By: Eric Buchanan, Chattanooga, Tennessee. eric@buchanandisability.com
If you are helping a client with a social security case, and decide to help with an LTD case, you should consider my advice above about issues the social security attorney should be aware of. However, once you agree to represent your client in the LTD case, there is much more you need to know and be aware of.
Representing clients in LTD cases can be rewarding and fulfilling, but there are many rules and issues you need to learn before you can do a good job for your client. The following list is just a small part of what you will need to learn to do a good job for your LTD clients.
1. Screen your cases carefully — the standard of review gives a huge advantage to the insurance company, as does policy language offsetting for other benefits.
Unfortunately, when we screen cases, one of the first things I have to find out is how much the person’s social security disability benefits are, including any dependents/auxiliary benefits, and whether the client has any other income such as workers’ compensation benefits or pension benefits that offset the LTD benefits. Because those other benefits are so common, it is also common that the LTD benefits are not large enough after offsets to be meaningful.
If you are working on the social security case, find out the PIA right away. If you are only handling the LTD case, find out from the social security attorney the PIA and auxiliary benefits. Very carefully interview your client to determine if there are any other benefits being paid.
If the other benefits are too large, and the net LTD benefits too small, you will have to think very hard about taking on the obligations and expense of the LTD case. The reality is, that there are many cases where the person has very serious disabilities, but the LTD case is almost worthless, because the offsets are too great.
If you determine the person’s benefits are enough to make the case potentially worthwhile, you also need to be very careful in your case selection. Our experience is that LTD cases are typically harder to win than social security cases, and the litigation against the insurance company is much more adversarial than what we experience in social security cases.
The bottom line is that there are some LTD cases that are very good to work on, and can be very rewarding, but there are also very many that you probably cannot justify working on.
2. Get the plan documents early and read them carefully.
Unlike social security cases, each LTD policy or ERISA plan, has different rules. The definition of disability may be “own occupation” or “any occupation.” Some policies will pay benefits for “own occupation” for 24 months, others for only 12. Some policies exclude disabilities based on “self-reported symptoms” or limit such benefits to 24 months. There are many other variations in terms of appeal procedures, numbers of appeals required, and other differences from policy to policy and plan to plan.
Fortunately, one of the good rules under ERISA is that ERISA Plan administrators must provide a copy of plan documents when your client requests them in writing (or if you request them on behalf of your client). ERISA § 502(c), 29 U.S.C. § 1132(c) provides for penalties for an administrator’s refusal to supply required information. Under that section of ERISA, any administrator who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court’s discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper.
The Plan Administrator must provide the controlling plan documents. ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4) states, “The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.”
As a matter of technical ERISA rules, courts have read the provisions above to only apply to written requests to ERISA “Plan Administrators.” The “Plan Administrator” is usually not the insurance company, but is whoever is named in the plan as the administrator. Often that is the employer. Also, under ERISA, if no one is named, ERISA deems the plan sponsor (i.e., employer) to be the Plan Administrator. Therefore, if you do not have a copy of the policy or plan, the best thing to do is to write a letter on behalf of your client to his or her employer, addressed to the attention of the “Plan Administrator of the Long-Term Disability Plan.” It is best to send the letter certified, so you can prove it was received.
If the plan administrator does not provide the plan documents within 30 days, we usually write and ask again until we get the documents. If the documents are not provided within 30 days, you can seek a penalty on behalf of your client for up to $110 per day. As a matter of technical pleading, if the Plan Administrator fails to provide the documents within 30 days, in violation of ERISA § 502(c), “a civil action may be brought (1) by a participant or beneficiary (A) for relief provided for in subsection (c) of this section.” In other words, you filed a cause of action under ERISA § 502(a)(1)(A), alleging the Plan Administrator violated ERISA § 502(c).
3. Know the statute of limitations, but do not ignore the plan’s contractual statute of limitations; it may be shorter than the regular statute of limitations, but a court will likely uphold it.
Attorneys who are new to ERISA benefits claims often ask me, “So what is the statute of limitations for this claim?” The short answer is that there is not one in the ERISA statute, but the longer answer is much more complicated, because courts will apply limitations of time found in ERISA plans, or if there is no such provision, will look to state law to create a statute of limitations (“SOL”).
When an employee or former employee is denied benefits under an ERISA plan, the employee’s cause of action is brought under ERISA § 502(a)(1)(B) (29 U.S.C. § 1132(a)(1)(B)). The ERISA statute does not contain a specific statute of limitations for those claims. When a federal statute does not have a statute of limitations, courts have stated that federal courts should look to the most analogous state law statute of limitations for the analogous claim. See, e.g., DelCostello v. Int’l Bhd. of Teamsters, 462 U.S. 151, 158–60 (1983) (applying an analogous state law statute of limitation to an NLRB action where the federal statute contained none.) Courts have applied this to ERISA benefits claims and have usually applied the statute of limitations for a state breach of contract action. See, e.g., Meade v. Pension Appeals and Review Committee, 966 F.2d 190, 194 -195 (6th Cir. 1992) (applying the 15-year Ohio statute of limitations for breach of contract under Ohio Revised Code § 2305.06 to an ERISA claim).
However, applying the state law statute of limitations for breach of contract is not always the correct answer; courts have held that where a more specific analogous law applies that has a shorter statute of limitations, that shorter statute may apply, such as the statute for employment disputes. See, e.g. Syed v. Hercules Inc., 214 F.3d 155, 159, 161 (3d Cir. 2000) (applying a one-year SOL, rather than the three-year SOL under Delaware law); see also Adamson v. Armco, Inc., 44 F.3d 650, 653 (8th Cir. 1995) (applying Minnesota’s two-year SOL for an action for recovery of wages, rather than the six-year SOL for breach of contract); and Redmon v. Sud-Chemie Inc. Retirement Plan for Union Employees, 547 F.3d 531, 535–36 (6th Cir. 2008) (applying the Kentucky five-year statute of limitations for “an action upon liability created by a state statute” rather than the fifteen-year SOL for breach of contract.)
But, and this is a very big “but,” in many cases, the time period for bringing a claim may be even shorter than the state law statute of limitations. Courts have held that when the ERISA plan at question, or an insurance policy that provides an ERISA plan benefits, provides for a shorter period of limitations, that shorter period will apply. As the court in Massengill v. Shenandoah Life Ins. Co., 459 F. Supp. 2d 656, 660 (W.D. Tenn. 2006), explained, “Courts have also recognized that in the ERISA context, as with other types of contractual arrangements, the parties may agree upon a shorter limitations period, so long as the period is not unreasonably short.” See also Wilkins v. Hartford Life & Acc. Ins. Co., 299 F.3d 945, 948 (8th Cir. 2002); Northlake Reg’l Med. Ctr. v. Waffle House Sys. Emp. Benefit Plan, 160 F.3d 1301, 1303–04 (11th Cir. 1998); Doe v. Blue Cross & Blue Shield United of Wis., 112 F.3d 869, 873–74 (7th Cir. 1997).
When benefits are provided under an insurance policy, the policies typically contain language such as, “a claimant cannot start any legal action earlier than 60 days after proof of loss is provided nor more than three years after the time proof of claim is required.” This type of language is very common and is required in many states in order to have a contract approved by the state department of insurance. Typically, plans require proof of loss to be filed within 90 days after the end of an elimination period. If the elimination period is 180 days, then the Plaintiff has three years and 270 days to file a claim. See, e.g., Rice v. Jefferson Pilot Financial Ins. Co., 578 F.3d 450, 456 (6th Cir. 2009). Of course, these deadlines may be different, depending on the policy, so it is imperative for an attorney to obtain the actual policy as soon as possible.
However, attorneys need to be even more careful when ERISA benefits are provided through self-funded plans, where state insurance laws do not apply. When ERISA benefits are not provided through an insurance policy, the Plan is free to place any limitation on actions, so long as the time is “reasonable;” a limitations period as short as 90 days has been held to be reasonable. Northlake Reg’l Med. Ctr., 160 F.3d at 1304.
One more confusing issue arises in ERISA plans, because it is not always clear when the clock for the statute of limitations or the contractual period of limitations begins to run. Under ERISA, claimants are normally required to exhaust administrative remedies before they can bring an action. While some courts have held that the contractual period of limitations should not begin to run until the plaintiff has the right to file suit after administrative remedies are exhausted, other courts have held that the contractual period of limitations runs in accordance with the terms of the plan or policy, see, e.g. Rice, supra, so that when administrative remedies are exhausted, the plaintiff may have much less than three years to start a lawsuit. These conflicting cases were resolved in by the Supreme Court in Heimeshoff v. Hartford Life & Acc. Ins. Co., 571 U.S. 99 (2013), holding that contractual limitations in an ERISA plan are enforceable. The Court did explain that where the conduct of the administrator precludes filing before the contractual period of limitations, courts may allow for equitable tolling, id. at 615–16, but where there is a reasonable time to file suit after administrative remedies are exhausted, the plan language would be enforced.
The bottom line is that attorneys who are helping clients who have been denied ERISA benefits need to obtain a copy of the ERISA plan from the Plan Administrator very early in the process, calculate the time period under the plan, and be sure to file at the earliest possible time. Because the rules for administrative exhaustion and the limitations on time to file suit in ERISA cases are so harsh, attorneys should learn these rules early on in order to best represent clients with ERISA claims.
4. Do not assume you can add more evidence later; submit all your evidence early to ensure it will be before the court.
Just like the importance of “location” in real estate, my opinion is that the three most important things to know about LTD litigation are: closed record, closed record, closed record.
The record closes when the insurance company issues its final denial. Courts will not allow you to submit new evidence of disability once the case is in court. The biggest mistake attorneys make is not understanding this rule. Your only chance to put on proof to help your client win an LTD case is during the time the insurance company is administratively considering the claim.
The good news is that there are no rules of evidence or restrictions on what you can submit when the record is open. You can submit medical records, opinions, RFC forms, letters, videos, sworn statements, and many other types of evidence.
The bad news is that attorneys who do not regularly handle these claims often just don’t seem to get the importance of this stage. I cannot tell you how many times an attorney has tried to refer a case to me after the attorney has filed an appeal letter, supported by some medical records, and not much else. By the time the insurance company denied the appeal, it is too late to add more evidence and really address the best arguments in the case.
5. Do not assume your client’s treating doctor’s conclusory opinion or a worker’s compensation rating is enough to establish disability; you must establish restrictions and limitations to support that your client cannot work.
Attorneys who normally handle personal injury cases and other types of litigation often don’t understand this rule, but those of us who regularly handle social security disability cases understand why this is important.
To best present your clients’ cases to LTD insurance companies, and have the best arguments later in court, you need to not only present the insurance company with your client’s medical records, but also with opinions of restrictions and limitations.
Also, you need to provide evidence that the restrictions and limitations actually preclude work or cause a disability under the terms of the policy. Unlike social security cases, you will not have an independent vocational expert available to testify at a hearing. Therefore, in order to prove your clients’ restrictions and limitations actually preclude work, you should consider hiring a vocational expert to provide an opinion. Further, unlike social security cases, there are no grid rules to help your older clients. You often need vocational evidence of total disability, even when your client would be disabled under the grids.
Also, remember that, unlike social security cases, there is no treating physician rule in ERISA claims; rather the terms of the plan apply. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003). So, when you develop the medical evidence, you need to consider all the ways you can shore up the opinions you have, so you can explain why they are more reliable than the opinions of the doctors hired by the insurance company.
6. Do not rely on the forms provided to your client’s physicians by the insurance company.
As social security attorneys, we are used to forms created by DDS or SSA that don’t define “marked” or only give the treating doctor limited choices to check boxes to show the person is disabled. In LTD cases, the insurance companies’ forms are often much worse.
For example, I know of one company that regularly issues policies that require people to show they are disabled from all occupations, yet they send out forms to the treating doctors that simply ask the doctor to check the range of work the person can perform. The choices are “Very Heavy,” “Heavy,” “Medium,” “Light,” and “sedentary.” There is no box to check anything less than sedentary!
My advice is to use your own forms and get the doctors to explain their limitations as clearly and in as much detail as possible.
7. Do not ignore the insurance company’s or plan administrator’s deadlines.
As social security attorneys, we are used to dealing with the deadlines for appealing from an initial denial to the recon level, to the hearing, etc. But, if our client misses a deadline before coming to us in a social security case, it is usually not a disaster, because the client can file a new application for social security benefits, so long as the person is not past his or her date last insured.
LTD cases are different. Because your client’s LTD coverage usually ends when employment ends, your client must prove he or she was disabled at the time he or she stopped working. The deadlines to apply for LTD and to appeal LTD only apply to that one time when employment ended. Unless your client returns to work, the LTD coverage is gone if your client does not apply or appeal on time.
Further, if your client does not timely appeal, and exhaust all his or her remedies, the federal court will usually dismiss any ERISA case you file.
8. Do not file suit until you have exhausted all your remedies.
This rule is an extension of the previous rule; until the insurance company has issued a final denial or has failed to issue a decision within the time deadlines under the ERISA regulations, your client does not have the right to file a civil action. Courts almost always dismiss ERISA claims for failure to exhaust if the claimant does not present his or her claim to the insurance company, and follow all the appeal procedures, before filing suit.
9. Pay attention to the collateral benefits.
As social security attorneys, we have all probably seen cases where our client’s entitlement to Medicare or Medicaid is even more important than the monthly benefits. In LTD cases, there is a similar concern.
In many cases, if a person is found disabled under an employer-sponsored LTD plan, some employers may offer additional benefits. These additional benefits can be very valuable for the employee and can be a significant liability for the employer.
Not all employers do this, but in some cases, employers allow a person receiving LTD benefits to also continue to receive other employee benefits. For example, some employers set up their benefits so that if a person is receiving LTD benefits, the person automatically can continue to be covered under the company health insurance plan. Some employers may offer other specific benefits for employees receiving LTD, such as continued pension contributions. Other employers have written policies that employees who become disabled and eligible for LTD benefits are treated as active employees and continue to receive all their other employee benefits.
On the other hand, employers may offer other benefits that provide continued coverage to people who are disabled, but the person must apply for that coverage separately. One common example of this is a life insurance “life-waiver of premium” or (“LWOP”) claim. If an employer offers life insurance with an LWOP provision, then an employee who becomes disabled can file an application with the life insurance company, and, if the employee proves he or she is disabled, then the employee can keep the life insurance coverage in place without paying premiums while the employee is disabled.
So, if you represent the employee who is claiming disability, how do you determine what other benefits your client is entitled to? The simple starting place is to ask the plan administrator, who is usually the employer, in writing. Under most ERISA plans, the employer is designated as the Plan Administrator, but some other person may be named. So, the first question an attorney should ask is, “Dear employer, please provide me with copies of all plan documents or other documents describing what benefits an employee may be entitled to if he or she becomes disabled. If you are not the plan administrator for any such plans, please tell me who the plan administrator is and provide me their address so I can request the documents from them.” The second question to ask is, “because my client is disabled, please tell me what actions my client needs to take to file a claim for any benefits he or she may be entitled to under any of those plans on account of his or her disability.”
Plan Administrators are fiduciaries under ERISA, and courts have held that an ERISA fiduciary is specifically charged with the obligations of a trustee, who “is under a duty to communicate to the beneficiary material facts affecting the interest of the beneficiary which he knows the beneficiary does not know and which the beneficiary needs to know for his protection.” Krohn v. Huron Memorial Hospital, 173 F.3d 542, 548 (6th Cir. 1999) (citing Restatement (Second) of Trusts).
A fiduciary must give complete and accurate information in response to a participant’s questions. Drennan v. General Motors, 977 F.2d 246, 251 (6th Cir. 1992). “Misleading communications to plan participants regarding plan administration (for example, eligibility under a plan, the extent of benefits under a plan) will support a claim for breach of fiduciary duty.” Id., citing Berlin v. Michigan Bell Telephone Co., 858 F.2d 1154, 1163 (6th Cir. 1988). A fiduciary breaches its duties by materially misleading plan participants, regardless of whether the fiduciary’s statements or omissions were made negligently or intentionally. Berlin, 858 F.2d at 1163-64. The Sixth Circuit has explained: “The duty to inform is a constant thread in the relationship between beneficiary and trustee; it entails not only a negative duty not to misinform, but also an affirmative duty to inform when the trustee knows that silence might be harmful.” Krohn, 173 F.3d at 548, citing Bixler v. Cent. Pa. Teamsters Health & Welfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1993).
In addition to having an affirmative fiduciary duty to explain to an employee who is a plan participant about any benefits the employee may be entitled to, a Plan Administrator who fails to provide requested documents within 30 days of a written request may be liable to the employee for a penalty of up to $110 per day. See discussion supra; see also ERISA § 502(c), 29 U.S.C. § 1132(c).
10. A little knowledge is a dangerous thing.
If you want to start helping your clients with LTD claims, I encourage you to do so. It can be a very rewarding area of the law, in addition to helping your clients with social security benefits.
However, LTD litigation can be very complicated. The learning curve starts out steep and stays steep for quite a while. While there are some conceptual similarities with social security cases, there are also dramatic differences. If you start handling LTD claims, think of it as a “license to learn” and try to keep improving your knowledge for as long as you work on these cases.