Erisa and Disability Benefits Law Blog

In Gibbs v. Cigna, the parties disputed whether the summary plan description reserved discretionary authority to the plan administrator. If so, the administrator's decision would be reviewed on appeal under an arbitrary and capricious standard. If not, the plaintiff would be entitled to de novo review.

At issue in this case were two competing summary plan descriptions.

CIGNA argued that the language of the 1997 summary plan description vested sole discretion in the administrator. By contrast, the plaintiff argued that the 1995 summary plan description, which did not grant such discretion, controlled because that was the language in effect when the he became disabled.

The Second Circuit agreed with the plaintiff finding that "Gibbs was vested in his right to disability benefits prior to the amendment of the plan." The Court went on to hold that a change in the discretion allocated to an administrator substantively affects a claimant's rights to benefits. Accordingly, the Court found that such a change cannot be applied retroactively to a disability claim that has already vested. The district court opinion to the contrary was vacated and the case was remanded for further proceedings

Read the entire opinion here.

Thanks to Law.com, Mark Hamblett, and the New York Law Journal for highlighting this important decision.

Persons making disability claims under ERISA are entitled to a "full and fair" review of their benefit claims. With that goal in mind, the U.S. Department of Labor developed minimum standards regarding the consideration of benefit claims. Those standards, set forth at 29 CFR 2560.503-1, apply to disability claims filed on or after January 1, 2002.

If you become disabled for any reason, including illness, disease, or accident, check your personal insurance policies to see if they provide any form of disability coverage. Disability coverage may exist in some cancer benefit policies and life insurance policies. Read them carefully. Apart from your own policies, many employers offer disability coverage for their employees. Be sure to read your employee benefits brochure or pamphlet (known as the "Summary Plan Description") and ask the appropriate officials at work about disability coverage. Disability benefits provided through work are usually governed by the federal ERISA statute.

If you have any form of private disability coverage, either on your own or through work, it is very important to review and abide by the terms set forth in the policies. Many policies set time limits for submitting a notice of claim, providing proof of loss, appealing adverse decisions, and other things. Do not ignore the instructions. Disability claims are sometimes denied simply because claimants fail to follow directions.

The general procedure for making a disability claim is to submit notice of your disability and then various forms, along with other information such as medical and payroll records. The policy usually specifies the required information. It is critical to stay on top of your disability claim and to provide information documenting your disability.

Communicate with your treating physicians to make sure that they have sent the required medical documentation of your disability, including standard forms from the insurance carrier. Try to make all medical appointments and follow doctors' orders. Many disability policies require regular and appropriate medical care for your condition.

There are two main types of disability coverage. The first, known as "own occupation" coverage, provides benefits if the claimant cannot perform the material duties of his or her own occupation. Therefore, if a concrete worker can no longer lift heavy weights due to a severe back injury, he would likely qualify for disability benefits under this type of coverage. He would be unable to perform his "own occupation."

The other type, known as "any occupation" coverage, generally affords benefits if the claimant cannot perform any occupation for which he or she is reasonably suited given his or her education, background, and experience. This definition of disability is similar to the one used by the Social Security Administration. It is often more difficult to satisfy the "any occupation" definition of disability.

To obtain disability benefits, a claimant must satisfy the particular definition of disability set forth in the policy. Different policies contain different definitions, so it is important to determine the applicable definition early in the claims process.

In many policies, the definition of disability changes after a certain period, typically 12 or 24 months. In those policies, the claimant is initially entitled to disability benefits under the "own occupation" standard, but then must satisfy the "any occupation" standard to continue receiving benefits. ERISA plans and policies sometimes pay benefits during the "own occupation" period and then terminate benefits after the change in definition.

Many ERISA disability plans contain "offset" provisions with respect to other income and benefits obtained by claimants, including Social Security disability benefits. An offset generally works to reduce private disability benefits by the amount of Social Security benefits that the claimant (and in some cases other family members) receives due to the claimant's disability. Because offset provisions vary from plan to plan, there is no one rule that applies to all of them. Each one must be reviewed to see how it applies to a particular claim. Despite the presence of an offset provision, it is often a good idea to file a claim for Social Security disability benefits. Access to Medicare for health insurance is one good reason.

An award of Social Security disability benefits may also help a claimant recover disability benefits from an insurance carrier or plan. Especially in ERISA cases, the award of Social Security disability benefits is relevant evidence of disability. Many courts cite the federal government's determination of disability in granting ERISA disability benefits. For this and other reasons, it is often prudent to seek disability benefits from the Social Security Administration.

For more information about Social Security benefits available to the disabled, click on the federal government's website here.

Many policies contain "offset" provisions with respect to other income and benefits obtained by claimants, including Social Security disability benefits. An offset generally works to reduce a claimant's private disability benefits by the amount of Social Security benefits the claimant (and perhaps other family members) receive due to the claimant's disability. Because offset provisions vary from policy to policy, there is no one rule that applies to all of them. Each policy or plan must be reviewed to see how it applies to a particular claim. I will be writing about Social Security offsets in more detail in upcoming entries.

Interestingly, the award of Social Security disability benefits may actually help a claimant recover disability benefits from an insurance carrier. Especially in ERISA cases, the award of Social Security disability benefits is relevant evidence of disability. When awarding private disability benefits, many courts cite the federal government's finding of disability under the Social Security system. For this and other reasons, it is often prudent to seek disability benefits from the Social Security Administration.

If the claimant's appeal to the insurance carrier or plan is denied, the next option may be to file a lawsuit.

The course of a disability lawsuit will depend in large part on whether your claim is governed by ERISA. If it is, the lawsuit may proceed relatively quickly in court. The court may or may not allow the claimant's lawyer to pursue what is known as "discovery," which generally consists of interrogatories, requests for documents, and depositions. Courts historically limit discovery in ERISA cases, but more courts are beginning to understand the role of discovery is providing the claimant with a full and fair review of the claim.

Judges decide ERISA disability claims based on the contents of the claims file and written arguments submitted by the lawyers. In their written arguments, the lawyers typically analyze the relevant case law, the applicable standard of legal review, the facts and circumstances of the claimed disability, and other issues. Afterwards, the judge takes the matter under advisement and renders a ruling in due course. Any party not satisfied with the ruling of the judge may appeal to a higher court.

If a disability claim is governed by ERISA, a claimant has a right to appeal an adverse decision made by the insurance carrier or plan. Likewise, disability claims not governed by ERISA usually include an opportunity to appeal an adverse decision.

The right to appeal is one of the most important aspects of an ERISA disability claim. Courts are generally limited to considering the contents of the claims file created during the claim and appeal. This means that if the initial claim is denied, the claimant has another chance to strengthen and fortify the claims file before filing a lawsuit.

If the initial claim is denied, the insurance carrier or plan administrator is supposed to tell the claimant why. The carrier or plan is then supposed to provide a reasonable time to appeal the denial. For disability claims submitted after January 1, 2002, the federal regulations provide an appeal period of 180 days.

During the appeal, the claimant should make efforts to address the reasons for the claim denial. If, for example, the insurance carrier says that there is no medical proof to support the claim, then the claimant may want to provide medical reports and records to substantiate the disability and impairment. The claimant might also want to submit medical literature, textbooks, illustrations, and other information appropriate to the situation.

As part of the appeal, the claimant may also want to consider submitting statements from the claimant, as well as her family members, friends, and co-workers, to address the claimant's impaired condition and its affect on her life. Other helpful materials may include photographs, videotapes, written job descriptions, expert vocational reports, favorable rulings from the Social Security Administration, and other things.