ERISA and Insurance Cases

All litigation firms win and lose cases. With this section, Foster Law Firm does not lament its losses or trumpet its victories. Instead, we wish to share recent ERISA and insurance cases we have handled which we believe to be of interest or legal significance.

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Foster Law Firm Attorney, Robert Hoskins, represented the plaintiff in a major published decision from the Fourth Circuit Court of Appeals, Boyd v. Metropolitan Life Insurance Company, 636 F.3d 138 (4 th Cir. 2011). The plaintiff in Boyd was the contingent beneficiary of an ERISA governed life insurance policy. The primary beneficiary was the ex-spouse of the deceased who had been named the beneficiary of the life insurance policy while the deceased and he were married. Upon dissolution of their marriage, the primary beneficiary executed a document waiving his right to recover any life insurance benefits. However, the deceased never formally changed the beneficiary designation on file with the life insurer, Metropolitan Life Insurance Company. When the insured died, the primary beneficiary designated on file was still the ex-spouse who had, also, specifically signed the document waiving any right to recover the benefits. With those facts, the contingent beneficiary argued that she was entitled to payment of the benefits in light of the executed waiver document by the primary beneficiary. The insurer, MetLife, paid the money to the primary beneficiary, thereby, ignoring the written waiver document. In so doing, MetLife followed what it interpreted to be the directive of a recent U.S. Supreme Court decision, Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 129 S. Ct. 865 (2009). However, in Kennedy, the ERISA plan, at issue, had a specific plan term pertaining to how a beneficiary could waive his interest and the waiver document in Kennedy was not in compliance with the plan's waiver provision. Therefore, the Supreme Court held that the waiver was unenforceable because it was not done in accordance with the policy terms. In Boyd, the life insurance policy, at issue, did not have a specific waiver provision addressing how a beneficiary could waive benefits. Accordingly, Boyd argued that the waiver executed by the primary beneficiary ex-spouse should be given effect since it was not in contravention of any specific plan terms. The Fourth Circuit Court of Appeals held that even though the facts were different, that Kennedy applied nonetheless and that MetLife's actions in paying the primary beneficiary despite his written waiver was appropriate. The court also inferred that any action by Boyd to recover the life insurance benefits needed to be directed against the primary beneficiary ex-spouse based upon the waiver document as opposed to against MetLife under the federal law of ERISA. To view the Fourth Circuit's decision, click here.

Foster Law Firm attorney, Robert Hoskins, represented the plaintiff in a major published decision out of the Fourth Circuit, Carden v. Aetna Life Insurance Company, 559 F.3d 256 (4th Cir. 2009). The relevant facts were simple enough. The plaintiff suffered from one condition which caused him to be disabled and entitled to long term disability benefits under an LTD plan insured by Aetna. Plaintiff also had a workers' compensation claim based upon a completely different medical condition which did not contribute to his right to receive benefits from Aetna. The issue for the court was whether Aetna was allowed an "offset" to its LTD benefit obligation for monies plaintiff received on his workers' comp claim. The District Court ruled against Carden and held that Aetna was entitled to the offset under the circumstances. The District Court ruled that Aetna's "decision is consistent with the plain and unambiguous language of the plan . . ." District Court Opinion, 2007 U.S. Dist. LEXIS 81678, *15 (D.S.C. 2007). At least one other District Court had similarly held that the Aetna policy document was unambiguous and that it clearly allowed Aetna the offset.

The Fourth Circuit actually reversed the District Court, in substance, holding that the plan was ambiguous on the relevant point. The Fourth Circuit ruled that Aetna's plan was "silent on the matter". Under longstanding Fourth Circuit authority, if a plan term is vague or ambiguous that ambiguity was to be construed against the drafter. Under longstanding authority, Carden would have prevailed given the ambiguity. However, the Fourth Circuit, in Carden, reversed its longstanding authority recognizing the doctrine of contra proferentem to interpret ambiguous provisions.

Carden along with another recent decision by the Fourth Circuit, Champion v. Black & Decker, clearly indicate that the law of ERISA is at a cross roads after the US Supreme Court's decision in Metropolitan Life Insurance Company v. Glenn. Carden reflects a recent trend by federal appeals courts of "cleaning" their "slates" of pre- Glenn ERISA law. It will be interesting to see how the law develops in the Fourth Circuit in ensuing years. To view a copy of the District Court decision, click here. To view the Fourth Circuit's decision, click here.

In White v. Eaton Corporation Short Term Disability Plan, 2009 U.S. App. LEXIS 1019 (4th Cir. 2009), the firm's Attorney Rob Hoskins represented the plaintiff. White involved an ERISA governed short term disability plan. In fact, the case involved the same benefit plan that was the defendant in both Mr. Hoskins' cases Donovan v. Eaton Corporation Long Term Disability Plan, 462 F.3d 321 (4th Cir. 2006) and Evans v. Eaton Corporation Long Term Disability, 514 F.3d 315 (4th Cir. 2008) . On January 21, 2009, the Fourth Circuit issued its per curiam decision in White v. Eaton Corporation Short Term Disability Plan ruling with White. The White opinion discusses both Donovan and Evans and finds that White's "case is substantially similar to Donovan. In both cases, Eaton has either failed to elaborate on, or outright ignored, evidence favorable to the claimant." Particularly, the court notes "deficiencies in the plan's decision-making process . . . reflected especially in its treatment of White's FCE, its failure to address conflict explanation of White's job requirements, and its failure to adequately address medical evidence supporting White's claims." In the end, the court distinguishes the facts before it in White from Evans and states:

". . . the Plan failed to address evidence favorable to White "thoughtfully and at length." Evans, 514 F.3d at 326. It relied on a fundamentally flawed FCE, based its determination on a description of White's lifting duties that was contradicted by evidence in the record and disregarded medical evidence favorable to White, even though the evidence met the Plan's own definition of "objective findings." Eaton's failure to seriously engage in a discussion of White's favorable evidence suggests that, as in Donovan, Eaton abused its discretion by denying White benefits. See Donovan, 462 F.3d at 329 (finding an abuse of discretion where there was a "wholesale disregard" of evidence in the claimant's favor); Glenn v. Metropolitan Life Ins. Co., 461 F.3d 660, 672 (6th Cir. 2006) (finding an abuse of discretion in a case where the administrator "offered no explanation for its resolution of [an inconsistency in the evidence] or, for that matter, whether it was given any consideration at all"), aff'd, 128 S. Ct. 2343 (2008)."

Click here to view the Fourth Circuit's decision in White.

Foster Law Firm Attorney Rob Hoskins represented Auddie Brown Auto Sales of Florence, Inc. in an action brought against it by its former health insurer, Carolina Care Plan (CCP). Auddie Brown is an automobile dealership located in Florence, South Carolina, which established an ERISA governed health benefits plan for its eligible employees. The plan was insured by CCP. An employee became covered under the plan and remained covered as an active employee until she ceased working entirely in June of 2004. Thereafter, the individual continued coverage for exactly 18 months under the federal law known as COBRA (which is a part of ERISA). However, the insurer, CCP, was not made aware that the client was no longer actively employed or that her coverage status had changed to COBRA continuation coverage. Because of that, the insurer asserted that it should not have to pay for approximately $650,000.00 in medical bills that were incurred to treat the individual between June of 2004 and December of 2005. The insurer filed suit alleging state law causes of action of negligence and breach of contract. The case was tried on its merits and after a day long non-jury trial. Judge Michael Nettles, ruled with the Foster Law Firm client and held that, in light of all of the evidence, ERISA preempted the state law causes of action and, even if it did not, CCP was not entitled to any recovery on its state law causes of action. ( Click here to see the circuit court order.) After issuance of Judge Nettles' order, the case was featured on the nationally prominent health insurance site, http://www.healthplanlaw.com/. (Here is the link to read the write up on the case: http://healthplanlaw.com/?p=654)

On February 20, 2008, the United States Supreme Court issued its unanimous decision in LaRue v. DeWolff, Boberg & Associates, 128 S. Ct. 1020, 169 L.Ed.2d 847 (2008). With LaRue, the court considered an extremely important question regarding remedies available under ERISA, 29 U.S.C. § 1132(a)(2). The court held, for the first time, that individual plan participants in ERISA governed 401(k) plans can sue to recover losses to their individual accounts caused by a breach of fiduciary duty. As The New York Times points out, the case affects up to 70 million American workers. James LaRue, the prevailing party, has been represented by Foster Law Firm Attorney Rob Hoskins from the outset of his case. Mr. Hoskins appeared before the Supreme Court along with his co-counsel, Peter Stris of the Whittier Law School in California, who presented oral argument on behalf of Mr. LaRue. The United States also argued on LaRue's behalf. To view a news article on the case, click here. Click here to view the Supreme Court's opinion.

In Evans v. Eaton Corporation Long Term Disability Plan, 514 F.3d 315 (4th Cir. 2008), the firm's attorney, Rob Hoskins, represented the Plaintiff. Evans involved an ERISA governed long term disability plan. In Evans, like the Donovan case below, the ERISA plan from which Evans sought benefits was funded by her former employer, Eaton Corporation, and administered by Broadspire Services, Inc. The plan had denied Evans' claim for benefits. After exhausting administrative remedies, Evans filed suit. The District Court Judge held that the evidence in support of Evans' disability was much more compelling than the evidence cited by the plan in support of its denial. The District Court reversed the claim denial and entered judgment for Evans. The plan appealed to the United States Court of Appeals for the Fourth Circuit in Richmond, Virginia. The Fourth Circuit reversed. The Fourth Circuit essentially held that Evans had presented some very compelling evidence and even stated that if the court were considering Evans' claim under a less burdensome standard of review that Evans would prevail. However, the court reversed the District Court and ruled in favor of the plan. The court used the case to underscore one of the most unfair and significant aspects of ERISA (at least from a claimant's standpoint) which is the "abuse of discretion" standard of review. The court stressed that under ERISA, in appropriate circumstances, a reviewing court must apply the "abuse of discretion" standard of review which the court emphasized is, by its nature, very deferential to the plan's decision. The court held that in reviewing a claim under an abuse of discretion standard the court should not exercise judicial abstinence, but should certainly use a "healthy dose of judicial restraint". In essence, the Evans case, which is a published decision, stands for the proposition that if a person's disability claim hinges on a "close call" then the plan will win under the abuse of discretion standard. The Evans decision is binding precedent in the Fourth Circuit. Click here to view the decision.

On January 23, 2008, in Wilson v. Phoenix Specialty Manufacturing Co., Inc., 513 F.3d 378 (4th Cir. 2008) the United States Court of Appeals for the Fourth Circuit affirmed a district court verdict in the amount of $197,783.00 for Plaintiff Jimmy Wilson on his claim brought under the Americans With Disabilities Act. Mr. Wilson was represented by a team of attorneys including Foster Law Firm attorney Robert E. Hoskins, former Foster Law Firm attorney, Candy Kern-Fuller (now a partner in her own firm, Upstate Law Group, LLC), and Victoria Eslinger of Nexsen Pruet. The Wilson case involved peripheral ERISA issues, but was decided based upon a primary issue under the Americans With Disabilities Act. The Wilson decision is a published decision meaning that it is binding precedent in the states which comprise the Fourth Circuit (South Carolina, North Carolina, Virginia, Maryland, and West Virginia). Click here to view the decision.