemberment case filed a Rule 59(e) Motion to Alter or Amend Judgment asserting that the court erred in its reasoning after the court granted the defendant-insurance company's motion for summary judgment. The court granted the claimant's motion and eventually sided with the claimant - granting her time to file a motion for attorney's fees and costs incurred in bringing both the Rule 59(e) motion and the motion for fees and costs. The court conducted a preliminary five-factor test to assess the appropriateness of awarding attorney's fees. After finding that the factors weighed in favor of the plaintiff, the court analyzed the qualifications and experience of the plaintiff's attorneys and held that while some of the attorney's fees should be reduced based on what are customary and reasonable fees for local ERISA attorneys, the work the attorneys conducted was neither excessive nor inappropriate. However, the court denied the claimant's request for costs because she did not expressly identify the amount of costs sought nor did she submit her costs using the required documentation under the Local Rules. Yates v. Symetra Life Ins. Co., No. 4:19-154, 2022 WL 1618787 (E.D. Mo. May 23, 2022).
  2. Court Grants Motion for Class Certification of Individuals With Group LTD Policies Wherein "Other Income Benefits" Provision Allegedly Does Not Permit Reimbursement for Personal Injury Recoveries. A plaintiff sued an insurer for seeking reimbursement of the benefits it paid to her after she received compensation from a personal injury settlement. The plaintiff then filed a motion to certify as a class all individuals who had group plans similar to hers but against who the insurer also pursued reimbursement. The plaintiff successfully argued that the members' plans were generally similar such that they did not permit reimbursement for personal injury recoveries. Later in the opinion, the court emphasized that the question of whether reimbursement was proper under the insurer's long-term dis-ability policies was the predominant issue of every potential class members' claims. Similarly, the court concluded that class certification is superior to other available methods to adjudicate the members' issues, considering (among other factors) that the claim amounts are small and that the court would uniformly apply ERISA law among all class members. Wolff v. Aetna Life Ins. Co., No. 4:19-01596, 2022 WL 1672128 (M.D. Pa. May 25, 2022).
  3. Court Holds Plaintiff Is Disabled From Practicing as a Physician and Entitled to LTD Benefits. The court conducted a de novo review of the insurance company's decision to deny long-term disability benefits to a plaintiff (practicing physician) who allegedly suffered from back pain, cognitive impairments and side effects from medications prescribed to treat the same. The Court found that the physicians performing reviews of the file on behalf of the insurer should be given less weight in determining whether the claimant's subjective complaints of pain were credible since they were based only on a paper review of the file (as opposed to an in-person exam). Further, the court found that the insurer failed to consider the claimant's cognitive limitations stemming from his injury. Carney v. Unum Life Ins. Co. of Am., No. 220-125599TGBRSW, 2022 WL 988360 (E.D. Mich. Mar. 31, 2022).
  4. Court Awards Insurance Benefits to Decedent's Beneficiary Despite Decedent's Failure to Properly Register for Increased Supplemental Life Insurance Benefits. An insurer denied a beneficiary's claim for supplemental life insurance benefits because he failed to submit evidence of insurability ("EOI"). The decedent had initially enrolled in an employer-sponsored Supplemental Group Life Insurance Plan but later chose to increase his coverage from the guaranteed amount to five-times his annual earnings. Although the insurance company required the decedent to submit EOI to increase his supplemental life insurance above the guaranteed coverage amount, the decedent's employer deducted increased premiums from the decedent's salary every month and sent the decedent several confirmations stating that he had registered for supplemental coverage. When the decedent died, the insurance company only approved the guaranteed amount to his beneficiaries rather than the potential full coverage for which the decedent had been paying into. The plaintiffs sought recovery of the supplemental life insurance benefits under §502(a) of ERISA, but the court initially ruled against the beneficiary on the ground that the decedent did not submit EOI as required by his policy. Here, the court not only granted the beneficiary's motion for reconsideration (which is rare), but held that an incontestability clause barred the insurance company from raising the decedent's failure to provide EOI as a defense against liability. The court reasoned that their conclusion aligns with both case law and public policy. Pottayil v. Thyssenkrupp Elevator Corp., No. 1:17-4431-RWS, 2022 WL 1564551 (N.D. Ga. May 13, 2022).
  5. Court Dismisses Claims Over Life Insurance Policy for Lack of Subject Matter Jurisdiction. A decedent's ex-wife and widow separately sought the proceeds of the decedent's whole life insurance policy after he died from COVID-19 complications. The insured had failed to amend the beneficiary status from the ex-spouse to the new spouse. After the ex-wife sued the insurance company in state court for breach of contract (among other claims), the insurance company brought an interpleader claim against the widow and removed the case to federal court based upon diversity of citizenship. Here, the court found that state law revoked the ex-wife's beneficiary status unless the divorce agreement expressly said otherwise. After the court cleared the insurance company of liability to both the ex-wife or widow, the court permanently enjoined the ex-wife, the widow, and the decedent's estate from commencing any action against the insurance company. The court excused the insurance company from the case but refused to rule on the remaining claims because both the ex-wife and widow are citizens of the same state. Therefore, the federal court lacked the necessary subject matter jurisdiction to hear the claims between the ex-wife and widow. Sevelitte v. Guardian Life Ins. Co. of Am., No. CV 21-10630-LTS, 2022 WL 1051351 (D. Mass. Feb. 25, 2022).

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