Presenting a live 90-minute webinar with interactive Q&A Defending Against ERISA Wrongful Denial of Benefits Claims: Procedural and Substantive Strategies Navigating ERISA's Procedural Prerequisites; Leveraging Defenses of Lack of Standing, Contractual Time Limits, Exhaustion and More WEDNESDAY, DECEMBER 14, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Ronald M. LaRocca, Esq., Pierce Atwood , Providence, R.I. Medora A. Marisseau, Shareholder, Karr Tuttle Campbell, Seattle Nancy Pridgen, Counsel, Patel Burkhalter Law Group , Atlanta The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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ERISA DENIAL OF Medora Marisseau BENEFITS LITIGATION: Karr AVOIDING PROCEDURAL Tuttle AND SUBSTANTIVE Campbell LANDMINES Seattle mmarisseau@karrtuttle.com
EXHAUSTION OF Medora Marisseau ADMINISTRATIVE Karr Tuttle REMEDIES FOR ERISA Campbell BENEFIT CLAIMS Seattle
THE EXHAUSTION RULE Rule: A claimant must first avail herself or himself of a plan’s own internal review procedures before bringing suit. See Heimeshoff v. Hartford Life & Acc. Ins. Co ., 134 S. Ct. 604, 610 (2013). Judge-made rule, not part of the ERISA statute. 7
WAIVER Affirmative Defense. Generally considered an affirmative defense (subject to waiver), not jurisdictional. Vaught v. Scottsdale Healthcare Corp. Health Plan , 546 F.3d 620, 627 n.2 (9th Cir. 2008) Crowell v. Shell Oil Co. , 541 F.3d 295, 308-09 (5th Cir. 2008) Paese v. Hartford Life & Accident Ins. Co. , 449 F.3d 435, 445 (2d Cir. 2006) But See Herman v. Hartford Life & Acc. Ins. Co ., 508 F. App’x 923, 926 (11 th Cir. 2013) (failure to exhaust is jurisdictional) 8
EXHAUSTION REQUIREMENT MUST BE BASED ON THE TERMS OF THE PLAN What I s The “Plan”? A. The SPD is generally not the plan. Cigna Corp. v. Amara , 131 S. Ct. 1866, 1878 (2011); B. Exhaustion requirement found only in SPD generally not enforceable, unless the SPD and Plan are “one and the same.” Eugene S. v. Horizon BCBS of N.J ., 663 F.3d 1124 (10 th Cir. 2011). See also Maher v. Aetna Life Ins. Co ., 2016 U.S. Dist. Lexis 70559 (W.D. Wash)(references to “plan” and conflict resolutions provisions in SPD evidence SPD was not the plan); Calbrec v. Earon Med. Plan , 2015 U.S. Dist Lexis 82426 (E.D. Pa)(wrap document and SPD constituted the plan); Bd. Of Trustees v. Moore , 800 F.3d 214 (6 th Cir 2015)(Trust agreement and SPD constituted the plan). 9
EXHAUSTION REQUIREMENT MUST BE BASED ON THE TERMS OF THE PLAN What is the Plan? (continued) C. A plan’s integration clause precludes the administrator from binding insureds to exhaustion requirements in extraneous documents. See Pritchard v. MetLife Ins. Co ., 2015 U.S. App. Lexis 6553 (9th Cir. 2015)(group policy and certificate constitute “entire contract”); 10
EXHAUSTION REQUIREMENT MUST BE BASED ON THE TERMS OF THE PLAN What Is The “Plan”? (continued) D. But, exhaustion requirement found in a denial review policy, which does not contradict, and is implicitly authorized by the plan, was enforceable. Holmes v. Colo. Coalition for the Homeless LTD Plan , 762 F.3d 1195 (10th 2014); E. However, denial letter cannot impose exhaustion requirement because explicit incorporation of extraneous claims procedures is required. Montoya v. Reliance Std. Life Ins. , 2015 U.S. Dist. Lexis 26044 (N.D. Cal. 2015). 11
EXHAUSTION REQUIREMENT MUST BE UNAMBIGUOUS Examples: Requiring exhaustion of ERISA claims appeals “before the claim may be submitted to arbitration ” did not require exhaustion prior to filing lawsuit. Montoya v. Reliance Std. Life Ins. , 2015 U.S. Dist. Lexis 26044 (C.D. Cal. 2015). “Claimant may request a review of this determination” and “failure to request a review may constitute failure to exhaust” did not unambiguously require exhaustion. Id. Following a decision on 1 st level review, “We will also advise you of your further appeal rights, if any,” unambiguously allowed the Plan to enforce 2d level review, when communicated to the insured. Holmes, supra . 12
EXHAUSTION REQUIREMENTS ARE LIMITED BY THE ERISA CLAIMS REGULATIONS A. Claims procedures cannot require claimant to file more than two appeals of an adverse benefit decision before bringing a civil action; B. Plan cannot assert that a claimant has failed to exhaust administrative remedies because the claimant did not pursue a voluntary level of appeal provided by the plan; C. Voluntary levels of appeal may be pursued only after exhaustion of mandatory appeals. See 29 CFR § 2560.503-1(c)(2), (c)(3)(i), (iii). 13
EXHAUSTION AND ACA CLAIMS REGULATIONS A. ACA requirement of external review process does not require exhaustion of external review. Bailey v. Chevron Corp. Omn. Health Plan , 2014 U.S. Dist Lexis 76782 (C.D. Cal. 2014);29 CFR §2590.715- 2719(b)(2)(i). B. Adverse benefit determination definition expanded to include rescission, whether or not there is an effect on any particular benefit at the time, which is subject to ERISA claims regulations. 29 C.F.R. § 2590.715- 2719(b)(2)(ii)(A). 14
EXHAUSTION AND ACA CLAIMS REGULATIONS Note: Claims for violation of Section 1557 of the ACA (prohibiting discrimination in health care or health coverage) do not require exhaustion of grievance procedures. 45 CFR Part 92 (final rule). 15
WHEN ARE CLAIMS “DEEMED EXHAUSTED”? A. Administrator fails to follow internal review procedures or full and fair review is denied, (29 USC §1133), unless substantial compliance is shown (e.g. violation is de minimus ). Examples of Deemed Exhausted: Untimely denial of claim. Providing different denial reasons in 1 st and 2 nd level review decisions. Using same decision makers in initial and appeals decisions. 16
WHEN ARE CLAIMS “DEEMED EXHAUSTED” B. Failure to follow the additional ACA internal claims and appeals processes (for non-grandfathered health plans), including full and fair review regulatory requirements and culturally and linguistically appropriate notice, unless deminimus and for good cause or outside of administrator’s control. 29 CFR 2590.715-2719(b)(2)(ii)(F). Examples: Failure to notify claimant of right to present evidence/testimony as part of claims process; failure to included denial code and its meaning, and standards used in decision; failure to provide, upon request, the dx and treatment codes and meanings, associated with an adverse decision. 17
WHEN ARE CLAIMS “DEEMED EXHAUSTED”? C. Pursuit of administrative remedies would be futile. Claimant has burden of proof, but dispute in circuits whether futility must be affirmatively pled. (Compare 2 nd v. 9 th Cir.) Evidentiary standard for showing futility (“clear and positive” indication that it is certain the claim will be denied on appeal) Examples: identical claims consistently denied; claims by similarly-situated claimants consistently denied; evidence of a fixed policy to deny such claims. 18
WHICH ERISA CLAIMS AND PARTIES DOES EXHAUSTION APPLY TO? A. Split in circuits as to whether exhaustion applies to ERISA statutory violations (§1104) or equitable claims, such as §1132(a)(3). Not apply: 3 rd , 4 th , 5 th 6 th , 9 th , and 10 th Circuits Does apply: 1 st , 7 th & 11 th Circuits May apply if statutory claim is based on fiduciary’s interpretation of the plan: 2 nd & 8 th Circuits. 19
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