Mar 25, 2017

Seventh Circuit to ERISA Claimants: "We Leave You Now to the Tender Mercies of Your Insurer"


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11/17/2008
Brian S. King
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The Seventh Circuit Court of Appeals issued a decision yesterday, Semien v. LINA, 436 F.3d 805 (7th Cir. 2006), that is an awful joke. It affirms the denial of a long term disability claim, a not infrequent occurrence in our federal courts. The troubling thing about the decision is the court’s contention that Congress intended to restrict the ability of federal judges to review insurers’ and self funded plans’ denials of ERISA claims: "Congress has not provided [the federal judiciary] with the statutory authority, nor the judicial resources, to engage in a full review of the motivations behind every plan administrator’s discretionary decisions" Slip opinion, P.17. Going further, the court states that it will have no part in a "costly system" in which federal judges "conduct wholesale reevaluations of ERISA claims." Pp. 17-18. The court wrings its hands about the possibility that giving claims denials anything more than a cursory review will "tax the judicial resource of the district courts and magistrate judges beyond the breaking point." P. 13.

What authority does the court provide to warrant this abdication of judicial responsibility? None. There are no meaningful citations to language in the statute or legislative authority. ERISA does specifically address the rights of insureds to obtain review of a claim denial in federal court at 29 U.S.C. §1001(b). But the court doesn’t cite to this. It’s difficult to know whether the omission is due to ignorance or conscious disregard. Regardless, the language from the statute undermines the court’s argument. It states that one of ERISA’s primary purposes is to provide plan participants and beneficiaries "appropriate remedies, sanctions, and ready access to federal courts" in the event a claim is denied.

That is not all. The decision effectively bars any opportunity for discovery in all but the most clear cut cases of conflict of interest or procedural irregularity. P. 17. Basically, the court will perform a quick review of the prelitigation record to simply assure itself that an insurer’s or self-funded plan’s decision is not patently unreasonable. Unless there has been self-evident and significant overreaching by the insurer or employer, the court will not overturn the denial. And the court assures us that we need not worry that its unwillingness to meaningfully review insurer or employer decisions will end up hurting employees. After all, there is no reason to think that the benefits staff of an insurer or employer "is any more ‘partial’ against applicants than are federal judges when deciding income tax cases." P. 16. I want to emit a loud guffaw when I see these words.  Reading pap like this makes me wonder what planet the author comes from.  Let me put it this way. If our federal judges hold themselves to standards of fairness and impartiality that are no higher than insurers or employers whose decisions to approve benefits directly affect their bottom lines, we’re all in trouble.

The Seventh Circuit covers Illinois, Indiana and Wisconsin. This case is binding precedent for the folks who live in those states. Semien is fortunate to have Mark DeBofsky, as fine a plaintiffs’ ERISA lawyer as there is in the country, for her counsel. Whether Mark petitions for rehearing, rehearing en banc or petitions for a writ of certiorari from the Supreme Court, I’m confident he will not accept such a misguided decision lying down.



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