Employee Benefit Claims under ERISA
Proving That Denial of a Nurse's Long-Term Disability Claim Was Arbitrary and Capricious
An employer's long-term disability insurance policy typically contains language by which the insurance company reserves for itself "discretionary authority" to decide whether employees and beneficiaries are entitled to receive disability benefits. It is also typical that, after denying a benefits claim, the insurance company will rely on this "discretionary authority" to try to defeat the claimant's lawsuit. Under existing law, a court generally may not reverse the insurer's denial of benefits unless the claimant proves to the court's satisfaction that the denial was "arbitrary and capricious." This is not easy to prove.
A disabled operating room nurse came to us for help after the insurance company had refused her claim for long-term disability benefits. The lawyer she had hired had dropped the case after he had started the lawsuit but had not obtained a settlement from the insurer. The nurse had worked for more than a decade as an operating room nurse, but a degenerative spine condition prevented her from continuing. The insurance policy provided benefits if the nurse was disabled from performing her "own occupation." The insurer had denied the claim, however, finding that the nurse's "own occupation" was not that of "operating room nurse," but simply, "nurse," including school nurse or even an insurance company nurse medical records reviewer. The insurer defended against the lawsuit by relying on its "discretionary authority" to interpret the policy terms, given to it by the language of the insurance policy.
Overcoming the insurer's objection that there should be no pre-trial discovery because the policy had given the insurer "discretionary authority," we first obtained a court order directing the insurer to answer our questions about its compliance with federal regulations enacted under ERISA. We then identified proof in the insurer's internal computer entries that suggested that the insurer had not complied with those regulations.
The court, agreeing that the insurer's actions had been arbitrary and capricious, reversed the insurance company's decision to deny benefits.
A Disabled Lawyer Whose Insurer Refused to Pay Long-term Disability Benefits
After practicing law for twenty years, a lawyer developed a disabling back condition. At first, the insurer responsible for the lawyer's long-term disability ("LTD") benefits plan agreed that he was disabled and paid monthly disability benefits. After about two years, though, the insurer cut off the lawyer's benefits, claiming that he was no longer disabled.
The lawyer came to us to help him get his disability benefits restored. We advised him that, because had obtained his LTD coverage through his employment, the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001, et seq. ("ERISA") governed his claim.
ERISA has special rules, including a requirement that the person seeking benefits first use all the remedies provided by the benefit plan before starting a lawsuit. This is called "exhausting plan remedies." When we tried to help the lawyer exhaust - to follow the insurer's procedure to appeal the denial - the insurer refused to allow us to examine all the insurer's documents about the lawyer. Faced with what we considered an unreasonable refusal, we chose not to exhaust. Instead, we immediately filed a lawsuit in federal court. Predictably, the insurer moved to dismiss our lawsuit, claiming that we had not taken the internal appeal as the law typically required. But the judge denied the insurer's motion to dismiss and allowed our lawsuit to proceed.
We then served the insurer with a notice to depose — to question under oath — the employee who had made the decision to stop the benefits about why he did so. The insurer opposed this, too, citing court decisions that had ruled that such questioning was impermissible in ERISA cases like ours. Again, the judge agreed with us and ordered the insurer to bring its employee for questioning. His answers helped us to prove that the insurer had made its decision unfairly and unreasonably. In the end, the judge found that we had proven with the medical evidence that the insurer had acted "arbitrarily and capriciously." As a result, the judge set aside the insurer's decision and also ordered the insurer to pay the lawyer's legal fees.
Insurance Claim Denials
Three Children Denied Their Father's Life Insurance
We represented three immigrant children whose father had been killed in his home country, Guyana. The father's life insurance company had refused to pay the benefits on life insurance that the father had purchased.
The insurer insisted that the father had falsely completed his written application for the insurance and that it would not have issued the policy if it had known the truth. To make out this defense — called material misrepresentation — the insurer had to prove two things: (1) The father had answered an application question incorrectly, and (2) The insurer would not have issued the policy if it had received the correct answer to its application question.
It appeared that at least one of the father'sanswers was not correct, but we thought that the insurer could not prove the second point. We argued that the insurer would have issued the policy even if it had received the correct information.
The case went to trial, and we disproved the insurer's defense with our cross-examination of the insurer's own underwriter. The insurer called its underwriter to testify to the conclusion that the insurer would not have issued the policy if the father had answered the application questions correctly. (An underwriter is a person who assesses risks for an insurer before it decides whether to issue a policy and how much to charge for the coverage.) On cross-examination, we got the underwriter to admit that he had not and could not identify even one similar application that the insurer had rejected and that the insurer had not published any written guidelines that applied to the father's situation. After the underwriter finished testifying, the insurer agreed to pay the life insurance to the children.
A Widow Denied Her Husband's Life Insurance
On the eve of trial, a woman retained us to try the jury case. Her husband had died and she had sued a life insurer that had refused to pay the insurance benefits on her husband's life. The insurer insisted that the husband had lied on his insurance application when he denied smoking.
The insurer's proof depended entirely on its investigator's interview of the widow during which she had signed a statement — written in English by the investigator — stating that her husband had been a smoker. At trial, though, the widow — a native Spanish-speaker — testified that she had not told the investigator that her husband had smoked. We argued that the signed statement was suspect, partially because the widow did not read, understand and speak English well. Before the jury returned a verdict, the insurer made a settlement offer that the widow decided to accept.
Without Starting a Lawsuit, We Persuade a Disability Insurer to Reverse its Denial of Benefits
We were hired by a trial lawyer who suffered from ischemic optic neuropathy. His optic nerves had been damaged by the loss of blood supply, as a brain suffers from a stroke or a heart from a heart attack.
The lawyer's insurance company had denied his claim for disability benefits. The insurer's consulting doctor had given his opinion that the lawyer was not disabled, citing the fact that the lawyer could see well enough to read and drive a car.
With the help of a medical specialist called a neuro-ophthalmologist, we persuaded the insurer — without having to start a lawsuit — that, while the lawyer could drive and read, he could not do two important job tasks of a trial lawyer:
- He could not see well enough to evaluate the facial expressions of everyone in the courtroom during the trial (jurors, witnesses, lawyers and judge).
- He also could not speed-read documents unexpectedly offered into evidence during trial.
- We showed that a trial lawyer cannot do his job effectively when he is unable to perform these tasks. After reading our medical report and written argument, the insurer reversed its decision and agreed to pay the disability benefits until the lawyer reached the age of 65 unless he, not the insurer, decided that he was able to return to work.
Painter Whose Insurer Refused to Reimburse Him After His Studio Was Burglarized
Burglars broke into a 65-year-old painter's studio and stole many paintings, but the painter's insurer refused to pay. The insurer gave two reasons for its refusal: It claimed first that the artist had failed to complete the sworn proof of loss required by the policy and, second, that the artist had falsely completed his insurance application, entitling the insurer to rescind the policy.
The artist retained us, and we started a lawsuit. On the first defense, the law generally requires a judge to dismiss the complaint of anyone who has failed to file a proof of loss, and the artist admitted that he had not submitted the sworn proof of loss, despite the company's request. We raised the counter-defense of "substantial compliance:" Everything that the insurer could conceivably have hoped to receive in its sworn proof of loss form could be found in the documents and information that the artist had given to the insurer's private investigator. We asked the court to look to the substance, not the form of the proof.
On the insurer's second defense, it was undisputed that the artist had been burglarized another time — before he applied for his insurance — and that he had failed to disclose this on his application, though asked to do so. The insurer insisted that it would not have issued the policy had the artist answered the question correctly. We countered by pointing out that the insurer — which had the burden of proof on this defense — had not come up with convincing proof that (1) it had denied others' applications for similar coverage when it had known of an earlier burglary or (2) it had published underwriting guidelines that had announced its alleged policy to reject or rate of applicants with a history of one earlier burglary. Without such proof, the artist's incorrect answer did not matter (was not what the law calls a "material" misrepresentation).
After we asserted our two counter-defenses but before the court decided the legal issues, the insurer asked for mediation to try to settle the case. At the mediation, the insurer agreed to pay the artist's insurance benefits.
Personal Injury, Medical Malpractice and Wrongful Death Cases
Wrongful Death of Young Woman — Medical Malpractice
The parents of an eighteen-year-old girl who had died came to us after other lawyers had declined to take on their case. Their daughter had been diagnosed with hepatitis, but, after treatment by doctors at an HMO and New York City hospitals, she died, leaving a one-year-old son.
The doctors and one of the hospitals were blaming the deceased girl for not following instructions. The young woman had not followed the doctors' instruction, but we proved that her failures had not caused her death, but that it was the doctors' mistakes that had done so. We obtained all the medical records and did some basic medical research on the different kinds of hepatitis and the proper way to treat each. Based on our own study, we suspected that the doctors had given inadequate care, so we retained two different medical specialists who advised us precisely how the doctors had misdiagnosed the kind of hepatitis and, worse, had failed to treat the young woman correctly and, by doing so, had caused her death.
We filed suit and, on the eve of trial, the defendants agreed to settle the case. The settlement included an annuity sufficient to provide medical insurance, private school tuition, and college and even graduate school tuition for the young boy.
Brain-Damaged Baby — False Medical Records
A young mother retained us after her baby was born with cerebral palsy, spastic quadriplegia and severe brain damage. She told us how she had been neglected and left alone for hours in a hospital's maternity department. But the hospital's records contradicted the mother and reported that nurses had regularly checked on the mother.
We disproved the hospital's defense before a jury. We showed — through inconsistencies in the records themselves and testimony both by the hospital's doctor and by our expert obstetrician — that the mother's testimony was true and the hospital record was not. In the middle of trial, the hospital agreed to a settlement that provided for more than $10,000 a month tax-free income for life.
We persuaded the court to apply some of the funds to pay for health insurance for the baby's entire family. Before that, the immigrant family was dependent on Medicaid. Now the baby's entire family receives the best medical care money can buy.
Young Woman Employed by Veterinary Hospital Bitten on the Face by a Dog
We represented a young woman employed as an office manager by a veterinary hospital. Without any warning, a dog owned by a veterinarian bit the woman on the face, tearing off part of her lip and leaving her scarred and unhappy with her appearance, even after two plastic surgeries.
The defense lawyers moved to dismiss the case, arguing that:
- The woman had voluntarily assumed the risk by working in the animal hospital where she knew sick dogs could bite her and
- She had failed to follow known safety procedures.
In response, we urged the judge to deny the motion because New York law required that a jury decide both issues, at least on the proof we had given the court. The judge agreed and ordered the case to go to trial. On the day we went to court to select the jury and start the trial, the defense conceded and agreed to pay the damages sought by the young woman.
Business Disputes, Consumer Disputes and Litigation
A Small Publishing Company Defeats an Unfounded Class Action
We represented a small New York book publisher. Several of its authors had falsely accused the publisher of defrauding them and other authors of money due to them. Over our objection, a judge wrongly certified the case against the publisher as a class action. This certification — if allowed to stand — would have greatly increased the expense of defending the case, regardless of how false the charges were. In effect, it would have pressured the publisher to pay an unfair settlement amount. Therefore, we appealed the judge's order granting class certification, and the appellate court reversed the judge's decision and agreed with us that there should be no class action. Following the announcement of the appellate decision, all five plaintiffs abandoned their claims, and the court dismissed the complaint against the publisher.
Author and Publisher Accused of Copyright Infringement and Libel
A nationally-known collector of photographs and films about the assassination of President Kennedy sued a former co-author and the co-author's publisher about a book called High Treason II. The two defendants retained us to represent them. Plaintiff claimed that defendants had infringed his copyright by publishing photographs which contained his original enhancements. Plaintiff also claimed that the author defendant had defamed him in the book.
We tried the case in federal court and obtained a defense verdict. On the copyright claim, we proved that any original photographic work plaintiff may have done was not visible in the copies that defendants had published in their book. We also proved that defendants' use of the photographs was a permissible fair use under 17 U.S.C. § 107. On the libel claim, we proved that plaintiff was a limited public figure who had failed to meet his legal burden to prove that either defendant had actual knowledge of falsity or subjective awareness of probable falsity.
Vacating Default Judgment for Man Whose Bank Account Had Been Frozen
A man came to us because he had received notice from his bank that a lawyer had seized and frozen his account to pay a default judgment in Supreme Court in the Bronx. The man told us he had never been served with legal papers, but the lawyer insisted that he had properly served the man both with the summons and complaint.
We quickly obtained an injunction to forbid the lawyer and his client from removing any money from our client's bank account. We filed a motion to vacate the default judgment on the ground that the plaintiff's proof was false and that he had never served any legal papers on our client.
The judge ordered a hearing at which we cross-examined the professional process server who claimed that he had rung our client's front door bell and handed the suit papers to him there. Our client's home had an unusual approach to the front door, and we convinced the judge that the process server's testimony and his own paperwork disproved his claim to have served our client. The judge vacated the default judgment, restored the entire bank account to our client and allowed him to defend the case on the merits.
Defense of Personal Injury Claim Despite Police and Hospital Reports to the Contrary
We defended a young woman who had driven through a stop sign and struck the car driven by the plaintiff. The plaintiff had suffered a fractured neck.
The injured plaintiff, the police accident report and the hospital emergency room records all reported that he had been wearing a seatbelt. But based on the type and location of his injuries and the physical damage to his car, we did not believe that he had been wearing a seatbelt. We found engineering and medical literature about how the neck must move to cause the particular fracture, and we found support for our belief. We then retained a seatbelt expert who was also an orthopedic surgeon. He reviewed the evidence and agreed with us that the plaintiff had not been wearing his seatbelt.
Because the young woman had missed the stop sign, we tried to settle the case. But the plaintiff had repeatedly refused our settlement offer, insisting that he should receive much more money than had been offered.
During the jury trial, however, the plaintiff changed his mind and agreed to accept our settlement offer. Plaintiff's change of heart came immediately after he listened to our opening statement in which we explained our seatbelt defense in detail to the jurors.
The attorneys at Dwyer & Brennan represent clients throughout New York City in state courts in Manhattan, Brooklyn (Kings County), Queens (Queens County), and the Bronx, and in all New York federal courts.
