and resolved my case.”
Congratulations to Mehr Fairbanks’ Partner, Elizabeth Thornsbury, on being selected to the 2024 Kentucky Rising Stars List by Super Lawyers!
Elizabeth is listed as a top rated Employee Benefits attorney in Lexington, Kentucky. Selections are determined on 12 indicators of peer recognition and professional achievement on an annual, state-by-state basis. Being named to the Rising Stars list is a prestigious distinction that only the top 2.5% of attorneys receive.
Congratulations to Mehr Fairbanks’ Partner, Bartley Hagerman, for being selected as a National Trial Lawyer Top 40 Under 40 for Kentucky for 2024!
It is common for employees to obtain long-term disability coverage through their employment as an employee benefit. These policies are typically governed by a federal law called ERISA (this stands for the Employee Retirement Income Security Act). Having access to this coverage should provide comfort to employees in case the unthinkable happens: some life altering event that leaves you disabled and unable to continue working – physically or mentally. However, typically insurance policies contain language that employees aren’t often aware. For example, most disability insurance policies limit how long benefits will be paid for any conditions that the insurance company considers to be a “mental illness” or “mental health condition.” Most disability policies limit the maximum disability benefit period for mental health conditions to a maximum period of 24 months of benefits (although it is possible some policies have a shorter, or even longer, benefit period – every policy is different). Opposite of this, most policies have a much longer disability benefit period for conditions that are considered “physical” conditions (for example, most policies pay benefits to ages 65 or 67 for physical conditions).
Why is there such a disparity in how physical and mental conditions are treated by disability insurance carriers? There shouldn’t be – and other types of coverage (such as health insurance) do not have this disparity. However, action is now being taken to try and make this change for disability policies. The 2023 ERISA Advisory Council has taken a focus on this very issue this year. Their goal has been to “study the scope and impact of employee benefit plans’ limitations on disability benefits for mental health and substance use conditions.”
The ERISA Advisory Council has now urged Congress to pass legislation for mental health parity in disability policies. And, since this news, a large disability insurance carrier – Sun Life – has vocalized support for mental health parity. Sun Life, in a press release, stated:
On June 15, 2023, Mehr Fairbanks obtained a favorable opinion from the Kentucky Supreme Court related to a more than $15 million trial verdict in Magoffin County that Mehr Fairbanks obtained for its clients in October 2018. Following the jury’s verdict, the case was appealed by the insurance company. With the most recent decision, the Kentucky Supreme Court reversed a decision on appeal by the Kentucky Court of Appeals. The Supreme Court held that Kentucky case law “should not be construed as requiring a final judicial determination of coverage prior to filing a third-party tort claim against an insurer.” Importantly, the Court held that “the longstanding requirements of Wittmer v. Jones” continues to apply in insurance bad faith claims.
Call us today at (859) 225-3731 or visit us here to request a free consultation with one of Mehr Fairbanks’ attorneys.
*The information contained within this post should not be considered legal advice or legal representation.
On April 21st, the Kentucky Court of Appeals issued a unanimous opinion in favor of Mehr Fairbanks Trial Lawyers’ client, the Greenville Cumberland Presbyterian Church. The Court of Appeals opinion reverses and remands the Muhlenberg Circuit Court’s decision to enter summary judgment in favor of State Auto Property & Casualty Company. State Auto had issued an insurance policy to the church but when the church roof collapsed, State Auto denied the claim. The Court of Appeals ruled that there was in fact insurance coverage for the church’s loss under the State Auto policy.
Mehr Fairbanks partner Bartley Hagerman wrote the briefs and argued the case before the Court of Appeals.
Like many other employee benefits, ERISA disability law is designed to protect employees who have paid for or been promised these benefits through their employer. These benefits include:
A pension plan is an employee benefit plan established or maintained by an employer (or employee organization) that provides retirement income for employees. Primarily, pension plans are funded by the employer. More recently, traditional pension plans are becoming less available. Companies have replaced them with alternative plans (like 401(k) retirement savings plans) because they are less costly for employers. Some companies, like UPS, still have pension plans in place for their employees. However, when UPS reclassified some of their positions from nonunion to union it negatively impacted those employees’ pension plans. Consider the following:
Ralph Gragg worked for UPS as a driver hauling freight for approximately thirty years. When UPS decided to reclassify Mr. Gragg’s position, he transitioned from being a nonunion worker to a union worker. With his new classification status, his pension plan would then be funded by two distinctly different pension plans that existed within UPS. Each pension plan had a “Social Security Leveling Option” that would “increase the beneficiary’s monthly benefit before age 65 and thereafter reduce it by the amount of his Social Security benefit.” Gragg v. UPS Pension Plan, 55 F.4th 1059, 1061 (6th Cir. 2022). Mr. Gragg selected the “Social Security Leveling Option” for both of his pension plans. Each plan sent Mr. Gragg a letter that indicated what his payments would be before and after receiving his Social Security benefit. Each plan indicated that his monthly payment would be reduced by $1754 (the anticipated amount for his Social Security benefit).
However, when Mr. Gragg retired and began collecting his Social Security benefit each plan was reduced by his Social Security benefit for a combined total of $3508. When Mr. Gragg inquired about the discrepancy with each plan individually, they both responded with complicated messages that, in the end, indicated that the “reduced benefit amount was the correct amount.” Id. So, in November of 2020 Mr. Gragg filed a lawsuit against the UPS Pension Plan. He asserted a claim under the Employee Retirement Income Security Act, 29 U.S.C. § 1132 (a)(1)(B), that alleged that both pension plans paid him less than he was entitled to each month. Namely, $1754 less due to both plans being reduced by that exact amount.
The federal District Courts are beginning to adjust their views on how to best handle ERISA denial-of-benefits cases. Some courts use a modified summary judgment standard unique to ERISA denial-of-benefits cases that are based exclusively on an administrative record and the non-moving party is generally not entitled to the usual inferences in its favor (unlike the traditional summary judgment standard). In Anderson v. Liberty Lobby, Inc., the Supreme Court stated that “at the summary judgment stage the judge’s function is not himself to weigh the evidence… but to determine whether there is a genuine issue for trial.” Therefore, if material facts are in genuine dispute, then summary judgment may not be appropriate. Some courts have concluded that when fact-finding is required, or there is genuine issue related to material facts, then a bench trial is best. The 4th Circuit has held that this situation may arise when there is a necessity “to resolve competing factual contentions within the administrative record about the cause, severity, or legitimacy of an individual’s impairment.” Tekmen v. Reliance Standard Life Ins., 55 F.4th 951, 960 (4th Cir. 2022) (citation omitted).
Of note, the 6th Circuit, which is relevant Kentucky, has discussed not using summary judgment procedures or bench trials to decide ERISA actions, but instead reviewing the merits of the action based solely upon the administrative record with findings of fact and conclusions of law. It was suggested that the courts only consider evidence outside of the administrative record for limited exceptions. Wilkins v. Baptist Healthcare Sys., 150 F.3d 609, 619 (6th Cir. 1998) (Gilman, J., concurring).
For example, when insurance companies try to determine whether or not to award disability benefits, they may seek to hire their own physicians to review the medical records on file to reach a determination. This determination may or may not conflict with the medical opinions of the treating physicians. When there are conflicting opinions between the physicians hired by the insurance company and the treating physicians, however, this will likely lead to material facts in dispute. This is when a bench trial may be the most appropriate way for courts to rule on ERISA denial-of-benefits cases. Like in the example outlined below:
Disability insurance is a unique type of insurance that protects a person’s ability to earn a paycheck if that person experiences a serious injury or illness. Disability insurance is meant to provide employees with a way to receive a portion of their expected income if they later become unable to work. Disability insurance is often categorized as either short-term or long-term. The primary difference between short-term and long-term disability plans are the periods of time a person may receive benefits due to her inability to work. Short-term disability plans usually work in tandem with long-term disability plans. Generally, once short-term benefits are exhausted, then a long-term disability policy would become effective in an effort to continue providing an employee with income until she is able to return to work. Some long-term disability plans may last for the lifetime of the policyholder, most will usually provide coverage for approximately thirty-six (36) months.
Most employers provide some type of disability insurance coverage for their employees. It might be time to refresh your memory on what your employer provides you with specifically. In an unpublished opinion, the Ninth Circuit recently determined that an employer provided disability insurance company was within its rights to reduce an employee’s disability benefits by $800,000. The $800,000 came from a recent personal injury settlement the employee received on a completely unrelated matter. Haddad v. SMG Long Term Disability Plan, No. 16-CV-01700-WHO, 2021 WL 2187979 (E.D. Cal. May 28, 2021).
The case turned on the legal distinction between “offsets” and “exclusions” and “limitations” in regard to long-term disability plans. This marginal difference may be the difference between receiving the anticipated total value of long-term disability benefits or having that total value later diminished. Exclusions and limitations carve out areas from the scope of an insurance policy’s coverage. Offsets reduce the total amount owed for covered claims.