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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 In an unpublished opinion, the Ninth Circuit recently determined that an employer provided disability insurance company was within its rights to reduce an employee’s disability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.

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Mehr Fairbanks’ Partner, Bartley K. Hagerman, has been recognized as a Top 40 Under 40 Civil Plaintiff Trial Lawyer by The National Trial Lawyers! The National Trial Lawyers: Top 40 under 40 is by invitation only and is extended exclusively to chosen trial lawyers who practice civil plaintiff and/or criminal defense law. 

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Mehr Fairbanks’ Partner, Elizabeth A. Thornsbury, has been nominated and accepted as a Member of the 2023 Lawyers of Distinction! Lawyers of Distinction Members are selected based upon a review and vetting process by a Selection Committee using factors to recognize the nominee’s achievements and peer recognition.

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Towards the end of last year, the Department of Labor (“DOL”) released its final rule titled, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.” 87. Fed. Reg. 73822 (Dec. 1, 2022) (the “Socially Conscious Investing Rule”). This new rule is now in effect and the DOL stated one of the purposes of its new rule was to focus on “the chilling effect and other potential negative consequences caused by the previous rule, ‘Financial Factors in Selecting Plan Investments,’ 85 Fed. Reg. 72846 (Nov. 13, 2020), with respect to the consideration of climate change and other environmental, social, and governance (“ESG”) factors.” The Socially Conscious Investing Rule provides guidance related to the fiduciary duties of both prudence and loyalty, as applicable to the selection of plan investments. This new rule specifies that a “fiduciary’s determination with respect to an investment or investment course of action must be based on factors that the fiduciary reasonably determines are relevant to a risk and return analysis.” 29 CFR § 2550.404a-1(b)(4).

However, not everyone agrees with the Socially Conscious Investing Rule or its future impact on retirement plans managed by employers. For instance, twenty-five Republican state attorneys general formed an alliance and filed a lawsuit against the DOL. Kentucky is one of the states that joined in this lawsuit. In their complaint, the Republican attorneys general alleged that the new Socially Conscious Investing Rule violated the Employee Retirement Income Security Act (“ERISA”). In their complaint, the attorneys general are requesting that the U.S. District Court for the Norther District of Texas makes a declaration that the Socially Conscious Investing Rule is in direct violation of ERISA. “The 2022 rule undermines key protections for retirement savings of 152 million workers — approximately two-thirds of the U.S. adult population and totaling $12 trillion in assets — in the name of promoting environmental, social, and governance factors in investing, including the Biden administration’s stated desire to address climate change,” the complaint stated.

Their 46-page complaint states that in 2014, in Fifth Third Bancorp v. Dudenhoeffer, the Supreme Court unanimously concluded that ERISA requires fiduciaries to consider financial benefits and not any nonpecuniary benefits. Further, their complaint asserts that the exclusive purpose that ERISA fiduciaries must pursue are financial benefits. Also, the legislative history of ERISA supports the idea that the financial benefits alone should be the sole and exclusive purpose of the statute itself. ERISA’s fiduciary duties are the highest duties recognized by the law and therefore require that fiduciaries act with undivided loyalty towards the beneficiaries.

Simply put: Yes, but with limitations. It is important to speak to an attorney to know your rights and to ensure that you do not miss any deadlines related to your specific claim. To our current clients and to those seeking our services for short-term and long-term disability claims and appeals, we are still here to help you every step of the way.

On May 5, 2020, Mehr Fairbanks posted a blog that outlined how COVID-19 can impact the claims and appeals process for both our short-term and long-term disability clients. That blog post can be found here. However, since the original post, the Department of Labor has updated the guidance on the deadlines and extensions that may impact short-term and long-term disability claims and appeals under ERISA.

Because ofthe COVID-19 National Emergency, it was first announced that deadlines related to filing and appealing claims under ERISA were tolled until a certain amount of time after theNational Emergency ended. Originally, ERISA deadlines were suspended until 60 days after the end of the National Emergency. However, because of certain restrictions in the authority to extend deadlines for longer than a period of one year, the suspension of ERISA deadlines has been clarified.

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Mehr Fairbanks Trial Lawyers has been selected as one of the Best Litigation Attorneys in Lexington for 2022 by Expertise.com!

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Recently, a federal judge in Pennsylvania ruled in favor of the plaintiffs in an action brought against DuPont and Corteva Inc. (defendants). The court held that the Defendants’ motion to dismiss was premature, and that the case could continue through the litigation process. The case concerns the claim brought by employees of DuPont and Corteva alleging that the companies acted in violation of ERISA’s fiduciary duties by changing their early retirement policy after a corporate merger. The Defendants attempted to dismiss the case by arguing that the workers who initiated the suit were not classified as “employees” and therefore ineligible for early retirement. The court disagreed, rejecting the motion, and stating that it was still too early in the suit to determine whether this was adequate grounds for dismissal, and that such a determination would be more appropriate in the summary judgment phase or left to a jury.

Additionally, the judge stated that the “Plaintiffs have pled sufficient[ly] to allege that the administrative committee did not act reasonably in terminating their rights to early retirement … and that they had a legally enforceable right to benefits under the plan.” The violations at issue concern the Defendants’ actions following corporate restructuring. After a merger between DuPont and Dow Chemical Co., three separate entities were created: Corteva, Dow Inc., and DuPont. The named Plaintiff, Cockerill, stated that he had structured his career relying on DuPont’s early retirement options. Cockerill has worked for the corporation for over 20 years under the Rule of 85 early retirement plan (“Plan”). The Plan provided that early retirement was available if the sum of an employee’s age and the years they had worked at the company totaled to 85. Thus, Cockerill would have been eligible for retirement at the age of 58. The issue arose when DuPont became Corteva, and the retirement plan’s time frame divested as Cockerill was considered terminated from DuPont and a new employee of Corteva. However, no changes to Cockerill’s job were made and he continued to perform in the same role he had for DuPont. After the switch to Corteva, Cockerill was informed that the earliest year in which he could retire had changed from 2027 to 2034 due to the change in retirement plan management.

Representation for the plaintiffs has proposed a subclass of DuPont employees who did not qualify for early retirement due to the merger, though had been fired from the companies for “lack of work.” In response, the Defendants argue that the suit must be dismissed, as the plans at issue only applied to “employees” for the “company,” and members of the subclass did not meet the requirements of the description. In order to be considered an “employee,” the Defendants argue that a worker must have been employed by the original E.I. DuPont de Nemours and Co. or a subsidiary. The subsidiary at issue in the case, Specialty Products, is argued to not qualify as it was not affiliated with the original DuPont at the time the company diverged.

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The First Circuit recently affirmed the position that when a policy or plan is ambiguous, it should be interpreted in favor of the insured. The case that gave rise to the question is Ministeri v. Reliance Standard Life Insurance Company. The facts of the case concern a denial by the Defendant (“Reliance”) for life insurance benefits due to the widow of a Plan member, Renee Ministeri (“Plaintiff”). Reliance argued that the Plaintiff’s late husband, Anthony (the member of the plan at issue), did not have coverage under the policy because it had lapsed due to his absence from work caused by a severe medical condition. Anthony passed away in 2015, with Reliance claiming that the policy lapsed during the time he was not working.

The dispute revolved around unclear language in the policy regarding the definitions of “actively” working in the role of “corporate vice president.” Further, the facts were unclear about the amount of hours Anthony had worked during the relevant period. The Court held that “under a reasonable construction of the phrase, Ministeri could be regarded as an ‘Active … Corporate Vice President’ as long as he was a non-retired employee holding a job title matching the rank of Corporate Vice President.” Further, the Court’s ruling stated that no dispute existed as to whether Ministeri’s status as a current employee was terminated prior to his formal announcement of leave in 2014. Thus, the Court rejected Reliance’s argument concerning the interpretation of the ambiguous terms in this section of the policy.

Reliance proffered a second argument, opining that $500,000 in supplemental coverage was not available to Renee Ministeri in addition to the $592,000 in basic coverage provided by the policy. Reliance argues that Renee failed to apply for the portability provision of the policy, though it was noted during oral arguments that she had applied for supplemental coverage. Applying for supplemental coverage was the Plaintiff’s avenue to enacting the portability provision, against which Reliance did not argue. Judge Bruce M. Selya stated in his opinion that Reliance delayed their defenses to the Plaintiff’s claims in violation of ERISA; his opinion read, “[Reliance] chose to keep quiet about its discovered basis for denial until litigation ensued … that is precisely the sort of delayed reaction ERISA forbids.”

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