Source: https://www.lifeanddisabilitylaw.com/erisa-watch-first-circuit-holds-that-claimant-is-disabled-by-rsd-and-fibromyalgia-sanctions-against-her-attorney-for-threatening-to-sue-insurers-independent-docto/
Timestamp: 2019-04-18 10:47:39+00:00

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ERISA Watch – First Circuit Holds that Claimant Is Disabled by RSD and Fibromyalgia; Sanctions against Her Attorney for Threatening to Sue Insurer’s “Independent” Doctor Are Not Warranted.
HomeBlogBlogAttorney's FeesERISA Watch – First Circuit Holds that Claimant Is Disabled by RSD and Fibromyalgia; Sanctions against Her Attorney for Threatening to Sue Insurer’s “Independent” Doctor Are Not Warranted.
This week’s notable decision is Gross v. Sun Life Assurance Co. of Canada, No. 16-1958, __F.3d__, 2018 WL 460203 (1st Cir. Jan. 18, 2018). It’s jam packed with lots of goodies concerning consideration of chronic pain, surveillance, sanctions, prejudgment interest, and attorneys’ fees.
Plaintiff Gross worked as an optician and office manager until August 2006, when debilitating symptoms of chronic and severe pain caused by reflex sympathetic dystrophy (“RSD”) and fibromyalgia forced her into disability leave. Unfortunately, her case dragged on for many years, including two trips to the First Circuit Court of Appeals. On remand, the district court determined that Gross was entitled to benefits and attorneys’ fees. In the most recent appeal, Sun Life challenged the district court’s determination that the expanded administrative record supports Plaintiff’s claim of disability. Sun Life also argued that the district court abused its discretion in failing to impose sanctions on one of Gross’s attorneys for threatening to sue its “independent” doctor if he did not withdraw his revised opinion adverse to Gross. Gross filed a cross-appeal and argued that the district court abused its discretion in choosing a prejudgment interest rate that does not fully compensate her for the wrongful denial of benefits (federal statutory rate) and by setting the amount of attorney’s fees for the pre-remand proceedings.
The First Circuit held that Gross was entitled to benefits based on chronic and severe pain. Sun Life’s doctors failed to evaluate the “surveillance reports in the context of the entire surveillance investigation and the consistent perceptions of examining practitioners that her complaints of pain were genuine.” Their doctors did not explain the contrast between “the more ambitious surveillance activities” and Gross’s numerous days of relative inactivity over the course of nine days of surveillance. Additionally, the court was “frankly puzzled” that Sun Life did not act on the “independent” doctor’s suggestion of a reexamination, given the court’s highlighting of both the believability of Gross’s symptoms to medical practitioners and her co-workers’ description of her deteriorating physical condition while she attempted to remain on the job.
On the issue of sanctions, the court found that an award of sanctions against Plaintiff’s attorney was not required for his threat of litigation to the independent medical examiner. However, the court considered the attorney’s threat of litigation to the doctor and his misrepresentations in defense of that conduct on appeal worth of reproach. The court directed the Clerk of Court to send a copy of this opinion to the Kentucky Office of Bar Counsel for whatever action, if any, it deems appropriate.
Lastly, on the issue of attorneys’ fees, the court held that the district court did not exceed its authority in determining that the Kentucky attorney’s hours ($375) should be compensated at a lower rate than the Boston attorney’s hours ($500). Precedent allows a district court to choose an attorney’s standard rate, or the prevailing market rate in the forum, or a reasonable rate in between. However, the court found that the district court abused its discretion in finding that only 22.4 hours were reasonably expended on the attorney fee petition and in discounting time spent on summary judgment for lack of success. But, the 25% downward adjustment in hours sought accurately reflected both success achieved on the claim for benefits and the district court’s permissible view that the total of summary judgment hours was excessive. Finally, the court determined that awarding the full amount of fees sought for the prior appeal was not reasonable.
Corey v. Sedgwick Claims Mgmt. Servs., No. 1:15 CV 1736, 2018 WL 467517 (N.D. Ohio Jan. 18, 2018) (Judge Patricia A. Gaughan). The court awarded Plaintiff $72,387 in attorney’s fees, which is approximately 80% of the total fees sought following Plaintiff’s success on his long-term disability benefit claim. Defendant did not oppose the hourly rates requested by Plaintiff ($400 for 1983 law school graduate and $300 for 2005 law school graduate). The court did not award time spent on amending the complaint and opposing Defendants’ motion to dismiss, which the court granted in full. It also did not award time spent on an unsuccessful motion for limited discovery or time spent on administrative procedures on remand. The court awarded all time spent on appeal before the Sixth Circuit and only some of the time spent preparing the fee motion.
Saginaw Chippewa Indian Tribe of Michigan, et al. v. Blue Cross Blue Shield of Michigan, No. 16-CV-10317, 2018 WL 453762 (E.D. Mich. Jan. 17, 2018) (Judge Thomas L. Ludington). In this case, the Tribe took issue with BCBSM’s management of Plaintiffs’ self-insured employee benefit Plan. The court previously granted both Defendant’s and Plaintiffs’ motions for partial summary judgment. Both parties filed a motion for attorneys’ fees. The court denied BCBSM’s motion for attorneys’ fees and costs and granted the Tribe’s motion for attorneys’ fees and costs in part. The court awarded the Tribe 25% of the initial lodestar amount for a total of $204,347.85.
International Union, et al. v. TRW Automotive U.S., LLC, No. 11-CV-14630, 2018 WL 441355 (E.D. Mich. Jan. 16, 2018) (Judge Denise Page Hood). The court determined that Plaintiffs’ rights and/or claims under ERISA had not been determined at the time Plaintiffs filed their fee motion. Thus, the fee motion was not ripe for consideration when filed and “Arbitrator Long’s ruling that each party shall bear the expense of its own representatives (and that the parties shall share all other expenses of arbitration) necessarily reached only the matter addressed in arbitration, i.e., the breach of contract claim and does not preclude a future request for attorney fees on the ERISA claim.” The court denied the motion for fees as premature and without prejudice.
Beta Group, Inc. v. Steiker, Greenaple, & Croscut, P.C., et al., No. CV 15-213 WES, 2018 WL 461097 (D.R.I. Jan. 18, 2018) (Judge William E. Smith). In this matter arising out of Defendants’ alleged failure to eliminate from the Beta Group, Inc. Employee Stock Ownership Plan a mandatory 4% Money Purchase Pension Plan contribution by Beta for its employees, the court accepted the report and recommendation in its entirety and adopted its reasoning and recommendations. The court granted Defendants’ motion to dismiss the Individual Defendants because Plaintiff failed to lodge plausible claims against them. The court found no error in the Magistrate Judge’s application of the collateral source rule to decline to dismiss the Plan and Romeo as plaintiffs.
Gross v. Sun Life Assurance Co. of Canada, No. 16-1958, __F.3d__, 2018 WL 460203 (1st Cir. Jan. 18, 2018) (Before Thompson, Lipez, and Kayatta, Circuit Judges). See notable decision summary above.
Rodriguez v. Life Insurance Company Of North America, No. 15-12768, 2018 WL 398444 (E.D. Mich. Jan. 12, 2018) (Judge Nancy G. Edmunds). Under a de novo standard of review, the court determined that Plaintiff was disabled from her own occupation as a Program Manager as a result of chronic hip and back pain. The court noted that LINA’s reviewers did not consider the cognitive demands of Plaintiff’s own occupation, or the degree to which pain interferes with her ability to concentrate and meet the cognitive demands of her own occupation. LINA also did not address the SSA’s determination regarding Plaintiff’s pain, including its finding that she would be off task for 20% of the work shift due to chronic pain that has not responded well to a variety of interventions. The court declined to make a determination of “any occupation” disability since LINA did not make any determination on that claim. The court also denied Plaintiff’s request for an accounting by Defendant since this relief is inappropriate in a straightforward claim for LTD benefits under Section 502(a)(1)(B).
Fessenden v. Reliance Standard Life Ins. Co., No. 3:15CV370-PPS, 2018 WL 461105 (N.D. Ind. Jan. 17, 2018) (Judge Philip P. Simon). “Some cases turn almost entirely on what the applicable standard of review is. This case is one of them. This is an ERISA case that was transferred to me last year in a district-wide reassignment of cases. Judge Lee, who previously was assigned to the case, held that Reliance Standard Life Insurance Company’s decision to deny Donald Fessenden long term disability benefits would be reviewed under the deferential arbitrary and capricious standard, as opposed to deciding the case from scratch—the so-called de novo standard. When that decision was made by Judge Lee, the die was essentially cast.” The court granted summary judgment in favor of Reliance Standard Life Insurance Company. Although the court noted that there was substantial medical evidence supporting a debilitating case of chronic fatigue syndrome, the court “reluctantly” affirmed the Plan’s decision since there was evidence on both sides of the disability analysis and two reasoned opinions explaining the denial of benefits.
Speights v. BlueCross Blueshield of S.C., No. 9:17-CV-00594, 2018 WL 416561 (D.S.C. Jan. 16, 2018) (Judge David C. Norton). In this lawsuit concerning a denial of health insurance benefits for cancer treatment, the court found that Plaintiff’s breach of contract claim is preempted by ERISA since the claim stems from an ERISA-governed health plan. The court retained supplemental jurisdiction over Plaintiff’s remaining claims for negligence, unjust enrichment, unfair trade practices, and others. The court denied the motion to remand and retained jurisdiction over all of the claims.
Service Employees International Union Local 2000 Health and Welfare Fund, et al. v. Agency For Community Transit, Inc., No. 4:16 CV 1065 CDP, 2018 WL 465788 (E.D. Mo. Jan. 18, 2018) (Judge Catherine D. Perry). Applying ordinary principles of contract law, the court agreed with the employer that the terms of the CBA control in this case, and an employee may opt out of coverage at any time upon meeting the two conditions specified in the CBA: 1) furnishing the employer with written proof of insurance under another health plan, and 2) furnishing the employer with a written request not to be covered by the employer-provided health plan. An employee does not have to wait until open enrollment to opt out of coverage. The court granted summary judgment to the employer and denied it as to the Plaintiff Fund.
Meakin v. California Field Ironworkers Pension Tr., No. 5:16-CV-07195-EJD, 2018 WL 405009 (N.D. Cal. Jan. 12, 2018) (Judge Edward J. Davila). Under an abuse of discretion standard of review, the court determined that the Trustees did not abuse their discretion in suspending Plaintiff’s payments. The Trustees claimed that they stopped Plaintiff’s pension payments on their belief that these distributions were in violation of ERISA and the IRC. The court found that at least with respect to the IRC, the Trustees’ interpretation of the Plan’s terms, and suspension of benefits, was reasonable. The court also found that Plaintiff is not entitled to continued pension payments under a theory of equitable estoppel.
Ganson v. Detroit Pub. Sch., No. CV 16-13108, 2017 WL 6943424 (E.D. Mich. Dec. 11, 2017), report and recommendation adopted, No. 16-13108, 2018 WL 398431 (E.D. Mich. Jan. 12, 2018) (Judge Sean F. Cox). The court dismissed the ERISA claims with prejudice. The court determined that the Michigan Public Schools Retirement System (MPSERS) is a governmental plan not subject to or governed by ERISA. A governmental plan means “a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.” 29 U.S.C. § 1002(32).
Gibson v. Blue Cross Blue Shield of S.C., No. 8:15-CV-02476-DCC, 2018 WL 480391 (D.S.C. Jan. 19, 2018) (Judge Donald C. Coggins, Jr.). The Magistrate Judge recommended granting Plaintiff’s Motion to the extent it seeks to substitute Dale Gibson as the personal representative of the estate as Plaintiff and denying Plaintiff’s Motion to the extent it seeks to add a cause of action under ERISA. The court agreed it would be unfairly prejudicial to allow Plaintiff to add an ERISA claim at this late juncture. The court recognized that the Estate of Kimberly Gibson was closed before the Complaint was filed, and under the law of the State of South Carolina, the Plaintiff named in this case was not a legal entity capable of filing suit. However, the court found that Defendant will not be prejudiced by an amendment to the Complaint to substitute the proper Plaintiff in this action. The amendment will relate back to the original filing so Defendant’s motion to dismiss should be denied.
Schwartz v. Associated Employers Grp. Benefit Plan & Tr., No. CV 17-142-BLG-SPW, 2018 WL 453436 (D. Mont. Jan. 17, 2018) (Judge Susan P. Watters). In this lawsuit by a provider seeking full payment for the cost of emergency brain surgery that it provided to the Defendant’s plan participant, the court granted Defendant’s motion to dismiss in part. Construing the complaint in the provider’s favor, the court found that: (1) the provider’s name on the form and the circumstances of the agreement make it plausible that the insured assigned the rights to medical payments to the provider; (2) it is plausible that EBMS is liable as a fiduciary of the plan because it may exercise discretionary authority or control in the administration of the plan; (3) it is plausible that the provider’s promissory estoppel claim is not preempted because it is an independent third-party claiming damages for alleged misrepresentations. The court permitted the provider to proceed on her state law promissory estoppel claim because the facts as alleged in the complaint support the claim and Meadows and Catholic Health expressly hold ERISA does not preempt promissory estoppel claims by independent third-parties claiming damages for misrepresentations.
Mount Sinai Hosp. v. Crossroads Healthcare Mgmt. Ltd. Liab. Co., No. 17 CIV. 7408 (LGS), 2018 WL 461103 (S.D.N.Y. Jan. 18, 2018) (Judge Lorna G. Schofield). The court granted Plaintiff’s motion to remand to state court this case seeking payment for an operation performed on a participant in a self-insured employee welfare benefit plan. The court explained that Crossroads and Allied have not shown that Mount Sinai is the type of party that can bring a claim pursuant to § 502(a)(1)(B), because Mount Sinai does not have ERISA standing conferred to it by a valid assignment from the patient.
Manna v. Phillips 66 Company, et al., No. 16-CV-500-TCK-FHM, 2018 WL 454565 (N.D. Okla. Jan. 17, 2018) (Judge Terence Kern). Plaintiff contends that his job was eliminated, and therefore his termination was a “Layoff” as defined in the Plan, rather than a termination for cause, entitling him to severance pay under the Plan. The court found that the Committee ignored evidence showing that Plaintiff complied with a prior warning. The court also rejected Defendant’s argument that Plaintiff did not qualify for severance pay because he did not receive a written Notice of Layoff, as required by the Plan. “To the extent the Plan seeks to rely on formal designations or actions entirely within the employer’s control, the Court finds greater scrutiny under the ‘sliding scale’ is warranted. The Court is unwilling to find Plaintiff ineligible for benefits under the Plan based only on circumstances under Phillips’ control.” The court reversed the administrator’s decision and remanded the claim to the Plan for further findings and explanation.
Carpenter Technology Corporation v. Weida, No. CV 15-1936, 2018 WL 398297 (E.D. Pa. Jan. 11, 2018) (Judge C.J. Stengel). Plaintiff filed suit seeking imposition of a constructive trust and/or equitable lien over third-party settlement proceeds as reimbursement of medical expenses its health plan paid for Defendant’s injuries. The court held that as a law that regulates insurance, Pennsylvania’s anti-subrogation law is pre-empted by ERISA as applied to the self-funded health and welfare plan. Thus, the Plan’s subrogation and reimbursement provisions are fully enforceable. The court found that when Defendant’s settlement proceeds were deposited into the joint checking account, it was immediately converted from a “specifically identifiable fund” to the joint property of the married couple owned by tenancy by the entireties. The court concluded that the equitable lien had been extinguished, and any claim that Plaintiff would have over Defendant is a legal one, and not available under ERISA. The court granted Defendant’s motion to dismiss.
ERISA Watch authored by attorney Michelle L. Roberts, Partner.

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