Legal Summary: Knight v. Provident Life and Accident Insurance Company

not reported in F. Supp. 3d (2014), 2014 WL 1280278

The court in the Middle District of Tennessee properly evaluated this case by looking both at the applicable claims regulations and at the plan documents.  Our client had been employed by Nissan when he became disabled in 1999 and filed a claim in 2000.  Id., at 1.

The original Unum policy in place when the claim was filed allowed for 60 days to appeal.  Id., at 2.  Between 2000 and the end of 2004, Unum and Nissan put out LTD booklets that contained the certificate of insurance (i.e. the policy) and an addendum describing the current ERISA regulations; these booklets were updated regularly. Id.  During that time, the U.S. Department of Labor issued new ERISA claims regulations that were effective for claims filed after January 1, 2002, that included a new rule that claimants would have 180 days to appeal denials of disability benefits. Id, at 3, citing 29 C.F.R. § 2560.503-1(h)(3)(i).  After the new ERISA claims regulations were issued, the Nissan/UNUM LTD booklets continued to state in the certificate of insurance (i.e. the policy) that said appeals had to be filed within 60 days, but the ERISA addendum in the booklet said, “you have 180 days from the receipt of Notice of an adverse benefit determination to file an appeal.” Id.

Additionally, the LTD booklets refer to master “employee benefit plan,” but neither Unum nor Nissan included one in the record provided to the court.  Nissan and Unum did provide a copy of the 2003 plan that purported to incorporate a summary plan description (SPD) but the page where it should have been was blank. Id. Another version of the master plan in the record, effective January 1, 2004, while Unum continued to provide benefits, and purportedly incorporated all the plans listed in “appendix A,” but there was no appendix A provided to the court. Id. This 2004 plan contained another inconsistency, stating in one section that the time limit to appeal a denied LTD claim was 60 days, but in a different section the time limit to appeal a denied health care claim, which was defined to include LTD insurance benefits, was 180 days. Id.  Unum stopped providing LTD benefits for Nissan at the end of 2004.

Yet another plan document was the newer Nissan “Non-VEBA Welfare Plan,” effective January 1, 2007 which terminated and consolidated previous plans. Id, at 4. This plan both incorporated other plan documents listed in another appendix A, and stated that “the Plan shall govern in the case of any discrepancies or differences in interpretation between the terms, conditions or language in the Plan and the Incorporated Documents.” Id.

Nissan issued a 2008 Employee Benefits Manual that identified Unum as the fiduciary for LTD claims filed before January 1, 2005.  That manual also contained a provision that if an LTD claim is denied, “you …must make an appeal within 180 days …” Id.

Ultimately, Unum argued that because the original claim was filed before January 1, 2002, the court should ignore all the later documents. Id., at 6.  The court rejected this, citing to extensive ERISA law that ERISA benefits plans should be administered according to their plan terms, and all the plan terms should be considered. Id.

The court also pointed to the authority that when a plan is amended to allow a more favorable procedural rule, courts should enforce the plan as amended.  The court cited to cases like Gregg v. Transp. Workers of Am. Int’l, 343 F.3d 833, 844 (6th Cir.2003) (“[P]lan administrators may modify a welfare plan’s terms at any time….”); Grosz–Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154 (9th Cir.2001); Smathers v. Multi-Tool, Inc./Multi-Plastics, Inc. Employee Health & Welfare Plan, 298 F.3d 191, 196-97 (3d Cir. 2002) (finding that, where claims administrator has discretionary authority, procedural provisions “are not implicated until the administrator actually exercises that authority”). Id. at 7.  The court also pointed out:

Many of the same aforementioned authorities, including at least one district court within this circuit, have found that “a plan amendment that only alters a procedural or administrative aspect of a benefit determination does not affect a claimant’s benefits, and therefore may be retroactively applied.” Williams v. Target Corp., 2013 WL 5372877, at *8–9 (E.D.Mich. Sept.25, 2013); see also Price v. PBG Hourly Penson Plan, 921 F. Spp.2d 764, 773 (E.D .Mich.2013); Smathers, 298 F.3d at 196–97.

Id., at 7.

The court also favorably acknowledged our argument that

insurers and/or claims administrators, including Unum affiliates, have taken the position that the plan’s terms are subject to amendments that restrict a claimant’s ability to recover benefits. See generally GroszSalomon, 237 F.3d 1154.12 Although the court makes no finding of judicial estoppel in this regard, cases like Grosz–Salomon do indicate that arguments concerning the immutability (or lack thereof) of prior terms of plan documents and/or claims administration terms may be ad hoc legal positions taken for the insurer’s benefit in a particular scenario.

Id. Ultimately, the court considered all the relevant plan documents available and found that the plan in effect at the time Unum denied the claim allowed 180 days for appeal.

Of note, the court offered criticism for Unum’s failure to address any of the plan documents other than the original policy.

Remarkably, Unum has provided no meaningful indication that it actually sought to “interpret” any document other than the original Policy itself. That is, the court has no reason to conclude that Unum actually made any effort to construe the Policy in light of the LTD Booklets incorporated by reference into the 2003 and 2004 Plans, the terms of the 2004 Plan itself (which explicitly covered Knight’s claim), and the 2011 version of the Plan that necessarily applied to Knight. Unum’s lack of knowledge about these documents is distressing in light of ERISA’s requirement that claims be administered consistent with plan terms.

Id., at 8.  In addition to ignoring other plan documents, the court was critical of Unum for allowing only 90 days to appeal where that deadline was not in any plan document.

Unum has not identified any plan document referencing a 90–day appeals deadline. These considerations reinforce the court’s conclusion that Unum arbitrarily and capriciously applied a 90–day appeals deadline to Knight’s claims, without any meaningful consideration as to how that deadline accorded (or not) with the terms of the Plan and the relevant SPD incorporated therein at a given point in time.

Id.

Because Unum had never considered the claim on appeal, the court remanded the claim to Unum to properly consider the claim, and, because of the time delay, allowed us 30 days to submit updated evidence of disability. Id.​ at 1 and 9.

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