Following market conduct investigations performed by the insurance departments of the States of California, Maine, and several other jurisdictions, in May 2013, the CIGNA companies that administer long-term disability insurance benefits (Life Insurance Company of North America, Connecticut General Life Insurance Company, CIGNA Life and Health Insurance Company, and other affiliated companies) entered into a regulatory settlement agreement with several state insurance regulators. The agreements require significant restructuring of claims handling, use of outside physicians in assessing claims, and standards for consideration of concurrent Social Security disability determinations, among other requirements. A copy of the agreement is available here - Regulatory Settlement Agreement.
On July 26, 2013, the U.S. Court of Appeals for the Seventh Circuit issued a ruling in Larson v. United Healthcare Insur.Co., No. 12-1256 click here permitting ERISA plaintiffs to sue insurance companies that underwrite and are responsible for paying benefits when claims are asserted that benefits have been wrongfully denied. This ruling marks a significant change from prior Seventh Circuit case law that permits suits to recover benefits pursuant to 29 U.S.C. Sec. 1132(a)(1)(B) to be brought only against the benefit plan. A more detailed article about the case by Mark DeBofsky will be appearing in the Chicago Daily Law Bulletin in the next few weeks and will be made available on this website.
On July 26, 2013, Magistrate Judge Jeffrey Gilbert issued a ruling in Warner v. Unum Life Ins.Co. of America, No. 12 C 2782 Click Here (N.D.Ill.) granting plaintiff's motion to compel discovery in an ERISA action governed by the arbitrary and capricious standard of review. DeBofsky, Sherman & Casciari attorney Martina Sherman successfully argued that limiting discovery to the so-called administrative record, or the claim record assembled by the insurance company during the course of the claim, was too restrictive. Instead, the court permitted exploration of Unum's potential conflict of interest based on evidence suggesting that Unum may not have objectively assessed Debra Warner's claim for disability benefits. In particular, the court questioned why the insurer disregarded testing performed by a physical therapist. Consequently, the court permitted Warner to obtain compensation information and performance appraisals of Unum personnel in order to determine whether financial incentives may have biased their assessment of the evidence. However, the court refused to permit discovery of statistical information regarding approval/denial rates or a sampling of prior reports because it deemed such evidence potentially misleading. The court also found that communications between Unum claims personnel and the insurer's legal staff during the course of the claim appeal could not be withheld from production under an assertion of attorney-client privilege.
In Krase v. Life Ins.Co. of North America, 11 C 7659, 2013 U.S.Dist.LEXIS 100302 (N.D.Ill. July 18, 2013), Judge John Grady upheld DeBofsky, Sherman & Casciari' challenge to an insurer's assertion of attorney-client privilege over emails generated by an in-house attorney during the course of administering an appeal of the denial of a life insurance claim. The insurer refused to produce the documents, citing attorney-client privilege, while the plaintiff countered by asserting the fiduciary exception to the privilege. The court ruled for the plaintiff.
On June 19, 2013, Judge Marvin Aspen from the U.S. District Court for the Northern District of Illinois issued a ruling in a case brought by DeBofsky, Sherman & Casciari. Schlattman v. United of Omaha Life Ins.Co., 2013 U.S.Dist.LEXIS 85906 (N.D.Ill. June 19, 2013) is yet another ruling preserving the uninterrupted streak of court rulings upholding the Illinois ban on the inclusion of discretionary clauses in health and disability insurance policies. The court determined that 50 Ill.Admin.Code § 2001.3 was properly promulgated within the scope of the authority possessed by the Illinois Insurance Director and that the regulation survives an assertion of ERISA preemption. The regulation provides:
Borich v. Life Ins.Co. of North America, 2013 U.S.Dist.LEXIS 56974 (N.D.Ill. April 26, 2013)(Issues: Standard of Review; Discovery).