Autism News Network
Illinois Insurance Law update.
cases help define the Burden of proof / Standard of
March 2019: Wit v.
United: Judge finds United applied financial criteria to deny
mental health benefits when it created its own guidelines. Thus
the judge ruled United's actions could be used to determine
United breached its duty.
April 1, 2018 Update: All ERISA employee benefit plans that
condition a benefit upon a determination that a claimant is disabled
must apply new rules as of April 1, 2018.
A plan denying a claim must include the following protections:
- a discussion of the decision, including an explanation of the
basis for disagreeing with or not following: (1) the views
presented by the claimant of health care and vocational
professionals who treated or evaluated the claimant; (2) the
views of medical or vocational experts whose advice was obtained
on behalf of the plan in connection with a claimant's adverse
benefit determination; and (3) a disability determination
regarding the claimant made by the Social Security
- either: (1) the specific internal rules, guidelines,
protocols, standards or other similar criteria of the plan
relied upon in making the adverse benefit determination; or (2)
a statement that such rules, guidelines, etc. do not exist.
For initial claim denials, the notice must also include a
statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to and copies of all
documents, records and other information relevant to the claim.
For appeal denials, the notice must include a description of any
plan-specific limitations period that applies to the claimant's
right to bring a civil action, including the calendar date on
which the contractual limitations period expires for the claim.
These requirements do not apply just to those plans
providing long-term or short-term disability benefits, but to any
decision affecting benefits where disability is a consideration,
- group health plans providing coverage beyond age 26 for adult
children who are disabled;
- life insurance plans providing a premium waiver for
participants who are totally disabled; or
- deferred compensation plans providing special provisions for
disabled participants, such as accelerated vesting or early
of proof / Standard of review
In insurance litigation, the outcome often depends on which party
has the burden of proof and which party has the right to interpret
the written terms of the plan and the meaning of the medical
evidence presented by the patient. However, recent cases have
made the task more difficult.
During 2003, the U.S. Supreme Court and the Seventh Circuit
discussed the deference a plan must give to a treating physician's
opinion against a health plan's witness. The current rule is that
the plan is not required to give the doctor who actually treats your
child deference (a presumption that the treating physician's opinion
is the best). Black & Decker Disability Plan
v. Nord, 538 U.S. 822 (2003) (pdf)
recent cases state however that he treating physician may have
better information than the plan's doctor, and a plan cannot refuse
to consider the treating physician's opinion. In Hawkins, the 7th
Circuit overruled a plan which relied on mere scraps of evidence
to counter a treating physician's evidence. Hawkins v. First
Union Corporation Long-term Disability Plan, 326 F.3d 914
(7th Cir. 2003); see Govindarajan v.
FMC Corp., 932 F.2d 634, 637 (7th Cir. 1991) (holding
that a selective review of medical evidence and a conclusion based
on that selectivity was unreasonable). "Deferential review
is not no review." Hess v. Hartford Ins Co., 274
F.3d 456, 461 (7th Cir. 2001). (See also Elliott v. Metro Life Ins. Co.
Cir. 2006): "Logically, MetLife could have made a reasoned
judgment only if it relied on medical evidence that assessed
Elliott’s physical ability to perform job-related tasks. McDonald, 347 F.3d at 172
(citing Quinn v. Blue Cross
& Blue Shield Ass’n, 161 F.3d 472, 476 (7th Cir.
1998) (The plan “was under a duty to make a reasonable inquiry
into the types of skills [the claimant] possesses and whether
those skills may be used at another job.”)).
A 2006 opinion by a Federal New York court also reflects some ot
the earlier reasoning of the Seventh Circuit with a thorough
analysis of the advantages the treating physician has over the
reviewing physician in evaluating a patient's condition. For
psychiatric cases, an important aspect of the assessment of the
patient's condition comes from observation of the patient's
demeanor, watching affect, evaluating nuances of speech, etc.
These types of factors, and there are many of them, simply cannot
be recorded in written medical records. In addition, the ethics
code of the American Psychiatric Association prohibits a doctor
from offering a professional opinion unless he or she has examined
the patient. In Westphal the
court determined that the plan-insurer acted in an arbitrary and
capricious manner by relying on the opinions of non-treating,
non-examining doctors to override the prescription of care offered
by the treating physician. This rationale of this opinion could go
a long way toward tipping relatively balanced scales in close
cases in the provider's and patient's favor. Westphal v. Eastman Kodak Co,
2006 U.S. Dist. LEXIS 41494 (June 21, 2006, WD NY).
v. American Family Mutual Insurance Co., (W.D. Wisc., Nov. 21,
2006) the Plan and Cigna six times stonewalled the participant's
efforts to obtain the written plan documents determining when the
Plan would cover speech therapy. Only after
lawyers were involved did the plan provide the documents and reverse
its denial of the service, which it had initially denied under the
Similarly, the Sixth Circuit has ruled that the claims determination must be a
deliberate, reasoned process. Elliott v. Metro Life Ins. Co.
March 6, 2009: The 7th Circuit Court of
Appeals reviewed Mondry,
nothing in the SPD suggests that therapy must be “restorative” in order to qualify as
Because Cigna relied on the documents, ERISA required
the Plan to produce them. The wrinkle was that while Cigna
had these secret documents, American Family was the Plan, and it
was the Plan's duty, and not Cigna's to deliver the
documents. The court found the Plan liable for statutory
penalties for not delivering the documents, suggesting that the
Plan should have forced its claims administrator, Cigna, to
deliver the documents which showed Cigna's position was wrong.
While the documents eventually helped Mondry recover the cost of
the speech therapy. the deliver came too late for her to elect
COBRA coverage. Since Cigna misrepresented that speech
therapy was not covered, Mondry did not continue the
coverage. The court ruled that ERISA did not provide a
remedy for this injury, and that topic is beyond the scope of this
“medically necessary.” In short, CIGNA
had been relying on [its internal
criteria manuals] as the equivalent of plan language, treating the former documents as if they were
dispositive and citing them to
Mondry as such....
The Seventh Circuit reversed another claims denial:
Because the Plan's determination
failed to consider Ms. Leger's complete medical history and
Leger v. Tribune Company Long Term
Disability Plan, March 9, 2009.
explanation, important aspects of the [Functional Capacity
Evaluation], we believe that the Plan acted in an arbitrary and
capricious manner in terminating Ms. Leger's benefits.
A new case, Bard
Boston Shipping Assoc., ___ F.3d. ___, 2006 U.S. App. LEXIS
31137 (1st Cir. 2006) focuses on a variety of violations of ERISA’s
claims procedure requirements by a multiemployer trust fund:
The court in Bard
summarized the patient's predicament: "Bard is in a similar
position: because of the Plan's failures to give proper notice, he
did not learn about the Plan's interpretation until it was too late.
By the time the Plan's interpretation was made clear to him, he was
forced to argue his case to a Board that lacked the requisite
objectivity, and that used his earlier submissions against him.
Additionally, as in Glista, the defendant plan has "offered
no explanation for why it did not explain earlier" its basis for the
initial adverse benefit determination. ...Accordingly, we
grant relief similar to what we ordered in Glista. Thus we
bar the defendant plan from using Bard's earlier medical evidence
against him. In so doing, we essentially undo the prejudice that
resulted from Bard's reliance on his initial reasonable
interpretation of the Plan."
- the trust fund failed to give Bard proper notice of the
initial denial of his claim.
- the fund violated the claims procedure requirements when it
allowed the same individual review Bard’s appeal as had
originally evaluated and denied Bard’s claim review.
- the fund failed to comply with the time limits outlined in the
claim procedure regulations for making a decision on Bard’s
appeal and notifying him of that decision.
- the trust fund failed to consult an appropriate medical expert
when reviewing Bard’s claim.
- the trust fund unreasonably refused to take into account
updated medical records submitted by Bard’s treating physicians.
In a Feb.27, 2007, case, left unpublished, by the Eleventh Circuit
criticized Aetna's denial of claims (Helms v. General Dynamics Corp):
Aetna's myopic and
flawed reasoning and its procedural failures to properly inform
Helms of the specific reasons for his denial in a timely
fashion, coupled with the lack of an [Independent Medical Exam]
IME of an admittedly subjective condition, is arbitrary and
capricious. ... there
was no evidence other than that of Helms's treating physician
Dr. Epperson and Helms himself. Put another way, this is not a
case wherein the plan administrator refused to credit the
opinions of doctors that supported disability but instead
accorded greater weight to conflicting opinions of doctors
that did not support disability. See, e.g., Wangenstein,
[unpublished case]... (upholding a plan administrator's
weighing of multiple neurologists' examinations and reviews
but ultimately crediting neurologists that did not support a
finding of disability). With only Dr. Epperson's medical
evaluation in the form of his office notes, test results,
APSs, and narratives, Aetna excised narrow snippets of Dr.
Epperson's notes, while it discredited or ignored whole tracts
of his medical evaluation that supported Helms's STD claim,
all without a peer review or an IME. Aetna's review in this
case was malignant at worst, and arbitrary at best. See Nord, 538 U.S. at 834,
123 S.Ct. at 1972 ("plan administrators ... may not
arbitrarily refuse to credit a claimant's reliable evidence,
including the opinions of a treating physician.").
The Seventh Circuit, however, is going in a different direction in
2006-07. The Seventh Circuit's rulings would direct ERISA
cases arising out of Illinois, Wisconsin and Indiana. In Davis v. Unun Life Ins. Co.,
444 F.3d 569 (7th Cir. 2006), the Court ignored the above cases and
overturned a district court, saying:
The district court
and Davis also fault Unum for relying on "a mere paper review,"
lamenting the fact that Unum's doctors did not personally
examine Davis or speak with his doctors. However, neither the
district court nor Davis has cited, and our research has not
disclosed, any authority that generally prohibits the
commonplace practice of doctors arriving at professional
opinions after reviewing medical files. In such file reviews,
doctors are fully able to evaluate medical information, balance
the objective data against the subjective opinions of the
treating physicians, and render an expert opinion without direct
consultation. It is reasonable, therefore, for an administrator
to rely on its doctors' assessments of the file and to save the
plan the financial burden of conducting repetitive tests and
and citing Dougherty v. Indiana
Bell Telephone Co., 440 F.3d 910 (7th Cir. 2006):
uphold a benefit decision so long as that decision has "rational
support in the record." Leipzig,
362 F.3d at 409. " 'Questions of judgment are left to the plan
administrator,' and 'it is not our function to decide whether we
would reach the same conclusion' as the administrator." Sisto, 429 F.3d at 701
[cites]. Put simply,
a decision will not be overturned unless it is "downright
Finally. the Seventh Circuit backtracked a little, by saying the
abuse of discretion standard was not an absolute win for a plan, in
Call v. Ameritech Management
Pension Plan (Jan 9, 2007):
But "we have said
many times that the term 'abuse of discretion' covers a range of
degrees of deference rather than denoting a point within that
range, and where a particular case falls in the range depends on
the precise character of the ruling being reviewed."
It is true that the plan administrator,
who is given discretion to interpret the plan, adopted the
interpretation that the defendant is urging upon us; to reject
his interpretation we must find an abuse of that discretion. But
"we have said many times that the term 'abuse of discretion'
covers a range of degrees of deference rather than denoting a
point within that range, and where a particular case falls in
the range depends on the precise character of the ruling being
deference that we would normally give to an
interpretation by the administrator of a pension plan, [cite],
is overridden in this case by the lack of any reasoned basis for
that interpretation. Deference is
relative to the nature of the issues, including their
complexity. [cite] The more complex, the greater the range of
reasonable resolutions. In addition, "Deference depends on
ambiguity." [cite]. The points are related. The more numerous and imponderable
the factors bearing on a decision, the harder it will be
for a reviewing court to pronounce the decision unreasonable
and hence an abuse of discretion. But the
interpretation of written contracts in cases in which no
extrinsic evidence (that is, no evidence--besides the contract
itself) is presented is usually pretty straightforward. There
are the contract's wording, some commonsensical principles of
interpretation, and the commercial or other background of the
contract insofar as that can be gleaned without taking evidence.
When guides to meaning line up on one side of the case, as they
do here, an adjudicator who decides the case the other way is
likely to be acting unreasonably.
Also, given Leger, above,
even the Seventh Circuit will hold the plan fidciaries up to their
duty to review thoroughly the evidence presented to them.
Since medical claims, especially those involving autism, are more
complex than the interpretation of documents, this sliding scale of
deference tilts towards the plan and not the patient.
2015 Update: Discretionary
standard does not apply to Illinois Insured Plans
Illinois insurance regulations state:
No policy, contract, certificate, endorsement, rider
application or agreement offered or issued in this State, by a
health carrier, to provide, deliver, arrange for, pay for or
reimburse any of the costs of health care services or of a
disability may contain a provision purporting to reserve
discretion to the health carrier to interpret the terms of the
contract, or to provide standards of interpretation or review that
are inconsistent with the laws of this State.
In other words, an insurance policy in Illinois may not contain a
discretionary clause. The Seventh Circuit Court of appeals applied
this prohibition to a claim for benefits under an ERISA plan.
Fontaine v. Met Life, 800 F.3d 883 (7th Cir. 2015). The
employer's plan could not use the discretionary clause to deny
benefits. The Illinois regulation, as an insurance law, was
saved from preemption. However, this decision will probably
not apply to an employer which self-funds its benefit plan, since
self-funded plans may not be deemed to be insurance companies.
The Third Circuit issues a sweeping
ruling that sets out a new framework for how judges should decide cases where the
benefit determinator has a conflict of interest, but still tough
going in the Seventh Circuit.
Excerpts from the Court's
ERISA does not specify the standard of review that a trial court
should apply in an action for wrongful denial of benefits.
In Firestone Tire
& Rubber Co. v. Bruch, 489 U.S. 101, 113 (1989), the
Supreme Court held that the default standard of review in all §
1132(a)(1)(B) cases is de novo. The Court noted in a dictum that
when a plan by its terms gives the administrator discretion, which
the plan at issue in Firestone did not, the administrator’s
decisions are upheld unless they abuse that discretion. Id. at
115. On the issue of conflicts of interest, the Court noted that
“if a benefit plan gives discretion to an administrator or
fiduciary who is operating under a conflict of interest, that
conflict must be weighed as a ‘facto[r] in determining whether
there is an abuse of discretion.’” Id. (quoting Restatement
(Second) of Trusts § 187 cmt. d (1959)). Addressing conflicts of
interest in the post-Firestone era, most courts of appeals have
adopted a “sliding scale” standard of review. This approach grants
the administrator deference in accordance with the level of
conflict. Thus, if the level of conflict is slight, most of the
administrator’s deference remains
intact, and the court applies something similar to traditional
arbitrary and capricious review; conversely, if the level of
conflict is high, then most of its discretion is stripped away.
Doe v. Group Hospitalization & Med. Servs., 3 F.3d 80, 87 (4th
In Judge Becker’s scholarly opinion in Pinto v. Reliance Standard Life
Insurance Co., 214 F.3d 377, 392 (3d Cir. 2000), we cast
our lot with the sliding scale approach. Among the eleven courts
of appeals that have reported decisions in this area, six have
adopted some version of the sliding scale.4 Id.;Vega v. Nat’l Life
Ins. Servs., Inc., 188 F.3d 287, 296 (5th Cir. 1999) (en banc);
Woo v. Deluxe Corp., 144 F.3d 1157, 1161–62 (8th Cir. 1998);
Chojnacki v. Georgia-Pacific Corp., 108 F.3d 810, 815 (7th Cir.
1997); Doe, 3 F.3d at 87; Miller v. Metro. Life Ins. Co., 925 F.2d
979, 984 (6th Cir. 1991). In addition, the Ninth Circuit Court of
Appeals follows a “substantially similar” approach, though it
rejects the sliding-scale metaphor. Abatie v. Alta Health &
Life Ins. Co., 458 F.3d 955, 967 (9th Cir. 2006) (en banc)
(choosing simply to note that “[a] district court, whenfaced with
all the facts and circumstances, must decide in each case how much
or how little to credit the plan administrator's reason for
denying insurance coverage”). In Pinto, we held that the sliding
scale approach was most faithful to Firestone’s command that the
level of conflict be considered as a factor in shaping arbitrary
and capricious review. 214 F.3d at 392.
B. Contours of the Sliding Scale The premise of the sliding scale
approach is that courts should examine benefit denials on their
facts to determine whether the administrator abused its discretion.
Id. at 391. To apply the approach, courts first consider the
evidence that the administrator acted from an improper motive and
heighten their level of scrutiny appropriately. Id. at 392. Second,
they review the merits of the decision and the evidence of
impropriety together to determine whether the administrator properly
exercised the discretion accorded it. Id. at 394. If so, its
decision stands; if not, the court steps into the shoes of the
administrator and rules on the merits itself. At its best, the
sliding scale reduces to making a common-sense decision based on the
evidence whether the administrator appropriately exercised its
discretion. This theme, rather than getting bogged down in trying to
find the perfect point on the sliding scale, should be district
In sharp disagreement, the Court of Appeals for the Seventh Circuit
holds that it is improper to label those situations “conflicts of
interest.” See Rud v. Liberty
Life Assur. Co. of Boston, 438 F.3d 772, 776 (7th Cir 2006)
(Posner, J.). The problem, it argues, is that we generally assume
that parties to a contract are self-interested, and it is inimical
to the law of contracts to confuse self-interest with a conflict of
interest. Id. This is no doubt logical, yet the Supreme Court has
held that ERISA places us in the realm of trust law, not contract
law. Firestone, 489 U.S.
at 110–11. Moreover, were we to apply contract law, we would review
plans de novo from the start, for there is no analog to fiduciary
discretion in the common law of contracts. But we are not, and our
position, in strict accordance with Supreme Court precedent, follows
the common law of trusts.
2008 starts with more confusion between the circuits
Evans v. Eaton Corp. Long Term Disability Plan, — F.3d —-, (C.A.4 (S.C.)) (January 8, 2008)
". . . the district court, faced
with substantial conflicting medical
evidence and a good case on both sides, concluded that Evans’s
was the stronger one. But Eaton was entitled to an abuse of
standard of review, and the district court’s judgment, though
discretion in name, was de novo in fact. . . . But the delicate
persists. The district court lost sight of this balance. We
reverse the district court’s award of benefits to Evans and remand
directions that judgment be granted to Eaton."
Saffon v. Wells Fargo & Co. Long Term Disability Plan, — F.3d —-, (C.A.9 (Cal.)) (January 9, 2008)
As we read Abatie, when reviewing a discretionary denial of
benefits by a
plan administrator who is subject to a conflict of interest, we
determine the extent to which the conflict influenced the
decision and discount to that extent the deference we accord the
administrator’s decision. In so doing, we seek to overcome the
danger of conflicted plan decisionmaking” illustrated by the Unum Provident scandal. Langbein, supra, at 1335.
In Abatie, we explained
that a reviewing court must always consider the
“inherent conflict that exists when a plan administrator both
the plan and funds it.” Id. at 967. We “weigh” such a conflict
less “heavily” depending on what other evidence is available. Id.
We “view[ ]” the conflict with a “low” “level of skepticism” if
evidence “of malice, of self-dealing, or of a parsimonious
history.” Id. But we may “weigh” the conflict “more heavily” if
evidence that the administrator has given “inconsistent reasons
denial,” has failed “adequately to investigate a claim or ask the
plaintiff for necessary evidence,” or has “repeatedly denied
deserving participants by interpreting plan terms incorrectly.”
In explaining what it means to “weigh” a conflict of interest, Abatie
“conscious[ly]” rejected the “sliding scale” approach adopted by
[W]eighing a conflict of interest as a factor in abuse of
review requires a case-by-case balance …. A district court, when
with all the facts and circumstances, must decide in each case how
how little to credit the plan administrator’s reason for denying
coverage. An egregious conflict may weigh more heavily (that is,
the court to find an abuse of discretion more readily) than a
technical conflict might.
Doyle v. Liberty Life Assur. Co. of Boston, — F.3d —-, (C.A.11 (Fla.)) (January 7, 2008)
“applying a burden shifting analysis to a claims administrator’s
factual determinations poses unique difficulties.”
2016 update: Ninth Circuit amends
burden of proof standard when there is unequal access to
As noted above, a plaintiff usually bears the burden of proving his
or her claim for benefits. I Estate of Barton v. ADT
Secutrity Services Pension Plan, 820 F.3d 1060 (9th Cir.
2016),When Barton retired at age 65, ADT said it could not find his
employment records and denied his pension benefits. Barton
produced employment records, but only the employer could produce the
eligibility records. The Ninth Circuit Court of Appeals held
that where a claimant makes a prima facie case that he is
entitled to benefits but lacks key information about corporate
structure or the hours he worked necessary to substantiate a claim
for benefits, but the employer controls the information, then the
burden of proof shifts to the defendant to produce the information.
In 2008, look for the Supreme
Court to accept a case to resolve the differences between the
approaches taken by the Circuit Courts of Appeals.
Court rules that a plan's guidelines do not have to be revealed
when they are not used by the insurer.
The court in Brooks
decided whether an insurer's claims management guidelines should
have been provided to an ERISA plan participant who unsuccessfully
appealed the insurer's termination of her disability benefits. Under
the claims procedure
regulations, plan participants and beneficiaries have a right to
receive copies of "relevant" documents when appealing a denied
claim. The participant Brooks argued that the guidelines were
relevant within the meaning of the regulations because they were
either (1) relied on in making the benefit determination or
considered in the course of the determination, or (2) demonstrated
administrative processes and safeguards required under the
regulations. The insurer countered that it had not considered the
guidelines when it review the participant's appeal, and that, as a
matter of practice, any reference to the guidelines would have been
specifically noted in the participant's claim file. The court agreed
with the insurer, based on the evidence submitted by the insurer,
that since the guidelines were not considered in any way in the
course of the appeal, the insurer did not have to produce them to
the participant. This insurer avoided having to provide its
guidelines only because there was clear evidence that they were not
implicated in any way with this particular appeal. Other plans may
attempt to obtain the same result by adopting a procedure which
requires adding a note to the claim file when guidelines were
consulted. However, as the court acknowledged, other court cases
have read the relevant document rule differently and might require
production of this kind of guideline as a general rule.
The Court stated:
Brooks also asserts that the CMG is
relevant because it demonstrates compliance with the
administrative processes and safeguards that plans must adopt
pursuant to ERISA's implementing regulations. See 29 C.F.R. § 2650.503-1
Brooks reads the regulations too broadly. The Department of Labor
(DOL) has made clear that the disclosure requirement Brooks seeks
to invoke is limited to materials specifically generated
connection with a particular adverse benefit determination:
"[S]ubparagraph (m)(8)(iii) provides that, among the information
that a plan must provide a claimant... is any information that the
plan has generated or obtained in the process of ensuring and
verifying that, in making the particular determination, the plan
complied with its own administrative processes and safeguards[.]"
26 Fed.Reg. at 70,252. (Emphasis supplied). See also Palmiotti v. Metropolitan Life Ins.
, 2006 WL 510387 (S.D.N.Y.).
2560.503-1 Claims procedure.
(h)(2) Full and fair review. Except as provided in paragraphs (h)(3)
and (h)(4) of this section, the claims procedures of a plan will not be
deemed to provide a claimant with a reasonable opportunity for a full
and fair review of a claim and adverse benefit determination unless the
(i) Provide claimants at least 60 days following receipt of a
notification of an adverse benefit determination within which to appeal
(ii) Provide claimants the opportunity to submit written comments,
documents, records, and other information relating to the claim for
(iii) Provide that a claimant shall be provided, upon request and
free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant's claim for
benefits. Whether a document, record, or other information is relevant
to a claim for benefits shall be determined by reference to paragraph
(m)(8) of this section;
(m)(8) A document, record, or other information shall be considered
``relevant'' to a claimant's claim if such document, record, or other information
(i) Was relied upon in making the benefit determination;
(ii) Was submitted, considered, or generated in the course of making
the benefit determination, without regard to whether such document,
record, or other information was relied upon in making the benefit
(iii) Demonstrates compliance with the administrative processes and
safeguards required pursuant to paragraph (b)(5) of this section in
making the benefit determination; or
(iv) In the case of a group health plan or a plan providing
disability benefits, constitutes a statement of policy or guidance with
respect to the plan concerning the denied treatment option or benefit
for the claimant's diagnosis, without regard to whether such advice or
statement was relied upon in making the benefit determination.
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