Сообщения

Сообщения за сентябрь, 2022

What to Do if Your Employer Clearly Says It Will Not Pay Your Pension Benefit

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  Employees in the Chicago area, and elsewhere, come to expect that when their employer sponsors a   pension plan , or other type of benefit plan, and promises a benefit, that the employer will honor that promise. That is, unfortunately, not always the case. The first question, though, is what to do about it when the employer, which is usually acting as the plan's administrator, clearly says it will not pay the benefit?  https://askcompetentlawyer.com/covid-19-related-employment-litigation/   The natural inclination is to want to file a lawsuit, and many people have done that immediately, only to be disappointed by having wasted so much time by failing to exhaust administrative remedies. But why should a claimant have to make an administrative claim to the plan when the employer unequivocally states it will not pay a benefit? The Eight Circuit Court of Appeals analyzed this very issue in   Angevine v. Anheuser-Busch Companies Pension Plan , 646 F.3d 1034 (8th Cir. 2011). In  Angevi

Who Do You Sue Under ERISA When Your Health Insurance Claim is Denied?

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  Employees of Chicago area employers that participate in an employer sponsored group   health insurance plan   often assume if and when their claim is denied, they must sue the insurance company. But that is not always the case in litigation under the Employee Retirement Income Security Act of 1974 ("ERISA"). The insurance company is undoubtedly the party with whom the employee or other covered participant has had communications, and received a denial letter from. But the inquiry does not stop there. In the case of a health insurance plan that is fully insured, meaning the insurance company bears the financial risk, then the insurer will undoubtedly be a fiduciary under the plan. But in the case of large employers, the plan is often self-funded, and the insurance company merely acts as a claims administrator. The question then is whether the insurance company exercised any discretionary authority or control over approving or denying the claim.  See  ERISA § 3(21)(A). In Wess

GM Retirees Sue over Executive Retirement Plan Benefits

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  Executives in Chicago and the Midwest may be excited to hear about all the General Motors executives suing to recover   executive retirement plan benefits   from a previously bankrupt employer. Often, when executives have such retirement plans, commonly referred to as SERPs (or "top hats"), the participants can expect to receive little or nothing if the employer becomes insolvent. That is because   ERISA § 201(2)   top hat plans are exempt from ERISA's funding, vesting, and fiduciary responsibility protections, though are still enforceable as ERISA plans.  https://askcompetentlawyer.com/civil-litigation/   The General Motors that emerged from bankruptcy assumed much of the pre-bankrupt retirement plan obligations, but the credit agreement with the United States Treasury required that certain obligations, including pension obligations, be reduced. Like most executives and managers who have such non-qualified deferred compensation or excess benefit plans (ERISA § 3(36)),

Michigan Court Does Not Enforce State Ban on Discretionary Clauses in Long Term Disability Plans Where the Policy Was Issued in Another State

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  Employees in Chicago, and all over Illinois, are starting to become more aware of a state law ban on discretionary clauses in various insurance policies that fund their employee benefit plans, such as   long-term disability ,   health insurance , and   life and accidental death insurance . In 2005, the Illinois Department of Insurance enacted 50 Ill. Adm. Code § 2001.3, which bans insurers offering or issuing long term disability, health, or life or accidental death insurance policies in Illinois from having a discretionary clause in any "policy, contract, certificate, endorsement, rider application or agreement". However, this regulation only applies to insurance policies issued or offered in Illinois. If you work in Illinois, how do you know then whether you have protection from this ban on discretionary clauses? The answer is not as simple as one might expect. Where an insurance policy is issued or offered can be a tricky question to answer. It may involve looking at the

Pension Fund Cannot Terminate Participant's Benefits Because the Employer Stopped Contributing

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  Employees of Chicago companies that are subject to a collective bargaining agreement ("CBA") frequently wonder what will happen to their   pension benefits   if the employer goes belly up, or otherwise does not contribute to the pension fund. Sometimes the owners of these small employers are also employees themselves who perform work for the employer, the scope of which is covered b the CBA. The problem is that multiemployer plans depend on contributions from the employers that sign the CBA to fund the benefits the plan promises, so will the plan pay benefits to an employee or owner-employee from a non-contributing employer? The answer is almost always yes, unless the fund must impose benefit restrictions due to its funding level. Multiemployer plans are permitted to sue noncontributing employers for delinquent contributions under ERISA § 515.  https://askcompetentlawyer.com/  But the plan may not withhold benefits from employees, or even owner employees, in order to enforc

Forum Selection Clause in Disability Plan Held Unenforceable

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  Chicago area employees with coverage under an employer-sponsored long-term or short-term   disability plan   may be surprised to find out that when drafting the plan, their employer inserted a clause purporting to require that you have to file your lawsuit in a distant state if your claim is denied and you have to sue for your benefits. In fact, the Department of Labor has filed briefs in cases opposing such clauses, noting there is a "disturbing trend" among employers to place such clauses in their plans.  https://askcompetentlawyer.com/medicare-medicaid-fraud/   In Chicago, one court put a stop to that trend in a case I am handling. In  Coleman v. Supervalu, Inc. , No. 12-7064, 2013 U.S. Dist. LEXIS 13372 (N.D. Ill. Jan. 31, 2013), Ms. Coleman sued Supervalu because its claims administrator denied her claim for disability benefits. After she sued, Supervalu moved to dismiss the lawsuit, citing a provision in the plan that purports to require any employee covered by the pl

9th Circuit Permits Benefits Claim Against Insurer

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  Employees that participate in group   health insurance   or group   disability insurance   plans through their employers obtained another victory today.  https://askcompetentlawyer.com/   The United States Court of Appeals for the Ninth Circuit held that participants who bring claims under   ERISA § 502(a)(1)(B)   for benefits due under the terms of the employee benefit plan may sue the third party insurer--the insurance company from whom your employer buys insurance for the particular benefit plan--for those benefits. In Cyr v. Reliance Standard Life Insurance Company, Ms. Cyr received disability benefits under the employer's disability insurance plan insured by Reliance Standard. She sued her employer, alleging it discriminated against her by paying her approximately half of what it paid male employees with similar qualifications. Cyr prevailed, and won a retroactive salary increase. She then demanded Reliance Standard increase her disability benefit payments to reflect the ret

What Every Injured Person Needs to Know about ERISA Governed Health Insurance Plans

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  My office receives calls daily from employees, executives and managers in Chicago who claim their   health insurance   will not pay for a procedure. Some of the time, the plan does not even dispute that the claimed treatment or procedure is covered by the plan. So why won't the plan pay? The answer is two words: reimbursement and subrogation. The plan claims that it once paid benefits due to an injury caused by a third party and you recovered for that injury. I have seen plans withhold benefits years after the purported overpayment. After Great-West Life & Annuity Insurance Co. v. Knudson and Sereboff v. Mid Atlantic Medical Services, Inc., many plans have gotten particularly aggressive in enforcing subrogation and reimbursement rights. Nearly all plans include language to the effect that if the plan pays benefits for an injury caused by a third party, and you recover anything from the third party, by judgment or settlement, then the plan must be reimbursed. They also often s

Illinois House and Senate Pass Competing State Pension Bills

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  State employees in Chicago and all over Illinois with   retirement plan benefits   will most likely experience some sort of change to the State pension system. The Illinois House passed S.B. 1, which is estimated to completely shore up the various pension funds' $150 billion shortfall over the next 30 years. The competing Senate bill, S.B. 2404, is estimated to reduce the funds' deficit by $50 billion, of the $150 billion, over the next 30 years. The less aggressive S.B. 2404 has union support and a vow by the unions not to challenge the bill, if enacted, as unconstitutional. The competing S.B. 1, on the other hand, may draw constitutional challenges if enacted. Under bill 2404, current employees must select one of three retirement options: • A 3% simple cost-of-living adjustment, have future salary increases accrue towards pensions, and receive continued access to retirement health care; • A 3% compounded cost-of-living adjustment, have future salary increases accrue towards

ERISA § 502(a)(3) Strikes Back: Unexpected Expansion of "Other Appropriate Equitable Relief"

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  Employees in Chicago and the rest of Illinois lost another potential remedy in   ERISA disputes  yesterday, but may have gained others. The Supreme Court issued its opinion in   Cigna v. Amara   yesterday, which arrested any expansion of a remedy for a claim for benefits due under ERISA § 502(a)(1)(B), but may have expanded "other appropriate equitable relief" under ERISA § 502(a)(3). Cigna v. Amara  concerned an employer's conversion from a defined benefit pension plan to a cash balance plan. The new plan contained "a phenomenon known in pension jargon as 'wear away'".  Id.  at 8. In a "wear away," employees could be required to work for several years, or 6-10 in this case, for benefits accruing under the new plan to catch up to those existing under the old plan, effectively resulting in employees working for 6-10 years accruing no benefits. Cigna, however, failed to tell this to its employees in the required disclosures. The employees claim

Court Holds Long Term Disability Insurance Plan Cannot Grant Insurer Discretion

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  Employees in Chicago and around Illinois often have   long-term disability insurance   offered through their employers, but often they do not know just how much leeway the insurer has in deciding whether or not they are "disabled" under the terms of the plan or policy. It largely depends on whether the insurer, or claims administrator, has discretionary authority to interpret the terms of the plan and make decisions on benefit claims.  https://askcompetentlawyer.com/civil-litigation/  It essentially means a court reviewing your benefit denial would give a lot of deference to the insurer. Naturally, insurers always want such a term in the plan. As we recently posted, though there is an Illinois regulation which bans these discretionary clauses in disability insurance policies, 50 Ill. Adm. Code § 2001.3, insurers have begun to argue they have discretion if the granting language is in a document other than the insurance policy. Recently, Cigna made that exact argument in Nova

Plan Amendment Taking Away Right to Receive Annuity While Working Was Not a Cutback

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  Employees and executives in Chicago frequently want to know what benefits their   employer-sponsored pension   or retirement plan has to provide. Generally, both ERISA and the Internal Revenue Code require qualified plans provide a minimum level of participation, vesting, accrual of benefits, non-discrimination, and responsibilities on plan fiduciaries. But ERISA and the Code also provide that once a plan has provided a benefit pursuant to a retirement plan, it may not subsequently take away a protected benefit.  https://askcompetentlawyer.com/ This is called the anti-cutback rule.   ERISA § 204(g) . Employees of a Chicago-based employer recently challenged a plan amendment, arguing it violated the anti-cutback rule.   See   Carter v. Pension Plan of A. Finkl & Sons Co. for Eligible Office Employees , No. 10-3287, 2011 U.S. App. LEXIS 16824 (7th Cir. Aug. 15, 2011). In  Carter , the employer decided to terminate the pension plan (something an employer has a right to do, provided

Only Multiemployer Plans May Make Disability Determinations at Quarterly Meetings

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  Employees in Chicago and the Midwest who are participants in plans maintained by associations finally have clarity about the required administrative claims process when seeking   long-term disability benefits . Often association boards meet on set schedules, such as monthly or quarterly. The boards may have used these meetings in the past in order to make determinations on claims for benefits from plans established and maintained by the association. https://askcompetentlawyer.com/covid-19-related-employment-litigation/  But a recent decision from the United States Court of Appeals for the Ninth Circuit may have changed that forever. In Barboza v. California Association of Professional Firefighters, No. 09-16818, 2011 U.S. App. LEXIS 13341 (9th Cir. June 30, 2011), Barboza was a participant in a long-term disability plan maintained by the California Association of Professional Firefighters. Barboza filed his claim for disability benefits, but the association's board did not render

Don't Forget to Update Your Beneficiary Designations on Employer Sponsored Retirement or Life Insurance Plans

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  Executives and employees participating in employee benefit plans in Chicago received a reminder this week about why it is important to keep track of your benefit plans' beneficiary designations, and update those designations when appropriate. Many people may think they can enter into binding agreements with others, such as family members or former spouses, about entitlement to or waiver of benefits under an employee benefit plan, like a pension or   life insurance . However, if the plan is one covered by ERISA, those agreements, even if part of an agreed court order, will have no bearing on what the benefit plan administrator does with any proceeds if inconsistent with the beneficiary designation. The United States Court of Appeals for the Seventh Circuit reiterated this point in Jackman Financial Corp. v. Humana Insurance Co., No. 10-2112, Slip Op. (7th Cir. May 31, 2011). In that case, Mr. Torrence was a participant in a group term life insurance policy offered through his empl

ERISA Health Insurance Plans Empowered to Use Collection Agents to Seek Reimbursement and Subrogation

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  Employees in Chicago now have even more reason to know about   employer-provided health plans   and their rights to reimbursement and subrogation. https://askcompetentlawyer.com/  Should you experience any type of accident or injury caused by another party, you may need to use your own health insurance to cover the medical expenses incurred from the accident until obtaining a settlement from or judgment against the party causing the injury. Invariably, the health insurance company or fund will demand reimbursement for any expenses it covered that were caused by the other party. Following   Great-West Life & Annuity Insurance Co. v. Knudson   and   Sereboff v. Mid Atlantic Medical Services, Inc. , plans have become particularly aggressive in seeking such reimbursement. Nobody previously considered your own health plan making a claim against your own automobile insurance policy, though. But that might change after a recent decision from the Sixth Circuit Court of Appeals in   Shaff

Why Your Executive Employment Agreement May Reference Dodd-Frank Clawback Policy

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  Executives in Chicago may be puzzled to begin seeing vague references to new   compensation clawback   policies in their executive employment agreements.     https://askcompetentlawyer.com/covid-19-related-employment-litigation/ Section 954 of the   Dodd-Frank Wall Street Reform Act   requires, as a condition of the employer's securities being listed on a national securities exchange or association (such as NYSE, NASDAQ, etc.), if the employer must restate any financial statements because of "material noncompliance" with the securities laws, then the issuer will recoup from any current or former executive officer during the 3 years preceding the date the employer had to restate those financial statements all amounts paid in incentive based compensation that exceeds what would have been paid under the restated financials. Executive Compensation lawyers who advise employers mostly agree the executive employment agreements need to mention the clawback policy. However, the

Aetna's Denial of Disability Benefits Held to Be an Abuse of Discretion

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  Employees in Chicago and the Midwest often call my office and inquire about the "conflict of interest" in   ERISA long-term disability   cases. Few cases will be determined based on whether there is a conflict of interest, as insurers have become more clever at creating an appearance of there being no conflict of interest. But the best way to understand how the conflict applies in cases is to witness it changing the outcome of a case. In 2008, the United States Supreme Court held that where an ERISA plan administrator (such as an insurance company) both evaluates and makes benefit determinations, and is the source of funding to pay the benefits, the administrator is under a structural conflict of interest that should be weighed in judicial review of whether the administrator abused its discretion. Metropolitan Life v. Glenn, 554 U.S. 105 (2008). That does not necessarily mean the abuse of discretion standard will not apply; it just means a reviewing court will consider that

Don't Forget to Update Your Beneficiary Designations on Employer Sponsored Retirement or Life Insurance Plans

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  Executives and employees participating in employee benefit plans in Chicago received a reminder this week about why it is important to keep track of your benefit plans' beneficiary designations, and update those designations when appropriate. Many people may think they can enter into binding agreements with others, such as family members or former spouses, about entitlement to or waiver of benefits under an employee benefit plan, like a pension or   life insurance . However, if the plan is one covered by ERISA, those agreements, even if part of an agreed court order, will have no bearing on what the benefit plan administrator does with any proceeds if inconsistent with the beneficiary designation. The United States Court of Appeals for the Seventh Circuit reiterated this point in Jackman Financial Corp. v. Humana Insurance Co., No. 10-2112, Slip Op. (7th Cir. May 31, 2011). In that case, Mr. Torrence was a participant in a group term life insurance policy offered through his empl

LINA's Surveillance of Disability Benefits Applicant Used to Terminate Benefits, but Termination Was Arbitrary and Capricious

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  Employees in Chicago and the Midwest have mostly heard about insurance companies, especially   ERISA long-term disability   insurers, employing video surveillance when evaluating claims. Insurers have created this mass misconception that disability applicants get caught in the act of performing activities wildly inconsistent with the claimant's asserted limitations. But the truth is the insurers use the surveillance in many cases, and these so called "inconsistencies" are far more subtle than the insurers would have many believe. In a recent case, Life Insurance Company of North America ("LINA") terminated the long-term disability benefits of a claimant because it captured her on video surveillance removing groceries from her trunk in September 2007, and during January 2008 walking with a cane and test-driving a vehicle. Hunter v. Life Ins. Co. of N. Am., No. 10-1244, 2011 U.S. App. LEXIS 13598, at *4-6 (6th Cir. Jun29, 2011). Hunter had been diagnosed with de

Why Your Executive Employment Agreement May Reference Dodd-Frank Clawback Policy

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  Executives in Chicago may be puzzled to begin seeing vague references to new   compensation clawback   policies in their executive employment agreements. Section 954 of the   Dodd-Frank Wall Street Reform Act   requires, as a condition of the employer's securities being listed on a national securities exchange or association (such as NYSE, NASDAQ, etc.), if the employer must restate any financial statements because of "material noncompliance" with the securities laws, then the issuer will recoup from any current or former executive officer during the 3 years preceding the date the employer had to restate those financial statements all amounts paid in incentive based compensation that exceeds what would have been paid under the restated financials. Executive Compensation lawyers who advise employers mostly agree the executive employment agreements need to mention the clawback policy. However, the employers' lawyers advise to avoid being specific about the terms of th