Long Term Disability Success Story-Post 2

Author: Charles F. Fuller

When a client comes to our office with a long term disability issue, we analyze the client’s case and take action that is needed to protect the client’s rights. Our representation is tailored to the client’s specific needs.

Recently, a client I will call John came to our office. He had been on and off long term disability several times over the past half dozen years due to ongoing back problems. He had had multiple back surgeries by the time he came to our office and was unable to do much of anything at all, physically. When John came to us, his disability benefits had been terminated. He had prepared and submitted his own administrative appeal to the disability insurance carrier, and it had been denied. Further, he had asked the disability insurance carrier to reconsider his appeal, and they denied that as well. The long term disability policy had a very short, one-year statute of limitations provision which was quickly approaching. In reviewing John’s case, it was apparent that John did not provide sufficient medical documentation to support his claim for ongoing disability benefits. John knew how terrible he felt and could not physically return to his job because he was unable to do much of anything other than rest throughout the day. The disability carrier took a different view. John contacted our office and we met with John and his wife. He brought in some medical records and claim documents which were reviewed. It was apparent that substantial information and documentation was needed to pursue his case.

It was going to take some time to obtain John’s complete medical records. Since the statute of limitations was nearing, we prepared a complaint prior to the expiration of the statute of limitations and filed it with the United States District Court for the District of Maryland. We continued to seek out John’s medical records. After obtaining all of the records, reviewing and summarizing them, we reached out to John’s doctors and obtained detailed reports as to his specific physical limitations, the reasons why he was physically restricted and their opinions as to why John could not return to his regular occupation or any other occupation. We prepared a supplemental appeal and submitted this to the disability insurance carrier. After many months, the disability insurance carrier wrote to us and advised that it was refusing to consider the supplemental appeal. It was the disability carrier’s position that John had exhausted his administrative appeal rights and they did not have to further consider his appeal. Based upon the disability carrier’s position, we filed an amended complaint to bring all of this information before the court, including the supplemental appeal with the very supportive medical evidence demonstrating John’s disability.

In the early stages of the litigation, we advised the court that we thought it would be appropriate to have the case remanded, or sent back down, to the disability insurance carrier for its consideration of John’s supplemental appeal. The disability carrier refused to voluntarily undertake this review. We filed a motion to remand the claim back to the disability carrier, asking the court to order it to review John’s supplemental appeal. The disability carrier opposed that motion and also filed a motion for summary judgment, contending that as a matter of law, the court must uphold the carrier’s decision. We vigorously opposed this action taken by the disability carrier. Ultimately, the court ordered the disability carrier to review the supplemental appeal and denied its motion for summary judgment. Subsequently, the disability carrier upheld John’s supplemental appeal and restored his benefits.

The above situation is the reason why it is very important to have competent legal counsel representing you should you have a long term disability claim. Although you know how you feel and that you cannot perform your job duties as a result, that is often not enough to successfully obtain benefits. The federal statute governing such claims, the Employee Retirement Income Security Act of 1974, as amended, (ERISA), is a very technical statute, and knowledge of that statute and its procedural roadblocks is important. Having an attorney both knowledgeable and experienced handling ERISA claims is often essential in such cases. We would be happy to speak with you about your claim.

 

 

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Qualified Domestic Relations Order Victory

Author: Charles F. Fuller

Although our firm does not practice family law, representing individuals in divorces, adoptions or similar matters, we do practice in one very important area in that field. Due to our substantial experience with employee benefits and the Employee Retirement Income Security Act of 1974, as amended, (ERISA), we are often called upon to assist clients with Qualified Domestic Relations Orders (QDROs).

Our client, who I will call Ann, sought our assistance in protecting her rights to a portion of her ex-husband’s pension retirement benefit. Ann was married to Bill for over two decades. After Bill retired and began receiving pension benefits, they encountered marital difficulties leading to divorce. The parties live in a southwestern state, and through legal maneuverings by Bill’s attorneys, the state court held that Ann had given up her right to a survivor’s benefit of Bill’s pension retirement benefit. Ann did relinquish her right to receive a marital share of her former husband’s pension benefit during his lifetime in the Property Settlement Agreement between them. Bill’s employer subsequently went bankrupt. The bankruptcy employer’s pension plan was taken over by a federal agency, the Pension Benefit Guaranty Corporation (PBGC). The PBGC, in reviewing Bill’s pension file, determined that the state court order divesting Ann of her right to receive a survivor benefit in Bill’s pension and the state court’s entry of a QDRO in favor of Bill’s subsequent wife were invalid. The PBGC determined that Ann was the proper recipient of Bill’s pension benefit upon his death because the QDRO sought to provide a form of benefit not otherwise provided under the Plan; Ann’s survivor benefit irrevocably vested when the pension benefit was first paid to Bill and therefore was not waivable or assignable.

Bill initially brought suit against the PBGC in the United States District Court for the District of Columbia claiming PBGC had violated federal law. Subsequently, Ann was made a party to the litigation on the basis that she was an indispensable party. This allowed Ann to protect her own rights in the lawsuit. After Ann entered the case, Bill amended his complaint to add several state law claims against her.

Both Bill, on the one hand, and the PBGC and Ann on the other hand, moved for summary judgment in the trial court. The District Court agreed with the PBGC and Ann that Ann could not have waived her right to Bill’s survivor pension benefit through the state law QDRO because her benefits irrevocably vested after Bill began receiving benefits and therefore were not waivable or assignable. The trial court also dismissed the state law claims against Ann because ERISA, the federal statute governing pensions, preempted state law. Bill disagreed and appealed to the United States Court of Appeals for the District of Columbia.

In the appellate case, the PBGC was dismissed as a party, leaving Bill and Ann as parties to the appeal. We successfully argued to the Court of Appeals that the federal statute, ERISA, preempted the state law relied upon by Bill and invalidated the QDRO. The Court of Appeals agreed with our position. Further, we argued that contrary to the state court’s determination, Ann could not have waived her right to the survivor pension benefit through a QDRO because her benefits irrevocably vested upon Bill’s receipt of pension benefits and therefore Ann could not legally waive or assign those benefits to either Bill or his new wife. The Court of Appeals agreed with our position and ruled in favor of Ann. Bill did not seek to appeal the case to the United States Supreme Court, and therefore the Court of Appeals’ decision was final in favor of Ann.

The importance of Ann’s case, besides the substantial monetary benefit she may recover after Bill’s death, is that it is extremely important for a spouse to protect his/her rights to a former spouse’s pension benefit at the time of divorce. By obtaining a properly drafted and entered QDRO shortly after a divorce is finalized, a spouse can protect his/her federally protected rights without the resort to litigation. This was not done in Ann’s case. The litigation to prevent Ann from receiving her federally protected right to Bill’s pension benefit after his death was filed a year or two after the divorce. It wasn’t until more than a decade later that her rights were finally protected. Addressing this issue head on, close in time to the entry of the final divorce decree can avoid much heartache and expense. We are often called upon by clients to prepare QDRO’s to protect their rights to a former spouse’s pension. We would be happy to assist you should the need arise.

Tax Planning with Respect to Disability Insurance

Author: Charles F. Fuller

No one wants to become disabled, but when a disability arises that prevents you from working, the existence of disability insurance could provide you with an income stream during the period of disability. Often, people are provided short term and long term disability insurance coverage through their employment as part of their employee benefit package. Other times, people purchase individual disability insurance policies. Under either scenario, it is helpful to consider the tax effects of such disability coverage at the time that you obtain it and before you become disabled.

For individual policies where premiums are paid by the policyholder, the premiums are usually paid with after-tax dollars and therefore any disability benefits that you receive under the policy are not taxable for federal or state income tax purposes. This is rather straightforward and does not require much tax planning.

In situations in which an employee is provided disability coverage through employment, the employee should inquire with the employer regarding the tax consequences of this employee benefit should you be required to use it. In other words, you should ask your personnel or human resources department if there is a way to ensure that benefits you may receive as a result of disability under this policy can be received free of any income tax liability. Some employers have thought about this issue prior to implementing their employee benefit plan, while others have not. As a general rule, if the disability insurance premium is paid after being deducted from the employee’s paycheck (after tax dollars), any resulting disability benefits received should be free of tax. If the premium is paid with pre-tax dollars, either from a cafeteria plan[1] or deducted from your pay by your employer before taxes are deducted, any disability benefits received will most likely be taxable. If you have disability coverage, you should investigate now whether there is a way to ensure that your benefits would be free from income tax liability if you become disabled and receive benefits. It is important to investigate and plan for this contingency before you become disabled to determine if you can have greater resources (through tax-free disability benefits) should you become disabled.

[1] A cafeteria plan is an IRS-approved reimbursement plan which allows employees to contribute a certain amount of their gross income to one or more designated accounts before payroll taxes are computed. The account(s) can be used to pay for insurance premiums, medical and/or dependent care expenses not covered by insurance.

Update IRS Instructions for Reporting Employee Health Coverage

Author: Johanna Montero-Okon

On March 5, 2014, the Department of Treasure issued final regulations on employer health insurance coverage information reporting. The information reporting relates to health insurance coverage that is offered by certain employers, referred to as applicable large employers, and reporting is to be provided by each member of an applicable large employer. A few months later the Department issued additional guidance announcing their decision to extend transition relief to employers for 2014 for the annual information reporting.

Generally, Code Section 6055(a) requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs, and other entity that provides Minimum Essential Coverage (MEC) to file annual returns reporting information for each individual to whom it was provided. An entity filing an information return reporting MEC must furnish a written statement to each individual on the return that shows the information that must be reported to the IRS. In addition, separate reporting requirements that apply to “applicable large employers” are provided under Code Section 6056. The final regulations provide general and alternative reporting methods to employers that are subject to the Code Sec. 6056 information reporting requirements. Large employers, those with at least 50 Full-time employees, are required to annually report to the IRS information on the health care coverage that they offer, or do not offer, to full-time employees and to furnish related statements to their full-time employees.

On July 24, 2014, the IRS released draft forms that employers may use to report on health coverage that they offer to their employees. Specifically, Forms 1094-C and 1095-C may be used by applicable large employers in compliance with Code Section 6056. The Purpose of the forms is for ALE’s to report offers of health coverage to, and enrollment in health coverage by, their employees. The forms are also used in determining whether an employer owes payments under the Employer Shared Responsibility Rules. Both forms must be filed with the IRS by February 28 if filing on paper, or March 31 if filing electronically, of the year following the calendar year to which the return relates.

Long Term Disability Success Story, Post 1

 

Author: Denise A. Martin

McChesney & Dale has advocated for many decades on behalf of short and long term disability claimants who have been denied benefits, both through the private administrative appeal process with the insurer and federal litigation.[1] The purpose of this blog is to share a recent success story of one of our clients. For privacy reasons, we will refer to the claimant as Jill.

Jill came to our office after years of struggling with debilitating illness. She had been diagnosed with Lyme disease almost a decade prior, but despite initial treatment with antibiotics, her symptoms continued to worsen over the years. Her symptoms became so severe that she had to begin working from home and ultimately ceased working entirely. She found a Lyme-literate physician and began an intensive antibiotic regimen and other treatments. Jill’s claim for long term disability benefits was denied by her insurance company, and she submitted an administrative appeal without the assistance of an attorney. This appeal was denied on the basis of lack of medical evidence of her disability.

Jill then retained the services of McChesney & Dale to assist her with a second administrative appeal to the insurance company. Of note, Jill’s Lyme disease resulted in significant cognitive impairments (brain fog, word-finding difficulty, impaired memory, etc.), and McChesney & Dale had her undergo a neuropsychological evaluation, which provided very helpful evidence of her cognitive difficulties. This was particularly important in light of the intellectually demanding aspects of her employment in the national security field. In a lengthy appeal letter to the insurer, McChesney & Dale’s attorneys highlighted the relevant medical evidence, brought in witness testimony of Jill’s severe symptoms and inability to perform even simple household tasks, attacked the arguments of the insurer and its peer review physicians (whose opinion the insurer had relied upon to deny the claim), and introduced legal evidence that the peer review physicians were not credible.

On the basis of the evidence introduced in the second administrative appeal, the insurer overturned its previous decision to deny Jill’s benefits and sent a large check for her retroactive benefits. Though Jill’s medical condition has unfortunately persisted, such that she remains out of work, she is able to make ends meet with the much-deserved disability benefits she is now receiving.

 

 

 

 

Disclaimer: This blog is meant only to provide information about the experience of our attorneys. It is not intended as a guarantee or prediction that the same or similar results can be obtained in other matters.

 

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[1] For more information about the long term disability appeal process, please see our Long Term Disability article.

Update on Same Sex Marriage Laws: CMS FAQ on Coverage of Same-Sex Spouses.

By: Johanna Montero-Okon

On March 14, 2014, the Department of Health and Human Services, Centers for Medicare and Medicaid Services, published a Frequently Asked Question (“FAQ”) regarding the coverage of Same-Sex Spouses. FAQ’s are generally published by the Departments for the purpose of providing further regulatory guidance by explaining or addressing specific questions the public may have on regulations or the rulemaking process.

Specifically, this FAQ is intended to address questions related to the Department’s Final Regulations published on February 27, 2013. The final regulations implement section 2702 of the Public Health Service Act, which requires that some health insurance issuers offering coverage in the group or individual markets guarantee availability of coverage unless an exception applies. In addition, pursuant to the required availability requirements and the final regulations at 45 CFR 147.104(e), the preamble to the final regulations provides that, in doing so, health insurance issuers are prohibited from implementing discriminatory marketing practices or benefit designs. The goal is to ensure that insurance companies subject to the regulations do not discriminate against same-sex married couples, but instead offer them the same benefits extended to heterosexual married couples. As provided by the Department, the FAQ should clarify the meaning of the terms used in 45 CFR. 104(e). Furthermore, the answers provided by the Department should assist health insurance issuers seeking additional guidance on the requirements they must meet to ensure availability of coverage.

Virginians with Lyme Disease Seeking Long-Term Disability Benefits

By: Denise Martin

Some employers provide their employees with a benefit package that includes long-term disability coverage. All too often, insurers deny claims for long-term disability benefits on the basis that the claimant has not provided sufficient evidence to support a finding of a physical or mental disability.

4th Circuit Interpretations of Pre-Existing Condition Limitations in Long Term Disability Plans

By: Charles Fuller and Denise Martin

Most long term disability insurance policies contain a pre-existing condition limitation clause.  Insurers often rely upon these types of clauses to deny a participant’s claim for benefits.  This article will discuss various Fourth Circuit cases in which the Court determined the applicability of a policy’s pre-existing condition limitation. 

May a Court Overturn the Qualification of a Domestic Relations Order by a Plan Administrator?

Author: Denise A. Martin

QUESTION

May a court overturn the qualification of a domestic relations order by a pension plan administrator if it is determined that the qualification was made in error?

Long Term Disability

Author(s): William P. Dale and Charles F. Fuller

          

A major concern of individuals today is the provision of some form of income protection during extended periods of illness. Although many consumer loans, such as credit cards, automobiles and mortgages have disability insurance riders that allow consumers, for a monthly premium, to have disability coverage in the event of sickness or prolonged illness, often this coverage is inadequate to provide for the ongoing basic needs of a disabled individual.