Autism News Network
Illinois Insurance Law update.
cases help define the Burden of proof /
Standard of review
In insurance litigation, the outcome often depends on which party
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
deference a plan must give to a treating physician's opinion against
health plan's witness. The current rule is that the plan is not
to give the doctor who actually treats your child deference (a
that the treating physician's opinion is the best).
Black & Decker Disability Plan v. Nord, 538 U.S. 822
recent cases state however that he treating
physician may have better information than the plan's doctor, and a
cannot refuse to consider the treating physician's opinion.
In Hawkins, the 7th
overruled a plan which relied on
mere scraps of evidence to counter a treating physician's
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
based on that selectivity was unreasonable). "Deferential
is not no review." Hess v. Hartford Ins Co., 274
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
physical ability to perform job-related tasks. McDonald, 347 F.3d at 172
Quinn v. Blue Cross & Blue
Ass’n, 161 F.3d 472, 476 (7th Cir. 1998) (The plan “was
duty to make a reasonable inquiry into the types of skills [the
claimant] possesses and whether those skills may be used at
A 2006 opinion by a Federal New York court also reflects some ot
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
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
Psychiatric Association prohibits a doctor from offering a
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
the treating physician. This rationale of this opinion could go a
way toward tipping relatively balanced scales in close cases in
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
the participant's efforts to obtain the written plan documents
when the Plan would cover speech therapy. Only
lawyers were involved did the plan provide the documents and reverse
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
Because Cigna relied on the documents, ERISA
required the Plan to produce them. The wrinkle was that
Cigna had these secret documents, American Family was the Plan,
was the Plan's duty, and not Cigna's to deliver the
The court found the Plan liable for statutory penalties for not
delivering the documents, suggesting that the Plan should have
its claims administrator, Cigna, to deliver the documents which
Cigna's position was wrong. While the documents eventually helped
Mondry recover the cost of the speech therapy. the deliver came
late for her to elect COBRA coverage. Since Cigna
that speech therapy was not covered, Mondry did not continue the
coverage. The court ruled that ERISA did not provide a
this injury, and that topic is beyond the scope of this article.
“medically necessary.” In short, CIGNA
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
to consider Ms. Leger's complete medical history and rejected,
Leger v. Tribune Company Long Term
Disability Plan, March 9, 2009.
explanation, important aspects of the [Functional Capacity
we believe that the Plan acted in an arbitrary and capricious
terminating Ms. Leger's benefits.
A new case, Bard
Boston Shipping Assoc., ___ F.3d. ___, 2006 U.S. App. LEXIS
(1st Cir. 2006)
focuses on a variety of violations of ERISA’s claims procedure
by a multiemployer trust fund:
The court in Bard
the patient's predicament: "Bard is in a similar position: because
the Plan's failures to give
proper notice, he did not learn about the Plan's interpretation
was too late. By the time the Plan's interpretation was made clear
he was forced to argue his case to a Board that lacked the requisite
and that used his earlier submissions against him. Additionally, as
Glista, the defendant plan has "offered no explanation for
did not explain earlier" its basis for the initial adverse benefit
determination. ...Accordingly, we grant relief similar to what
ordered in Glista.
Thus we bar the defendant plan from using Bard's earlier medical
against him. In so doing, we essentially undo the prejudice that
from Bard's reliance on his initial reasonable interpretation of the
- the trust fund failed to give Bard proper notice of the
of his claim.
- the fund violated the claims procedure requirements when it
same individual review Bard’s appeal as had originally evaluated
Bard’s claim review.
- the fund failed to comply with the time limits outlined in the
regulations for making a decision on Bard’s appeal and notifying
- the trust fund failed to consult an appropriate medical expert
- the trust fund unreasonably refused to take into account
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
timely fashion, coupled with the lack of an [Independent Medical
IME of an admittedly
subjective condition, is arbitrary and capricious.
... there was no evidence other than that of Helms's treating
Epperson and Helms himself. Put another way, this is not a
the plan administrator refused to credit the opinions of
supported disability but instead accorded greater weight to
opinions of doctors that did not support disability. See, e.g.,
Wangenstein, [unpublished case]... (upholding a plan
weighing of multiple neurologists' examinations and reviews
ultimately crediting neurologists that did not support a
disability). With only Dr. Epperson's medical evaluation in
the form of
his office notes, test results, APSs, and narratives, Aetna
narrow snippets of Dr. Epperson's notes, while it discredited
ignored whole tracts of his medical evaluation that supported
STD claim, all without a peer review or an IME. Aetna's review
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
refuse to credit a claimant's reliable evidence, including the
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
arising out of Illinois, Wisconsin and Indiana. In Davis v. Unun Life Ins. Co.,
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
Unum's doctors did not personally examine Davis or speak with
doctors. However, neither the district court nor Davis has
our research has not disclosed, any authority that generally
the commonplace practice of doctors arriving at professional
after reviewing medical files. In such file reviews, doctors are
able to evaluate medical information, balance the objective data
against the subjective opinions of the treating physicians, and
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
conducting repetitive tests and examinations.
and citing Dougherty v. Indiana
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
reach the same conclusion' as the administrator." Sisto, 429 F.3d at
701 [cites]. Put
decision will not be overturned unless it is
Finally. the Seventh Circuit backtracked a little, by saying the
of discretion standard was not an absolute win for a plan, in Call v. Ameritech Management Pension
But "we have said many times that the term 'abuse of discretion'
a range of degrees of deference rather than denoting a point
that range, and where a particular case falls in the range
the precise character of the ruling being reviewed."
It is true that the plan administrator, who is given discretion
interpret the plan, adopted the interpretation that the
urging upon us; to reject his interpretation we must find an
that discretion. But "we have said many times that the term
discretion' covers a range of degrees of deference rather than
a point within that range, and where a particular case falls in
range depends on the precise character of the ruling being
deference that we would
normally give to an interpretation by the administrator of a
plan, [cite], is overridden in this case by the lack of any
basis for that interpretation.
Deference is relative to the nature of the issues, including
complexity. [cite] The more complex, the greater the range of
resolutions. In addition, "Deference depends on ambiguity."
related. The more numerous
imponderable the factors bearing
on a decision, the harder it will be for a reviewing court to
the decision unreasonable and hence an abuse of discretion. But
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
wording, some commonsensical principles of interpretation, and
commercial or other background of the contract insofar as that
gleaned without taking evidence. When guides to meaning line up
side of the case, as they do here, an adjudicator who decides
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
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
to provide, deliver, arrange for, pay for or reimburse any of the
health care services or of a disability may contain a provision
reserve discretion to the health carrier to interpret the terms of
contract, or to provide standards of interpretation or review that
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
that sets out a new framework for how judges should decide cases where the
benefit determinator has a conflict of interest, but still tough
in the Seventh Circuit.
Excerpts from the Court's
ERISA does not specify the standard of review that a trial court
apply in an action for wrongful denial of benefits.
In Firestone Tire & Rubber
v. Bruch, 489 U.S. 101, 113 (1989), the Supreme Court
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
the administrator discretion, which the plan at issue in Firestone
did not, the
administrator’s decisions are upheld unless they abuse that
Id. at 115. On the issue of conflicts of interest, the Court noted
a benefit plan gives discretion to an administrator or fiduciary
operating under a conflict of interest, that conflict must be
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
era, most courts of appeals have adopted a “sliding scale”
review. This approach grants the administrator deference in
with the level of conflict. Thus, if the level of conflict is
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
is high, then most of its discretion is stripped away. Doe v.
Hospitalization & Med. Servs., 3 F.3d 80, 87 (4th Cir. 1993).
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,
with all the facts and circumstances, must decide in each case how
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
to determine whether the administrator abused its discretion. Id. at
391. To apply the approach, courts first consider the evidence that
administrator acted from an improper motive and heighten their level
scrutiny appropriately. Id. at 392. Second, they review the merits
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
stands; if not, the court steps into the shoes of the
administrator and rules on the merits itself. At its best, the
scale reduces to making a common-sense decision based on the
whether the administrator appropriately exercised its discretion.
theme, rather than getting bogged down in trying to find the perfect
point on the sliding scale, should be district courts’ touchstone.
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
Assur. Co. of Boston, 438 F.3d 772, 776 (7th Cir 2006)
J.). The problem, it argues, is that we generally assume that
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
from the start, for there is no analog to fiduciary discretion in
common law of contracts. But we are not, and our position, in strict
accordance with Supreme Court precedent, follows the common law of
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
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.
supra, at 1335.
In Abatie, we explained
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
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
whether an insurer's claims management guidelines should have been
provided to an ERISA plan participant who unsuccessfully appealed
insurer's termination of her disability benefits. Under the claims
regulations, plan participants and beneficiaries have a right to
receive copies of "relevant" documents when appealing a denied
The participant Brooks argued that the guidelines were relevant
the meaning of the regulations because they were either (1) relied
in making the benefit determination or considered in the course of
determination, or (2) demonstrated compliance with
administrative processes and safeguards required under the
The insurer countered that it had not considered the guidelines when
review the participant's appeal, and that, as a matter of practice,
reference to the guidelines would have been specifically noted in
participant's claim file. The court agreed with the insurer, based
the evidence submitted by the insurer, that since the guidelines
not considered in any way in the course of the appeal, the insurer
not have to produce them to the participant. This insurer
having to provide its guidelines only because there was clear
that they were not implicated in any way with this particular
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
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
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
has made clear that the disclosure requirement Brooks seeks to
is limited to materials specifically generated connection with a
particular adverse benefit determination:
"[S]ubparagraph (m)(8)(iii) provides that, among the information
plan must provide a claimant... is any information that the plan
generated or obtained in the process of ensuring and verifying
making the particular determination, the plan complied with its
administrative processes and safeguards[.]" 26 Fed.Reg. at 70,252.
(Emphasis supplied). See also Palmiotti
Metropolitan Life Ins. Co.
, 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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