ERISA Disability Games Insurers Play: Admit Disability but Deny for a Limitation/Exclusion
The case Laake v. The Benefits Comm., W. & S. Fin. Grp. Co. Flexible Benefits Plan, No. 1:17-CV-611 (WOB-SKB), 2021 WL 5166377 (S.D. Ohio Nov. 5, 2021), illustrates a common game plan administrators and insurers play with ERISA disability. That is to admit disability but latch onto a benefit that pays for a limited duration (such as a mental condition), or an exclusion such as chronic pain syndrome or fibromyalgia.
Facts of the Case:
Ms. Laake filed a claim for long-term disability, but the claim was denied for arbitrary reasons.
She then filed suit, and the court agreed that the decision was arbitrary and capricious. The court remanded the case back to the plan administrator for another swing.
The plan administrator, however, failed to make a timely decision. It eventually denied the claim again.
Suit was reinstituted. This time, the court was a bit irritated and made several interesting findings.
Court Finding #1: "You Can't Do That"
First, the court decided that a de novo review was appropriate. The people making her claim decision were not on the committee vested with that authority and the plan did not give discretion to those individuals.
Court Finding #2: "You're Taking Too Long"
Second, the decision took over 270 days – which was too long and past the deadlines required for a full and fair review. Further, the plan administrator latched onto a “chronic pain syndrome” exclusion to admit disability but still deny the claim. That is often an appealing position since it acknowledges the claimant’s credibility, but still permits a denial. However, there was little or no evidence that Ms. Laake had this condition.