Robinson Warncke Sues MetLife under new ERISA regulations
This case confirmed the efficacy of the Department of Labor’s (DOL) 2018 revisions to ERISA’s “full and fair review” claim regulations. At ERISA’s inception in 1974, Congress charged the DOL with enacting regulations defining how insurance companies must behave to fulfill ERISA’s guarantee of a “full and fair review.” The DOL has revised its regulations several times, usually to deal with disability insurer’s tactics to skirt the intent of full and fair review. Every time the DOL has updated the regulations, disability insurers have found ways to dilute or avoid standards of conduct intended to protect consumers and plan beneficiaries.
In 2018, the DOL issued its latest update to the regulations. Among other things this revision clarified that insurers must “strictly comply” with all regulatory obligations, including deadlines for decisions and other required noices. This revision overruled the widely adopted judicial doctrine of “substantial compliance” (in lay language, “You didn’t comply with the letter of the law, but this seems close enough.”) The most striking change in the regulations was to make abundantly clear that, where the insurer misses deadlines or violates other duties, the insured may stop dealing with a non-compliant insurer and immediately file suit. An ERISA lawsuit allows for an independent judicial ruling on the merits of any ERISA disability claim.
You may wonder why an insured would choose to file suit rather than continue trying to convince an insurance company to pay a claim. In fact, the answer to that question is not always clear, and must be analyzed on a case-by-case basis. Sometimes it is clear that getting a claim in front of a neutral judge is better than trying to persuade an insurance company to part with its money. Sometimes there are other factors driving the decision and it might be best to continue working directly with the insurer.
In any event, in this case Metropolitan Life Insurance Company (MetLife) had denied the initial disability claim but had clearly blown its decision deadline by several months. The case also involved a great deal of money – over $2M in disputed benefits. We made the strategic decision to file suit for our client rather than going through an administrative appeal process which may or may not have given the client a fair shake. We believe that decision was vindicated in the outcome.
Our client was a high-level partner at Deloitte, having been with the firm for over 30 years and a partner for 18. A partner’s work at Deloitte is extraordinarily demanding, cognitively and emotionally. The job required learning and synthesizing massive amounts of information about client business operations, regulatory and legal environments, interpersonal relationships, and making complex recommendations with far-reaching financial implications. Much of this work occurs under nearly unreasonable deadlines. In order to succeed in the job, a Deloitte partner must possess extraordinary cognitive ability and emotional resiliency.
Our client succeeded in this demanding environment for thirty years despite being medicated for depression and anxiety for the majority of it. His professional success over the decades demonstrated that his mental health challenges had been effectively controlled.
Unfortunately, just a couple years before he was due to retire, our client suffered a series of personal setbacks sending him into a severe depression and triggering ongoing, debilitating bouts of anxiety. His mental health spiraled to the point that he was admitted for in-patient treatment, where he remained for a month. After being released, he continued with an intensive outpatient program for another month. After that he was still being treated intensively, often seeing a psychiatrist twice per week with constantly changing medications, and many of them at the highest allowed dosages. Even then his condition left him borderline functional from one day to the next.
Medical literature documents that severe depression and anxiety often result in cognitive slowing. Severely depressed and anxious patients also perform poorly on cognitive tasks requiring sustained attention and concentration. They also may have a tendency to shut down and become non-functional when placed in stressful situations. This was our client’s experience. He went from managing billion-dollar mergers to being unable to focus for more than a few minutes at a time. He often became paralyzed by even the most basic day-to-day tasks and choices. He was clearly in no shape to succeed in his extraordinarily stressful and demanding work environment at Deloitte.
Having failed after a year to regain the ability to return to work, our client filed a disability claim on his own. MetLife took 8 months to render a decision denying the claim. This was more than 4 months longer than permitted by ERISA’s regulations.
As required by ERISA and the plan, MetLife offered the client the right to file an “administrative appeal,” which is basically a request to MetLife to reconsider, couple with a right to submit any new evidence the claimant can muster. Our client contacted us about handling the appeal without realizing that MetLife had blown its deadlines and without knowing the legal consequences of the regulatory violation.
In fact, without reviewing the full claim file, we could not be sure that MetLife had blown its deadlines. ERISA allows an insured to agree to extend an insurance company’s deadlines. We have seen insureds agree to such extensions without understanding the consequences. Also, an insurance company may “toll” its deadlines as a matter of right under if it is waiting on critical information from the insured. Only by reviewing MetLife’s 3,000 page claim file could we be sure that MetLife had not done something to legitimately extend its deadline.
Mr. Warncke and Mr. Mitchell requested the claim file, which an ERISA insurer is required to produce upon written request. (This is another important right many unrepresented claimants fail to pursue, as the claim file often contains valuable information relevant to the ERISA appeal). We reviewed the entire file and became convinced MetLife had violated several regulatory duties. We believed that our client could and should file an immediate lawsuit. This would get his claim in front of a neutral federal judge instead of giving MetLife a chance to double down on its denial and saving itself millions of dollars. The client agreed and elected to file suit.
Our next goal was to press the legal advantages flowing from MetLife’s violations of regulatory standards of conduct. We also wanted to continue bringing pressure on MetLife. Therefore, our next tactic was to file an early motion for partial summary judgment. We used the early motion to educate our judge about MetLife’s unlawful conduct, and to ask him to rule that the case should proceed under a judicial “standard of review” more favorable to our client than most ERISA cases provide. We fully briefed the issue and the court scheduled the issue for oral argument. Suffice to say we felt very confident in our position and that a judicial opinion would likely reflect very poorly on MetLife.
The imminent judicial opinion would have been the first judicial ruling on the issue of the new “strict adherence” standard under the 2018 revised regulations. With MetLife’s regulatory violations being so clear and blatant, we believed would want to use this set of facts to set the tone for judicial interpretation of the regulatory changes.
Instead of risking a public judicial order addressing their conduct and applying the new regulations, MetLife agreed to a private settlement mediation. The mediation, in turn, led to a confidential settlement satisfactory to our client. We feel that the outcome vindicated the approach we took, resolving the matter relatively quickly. We are also glad to see that, at least so far, the new ERISA regulations appear to have real teeth to deter insurance company misconduct.