Courtesy of Elizabeth Koob comes an Order from Judge Laura Taylor Swain, U.S. District Court for the Southern District of New York, in Cohen v. Metropolitan Life Ins. Co., case no. 00 Civ. 6112. I placed a copy of the Memorandum Order the website library here. It is noteworthy because the decision holds MetLife in contempt and orders immediate payment of a claimant’s disability benefits, attorney fees and a $10,000 penalty.

Rachel Cohen’s disability claim was denied by MetLife on the basis of a pre-existing condition exclusion in her insurance policy. She sued and asked the court to rule that MetLife’s reliance on the pre-existing condition exclusion was wrong. In April, 2007, the court granted Cohen’s motion.  The Judge remanded the case back to MetLife for a final determination of Cohen’s right to, and amount of, benefits. In November, 2007, the court also awarded Cohen attorney fees and costs in pursuing her claim.

MetLife didn’t like either ruling. It appealed to the U.S. Court of Appeals for the Second Circuit. However, it is well established that an appeal of an order granting a claimant insurance benefits does not, without more, stay the effect of the lower court’s order. Cohen was entitled to her money from MetLife before the appeal was decided.

To stop Cohen’s ability to enforce the district court’s order, MetLife filed with the district court a request for the right to file a supersedeas bond. If the court granted that motion, Cohen would be required to wait until the appeal was decided before she could collect her judgment against MetLife.

Yesterday’s decision from Judge Swain denied MetLife’s motion on two separate grounds. First, the court ruled that the factors under Fed. R. Civ. P. 62(c) governing whether to stay a judgment during an appeal did not apply to the case. Second, the court ruled that MetLife had not filed its request for a supersedeas bond within the time limits required by the rules. The court then turned its attention to Cohen’s motion for civil contempt.

Cohen argued that MetLife had simply ignored the court’s April, 2007 ruling directing MetLife to determine Cohen’s right to, and amount of, benefits without taking the pre-existing condition exclusion into account. For this failure to act on the court’s ruling, Cohen asked that MetLife be held in contempt. In response to the April, 2007 order, MetLife had determined that Cohen was, in fact, entitled to benefits and MetLife determined how much she was to receive under the insurance policy. However, MetLife argued that it had the right to wait until its appeal was decided before it actually paid Cohen any money.

The court rejected this argument and ruled that "MetLife’s position is nothing short of contemptuous." It went on to state that its earlier orders did not permit MetLife to unilaterally decide to wait until the appeal was decided to pay what the district court had determined it owed Cohen.

The remedy? The court ordered MetLife to pay $269,552 in owed disability benefits (extending back to March of 1997), future benefits, attorney fees and costs in the amount of over $147,000 and a fine of $10,000. In addition, the court ordered that if the funds were not paid to Cohen by noon this Friday, three days after the issuance of the order, MetLife would be responsible to pay an additional $1,000 per day fine.

Congratulations to Elizabeth and her client Rachel Cohen.  But ask yourself whether, as good as it is, this order is adequate compensation for Rachel having to wait over 11 years for her disability benefits. These fact illustrate, again, the inadequacy of ERISA’s remedies in dealing with insurers that fail to live up to their contractual obligations.

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