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Life, Health, Disability & ERISA Update
Spring 2025
| | Greetings! We are pleased to provide you with a summary of decisions rendered by the First Circuit Court of Appeals, the U.S. District Courts within the circuit, and state appellate courts within the same geographic area. For your convenience, we have included hyperlinks with direct access to the full decision for each case. Decisions reproduced with permission of Westlaw. | | LIFE, HEALTH, DISABILITY & ERISA LITIGATION TEAM | |
J. Christopher Collins
In April, Chris presented a program on artificial intelligence to the Eastern Claims Conference Annual Meeting in Boston.
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Joseph M. Hamilton
In February, Joe attended the ABA’s Mid-Winter Symposium on Employee Benefits, ERISA, Life, Health and Disability Insurance, and Insurance Regulation
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First Circuit Addresses Revocation on Divorce Statute in Interpleader Action
In Sevelitte v. Guardian Life Insurance Company of America, 123 F.4th 53 (1st Cir. 2024), the First Circuit Court of Appeals affirmed a decision of the U.S. District Court of Massachusetts which awarded life insurance benefits pursuant to the Massachusetts Revocation on Divorce statute, M.G.L. c. 190B §2804(b).
The insured, Joseph Sevelitte, purchased a policy from Guardian in 1986. He named his spouse, Renee, as his primary beneficiary. No contingent beneficiary was named. Joseph and Renee divorced in 2013. Joseph died from Covid exposure in 2020. Renee made a claim for the benefits. However, when the claim investigation commenced, it was quickly learned that Joseph and Renee were divorced and that Joseph had remarried. Massachusetts, like most states, has a Revocation on Divorce statute, Chapter 190B §2-804(b). These statutes provide that, upon divorce, spousal beneficiary designations are revoked unless there is express language preserving the spouse as beneficiary either in the policy, some other pre-divorce governing instrument, or in a post-divorce agreement.
When Guardian learned of the divorce, the company requested a copy of the divorce agreement to determine if there was express language preserving Renee as beneficiary. The language in the agreement was ambiguous and Guardian informed Renee that the company could not pay her the benefits knowing the statute could mean the estate could make a valid claim for the benefits. However, before Guardian could file its interpleader, Renee sued Guardian in state court for breach of contract and a violation of the Massachusetts Consumer Protection Act, Chapter 93A, alleging $1.6 Million in damages. Guardian removed the case to federal court and filed a counterclaim in interpleader against Renee and joined the Estate as a third-party defendant. The company filed a motion for judgment on the pleadings requesting to be dismissed, enjoining Renee and the Estate from bringing any further litigation, and for attorney’s fees. Guardian’s motion was granted. Additionally, the District Court awarded benefits to the Estate based on the lack of any clear language in the divorce agreement preserving Renee as beneficiary.
Renee appealed to the First Circuit which vacated the part of the District Court’s judgment awarding benefits to the Estate. The court found that even though the divorce agreement was ambiguous, Renee had made a plausible claim that the language could support her position that she was preserved as the beneficiary.
On remand, the District Court again ruled in favor of the Estate, based on the application of Chapter 190B. While Renee made multiple arguments to establish such a designation, the court rejected them.
Renee again appealed to the First Circuit which affirmed the District Court’s determination that Renee had failed to generate a genuine dispute as to the intended meaning of the divorce agreement and therefore upheld the entry of judgment in support of the Estate.
J. Christopher Collins represented The Guardian Life Insurance Company of America
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Court Upholds Use of Physicians Not Licensed in Massachusetts to Opine on Massachusetts Residents in ERISA Cases
In Germana v. Hartford Life and Accident Insurance Company, 2024 WL 3416026 (D. Mass. 2024), the U.S. District Court of Massachusetts rejected Germana’s request to conduct discovery in an ERISA case and found Hartford’s use of physicians not licensed to practice in Massachusetts was appropriate to evaluate the condition of a Massachusetts resident.
Germana was paid disability benefits under a plan provided by his employer. After the definition of disability changed from his own occupation to any occupation, Germana’s benefits were discontinued. He sued and sought to take discovery, including a Rule 30(b)(6) deposition, document requests, and interrogatories. The court rejected all of Germana’s requests.
The court relied on First Circuit authority that discovery is not permissible in an ERISA benefit-denial case unless there is a good reason to do so. The court first rejected Germana’s argument that the fact his disability benefits were discontinued revealed a bias in Hartford that allowed discovery. The court noted that the First Circuit requires more.
Next, the court found that discovery is not permissible to challenge Hartford’s policy of refusing to consider materials once the record had been closed and a decision had been made on the administrative appeal. Again, the court cited the First Circuit’s holding that the final administrative decision acts as a temporal cutoff point.
The final significant point addressed by the court was Germana’s argument that he should be allowed to conduct discovery to address what he deemed to be an unlicensed practice of medicine in Massachusetts by Hartford’s use of out-of-state physicians to review his medical condition. While noting that it was not convinced that the use of those physicians constituted the unlicensed practice of medicine in Massachusetts, the court went on to hold that pursuant to the Department of Labor regulation 29 C.R.F. §2560.503-1(h)(3)(iii) and (m)(7), ERISA plans were allowed to utilize healthcare professionals so long as they were licensed and were trained in the field of medicine involved in the claim.
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Court Holds a Third-Party Administrator is not a Proper Party to an ERISA Benefits Claim
In Shea v. Unum Life Insurance Company of America, 2024 WL 4593525 (D. Mass. 2024), the U.S. District Court of Massachusetts rejected Shea’s attempt to include the third-party administrator of an ERISA benefits plan as a defendant in a claim for benefits.
Shea was a participant in a disability plan provided by her employer, Mass General Brigham, Inc. (“MGB”). The plan was self-insured. MGB entered into an Administrative Services Agreement (“ASO”) in which Unum Life Insurance Company of America (“Unum Life”) would administer claims and make the initial decision on entitlement to benefits. Any administrative appeal would go to MGB.
After Unum Life denied disability benefits to Shea and it was upheld by MGB, Shea sued in federal court naming both MGB and Unum Life as defendants. Unum Life moved to dismiss itself as a party given its role as a third-party administrator.
The court took into consideration the allegations made in Shea’s Complaint as well as the ASO. The court noted that ERISA does not authorize actions against non-fiduciaries of an ERISA plan and went on to find that Unum Life was not a fiduciary because it was not named so in the plan, nor did it function as one in performing its administrative functions.
As a result, the court allowed Unum Life’s motion to dismiss it, as well as its parent, Unum Group, from the litigation.
J. Christopher Collins represented Unum Life Insurance Company of America and Unum Group
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Court Finds Denial of LTD Claim Arbitrary and Capricious
In Barnes v. Unum Life Insurance Company of America, 757 F.Supp.3d 84 (D. Me. 2024), the U.S. District Court of Maine allowed Barnes’ motion for summary judgment granting her continued long-term disability benefits.
Barnes was employed by Unum Group as an executive account manager. As a result of neck and back issues, including radiculopathy, degenerative disc disease, and several surgeries, she applied for and received disability benefits beginning in 2002.
Barnes continued to be paid benefits until 2022 when Unum Life undertook a new review of her claim. Based upon internal medical reviews, benefits were discontinued. Barnes’ attending physician disagreed and Barnes exercised her right to an administrative appeal. The decision was upheld on appeal.
After a detailed review of the evidence, the court stated it was persuaded that Barnes had produced meaningful and probative evidence to substantiate her disability. The court held it found Unum Life’s decision to be arbitrary and capricious. The court found Unum Life engaged in a concerted effort to tilt and then reject the record presented by Barnes. The court was most troubled by the lack of apparent attention paid to Barnes’ need to engage in frequent travel.
The court was clearly impacted by the fact that Barnes had received benefits for 20 years before it was denied.
Summary judgment was granted for Barnes and benefits were reinstated.
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Court Denies Claimant's Request for Discovery and Supplementation of Administrative Record
In Basch v. Reliance Standard Life Insurance Company, 2024 WL 4459339 (D. Mass. 2024), the U.S. District Court of Massachusetts rejected Basch’s attempt to obtain discovery and supplement the Administrative Record.
Basch was covered by a disability plan governed by ERISA. His disability benefits were discontinued in October 2022. He was given the opportunity for an administrative appeal and he exercised that opportunity. After the denial was upheld, he filed suit in state court.
Reliance removed the case to federal court. After Reliance provided Basch with the proposed Administrative Record and a Scheduling Order had been issued after a scheduling conference, Basch filed a motion seeking various relief.
He first requested that Reliance be required to submit a supplemental affidavit regarding the authenticity of the Administrative Record. After finding that Basch had not provided any document to Reliance that was not included in the record, the court found Reliance’s affidavit sufficient.
Basch next requested that Reliance be required to clarify terms in the policy. The court denied that as well, finding that it was a merits question, not an issue as to the adequacy of the record.
The court next denied Basch’s request to add additional medical records to the Administrative Record stating that it was Basch’s obligation to submit whatever information he wanted to have reviewed during the administrative appeal and the time had passed to do so.
The court also denied Basch’s request to obtain discovery concerning one of the physicians that had reviewed the file. That request included communications between Reliance and the physician, as well as his employer.
Finally, the court denied discovery regarding Reliance’s structural conflict of interest finding that Basch had failed to meet the threshold showing that the denial of benefits was improperly influenced by a conflict.
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Court Remands Disability Claim Due to Alleged Procedural Error in the ERISA Appeal Process
In Achorn v. First Unum Life Insurance Company, 2024 WL 4180733 (D. Mass. 2024), the U.S. District Court of Massachusetts denied both parties' motions for summary judgment and remanded the case to First Unum for further review.
Achorn was employed as a law firm marketing specialist for Lexis/Nexis. Beginning in 2010, Achorn started receiving LTD benefits based upon back pain. Relying on Achorn’s physicians’ opinions, First Unum continued to pay benefits for 11 years.
In 2021, First Unum performed a detailed review of the claim. It included obtaining updated medical records, speaking with Achorn, and performing surveillance. The surveillance found Achorn performing activities completely inconsistent with her claimed restrictions. Following the collection of information, First Unum had the file reviewed by two physicians, both of whom found Achorn was not disabled from her occupation. In January 2022, benefits were discontinued.
Achorn appealed and submitted additional information, including an August 2022 opinion letter from her primary care physician, Dr. Woods. In that letter, Dr. Woods set out the basis of his opinion that Achorn continued to be unable to engage in her occupation and disputed the opinions of First Unum’s medical reviewers.
As required, First Unum had the medical information reviewed by a new physician, a physiatrist, Dr. Grattan. Dr. Grattan also found Achorn able to work. His report referred to Dr. Woods’ letter, but the court found this to be insufficient.
First Unum’s claim procedures require its reviewers to give significant weight to an attending physician’s opinion, unless that opinion is not well supported by medically acceptable clinical or diagnostic standards and is inconsistent with other substantial evidence in the record.
The court found that Dr. Grattan had failed to do this. Because the court found that there was still a question as to whether Achorn was eligible for additional benefits, it ordered the claim remanded to First Unum for a further review.
Joseph M. Hamilton represented First Unum Life Insurance Company.
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Court Allows Evidence of Insurability Case to Proceed as ERISA Claim for Benefits
In Slim v. Life Insurance Company of North America, 2024 WL 4870537 (D. P.R. 2024), the U.S. District Court of Puerto Rico dismissed Slim’s claim for breach of fiduciary duty but allowed the benefit claim to proceed. This decision appears to be at odds with precedent from the First Circuit.
Slim was covered under a life insurance benefit plan provided by his employer. The plan was funded by a policy issued by LINA. As part of the plan, Slim’s spouse was provided $30,000 of guaranteed life insurance. She could request an additional $250,000 but that required evidence of insurability.
Slim’s wife applied for the full additional supplemental amount and Slim’s employer began deducting premium for that coverage. Fifteen months later, Slim’s wife died, and Slim made a claim for the life benefits. LINA paid the guaranteed amount but denied the supplemental coverage because it had never received evidence of insurability from the spouse. Slim then sued.
The Complaint appeared to be drafted as a breach of fiduciary duty claim pursuant to 29 U.S.C. § 1132(a)(2) and (a)(3). LINA moved to dismiss.
In ruling on the motion to dismiss, the court agreed that the breach of fiduciary claim should be dismissed. The § 1132(a)(2) was dismissed because it is a derivative claim and can only be brought on behalf of the plan. Because Slim did not seek plan-wide relief, the claim failed. As to the § 1132(a)(3) claim, the court cited a 2007 First Circuit case for the proposition that the payment of life insurance benefits is not equitable relief which can be recovered under § 1132(a)(3). Therefore, that claim was dismissed as well.
The court then went on to hold that the Complaint did provide sufficient allegations to support a denial of benefits claim pursuant to 29 U.S.C. § 1132(a)(1)(B) and allowed the case to go forward on those grounds. Significantly, there was no mention in the opinion of the First Circuit’s decision in Shields v. United of Omaha Life Insurance Company, 50 F.4th 236 (1st Cir. 2022). In that case the First Circuit upheld the district court’s determination that in an evidence of insurability case the claimant could bring a § 1132(a)(1)(B) benefit claim. However, the First Circuit also held the claimant could bring a breach of fiduciary duty claim.
In Shields, the court held that a fiduciary duty could exist depending upon the obligations between the employer and the insurer as to the responsibility for determining eligibility for benefits. That is, if the insurer had an obligation to timely determine whether the beneficiary is eligible for the coverage once it begins accepting premiums, a claim for breach of fiduciary duty could stand. This may be an issue of further litigation in Slim.
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Claims for Wrongful Death and Punitive Damages Preempted by ERISA
In Cannon v. Blue Cross and Blue Shield of Massachusetts, Inc., 2024 WL 3902835 (D. Mass. 2024), the U.S. District Court of Massachusetts rejected Cannon’s argument that his claims of wrongful death and punitive damages were not preempted by ERISA.
Blaise Cannon was insured under a group policy of health insurance issued by Blue Cross to the employer of Blaise’s domestic partner. Blaise’s claim for coverage for an asthma inhaler was denied by Blue Cross. Several weeks later Blaise died from complications related to the asthma.
Blaise’s partner filed suit in state court bringing a series of state law claims. Blue Cross removed to federal court and moved for summary judgment on the basis that all claims were preempted by ERISA. Cannon did not contest that ERISA preempted several of the claims but argued that the claims for wrongful death and punitive damages survived. The court disagreed.
The court held that both claims were preempted because the court would be required to consult the group policy to resolve those claims and because both claims arose from the alleged improper denial of benefits. Each claim relied upon the premise that Blue Cross improperly denied the health benefit, thus resulting in his death. The ruling was consistent with First Circuit precedent on the issue of preemption of wrongful death claims.
The court went on to hold that the claims were also not actionable under ERISA because they did not seek benefit due under the policy but rather damages for an alleged improper refusal to authorize the treatment. The court held ERISA did not create compensatory or punitive damage remedies where an administrator fails to provide benefits due under a plan.
Summary judgment was entered for Blue Cross.
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Federal Court Remands Disability Claim to State Court for Lack of Diversity Jurisdiction
In Nadel v. Equitable Financial Life Insurance Company, 2024 WL 4690366 (D. Mass. 2024), the U.S. District Court of Massachusetts allowed Nadel’s motion to remand the case to state court.
Nadel was denied disability benefits by Equitable. The claim was handled by a third-party administrator, Davies Life & Health, Inc. Nadel filed suit in state court naming both Equitable and Davies as defendants. The defendants removed to federal court and claimed that diversity jurisdiction existed because Davies, a company with a principal place of business in Massachusetts, was fraudulently joined.
The court found that Equitable and Davies failed to meet their burden of demonstrating that Davies was fraudulently joined. The standard stated by the court was that there was no reasonable possibility that Massachusetts’ highest court would find that the Complaint stated a cause of action upon which relief can be granted against Davies. The court found there was a reasonable possibility that the Massachusetts Supreme Judicial Court could rule that Nadel stated a claim against Davies for tortious interference of the contractual relations based upon the allegations of the Complaint. The court also found there was a reasonable possibility that the SJC could rule that Nadel stated a claim against Davies under the Massachusetts Consumer Protection Act, Chapter 93A, again based upon the allegations of the Complaint.
The court allowed the motion to remand the case to state court.
J. Christopher Collins represented Equitable Financial Life and Davies Life & Health, Inc.
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Court Rejects Challenge to Authenticity of Beneficiary Designation
In Hebert v. Office of Personnel Management, 2024 WL 4892666 (D. Mass. 2024), the U.S. District Court of Massachusetts resolved an interpleader action by awarding life insurance benefits to the plaintiffs.
Gary Hebert was an employee of the United States Postal Service. By virtue of his employment, he was enrolled in Federal Employees’ Group Life Insurance. Gary and Kathleen were married in 1991 and divorced in 2015. They had two sons. A year later, Gary married Tiffany Hebert. In 2017, both Gary and Tiffany experienced serious health conditions. Tiffany was hospitalized. In early 2017, Gary moved back with Kathleen and their two sons. Shortly thereafter, he signed a beneficiary form naming Kathleen and the two sons as his life insurance beneficiaries. The beneficiary form was witnesses by a USPS employee as well as a friend of Gary’s. Gary died shortly thereafter.
When Kathleen attempted to obtain the insurance proceeds, Tiffany challenged it. Her claim was that it was not Gary’s signature on the beneficiary form, and he did not have sufficient mental capacity to name a beneficiary.
The court held an evidentiary hearing and then invited cross motions for summary judgment. The court entered summary judgment in favor of the plaintiff, Kathleen, after finding that Tiffany did not present any credible evidence to dispute the authenticity of Gary’s signature such as handwriting samples or expert opinion, or credible evidence to show he did not have sufficient mental capacity.
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Court Denies Transfer of Venue for Life Insurance Dispute
In Diggs v. Savings Bank Mutual Life Insurance Company of Massachusetts, 2024 WL 5389548 (D. Mass. 2024), the U.S. District Court of Massachusetts denied SBLI’s request that the case be transferred to the Northern District of Oklahoma.
Diggs was the beneficiary of a SBLI life insurance policy insuring Kelcey Ford. After Mr. Ford’s death, Diggs submitted a claim for benefits to SBLI. Because the policy was in the contestable period, SBLI conducted a review of Ford’s application and found Ford had misrepresented answers to questions regarding his criminal record and history of using illegal drugs. As a result, SBLI rescinded the policy and Diggs filed suit in federal court in Massachusetts.
Both Ford and Diggs lived in Oklahoma. SBLI was licensed to sell life insurance in Oklahoma, and the policy identified Oklahoma as the state of issue. The policy was also issued on a form approved by the Oklahoma Insurance Department and the application was signed in Oklahoma.
In addition to these facts, SBLI’s motion centered on the availability of the insurance producer involved in the sale of the policy. Both Diggs and SBLI considered the insurance producer, Ayanna Taylor, to be a key witness as she was the person who took Ford’s application. SBLI alleged that Taylor resided in Oklahoma, which was outside the subpoena range for Massachusetts, and therefore justified the transfer of the case to Oklahoma. However, in opposition to the motion, Diggs filed an affidavit from Taylor which stated she lived and worked in Princeton, Texas, more than 100 miles from the seat of the Northern District of Oklahoma and therefore outside of that court’s subpoena range.
The court noted that SBLI had the burden to prove the transfer of venue was warranted. The court found that considering SBLI was headquartered in Massachusetts, it could not be said there was any appreciable inconvenience in having the case heard in Massachusetts. The court also found that none of the other factors contained in the transfer of venue statute, 28 U.S.C § 1404(a), weighed heavily enough to overcome the strong presumption in favor of honoring a plaintiff’s choice of forum. The court stated that if Taylor was available to testify in either Massachusetts or Oklahoma, that would likely have been a determinative consideration. However, because she could not be subpoenaed in either, there was no good reason to transfer the case to Oklahoma.
The court denied the motion to transfer.
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District Court Denies Class Certification for Group Challenging Premium Increase for Long-Term Care Coverage
Earlier this year, the First Circuit Court of Appeals in Parmenter v. Prudential Insurance Company of America, 93 F.4th 413 (1st Cir. 2024), held a plan participant may bring a claim for breach of fiduciary duty regarding premium increases for long-term care coverage. After that decision, Parmenter sued on behalf of a putative class of insureds alleging that Prudential breached its fiduciary duties regarding premium increases for long-term care insurance in seven different group long-term care benefit plans. Parmenter then sought to have the class certified.
In Parmenter v. Prudential Insurance Company of America, 2024 WL 3903076 (D. Mass. 2024), the U.S. District Court of Massachusetts denied the motion for class certification. The essence of the claim was that Prudential had breached its fiduciary duty by failing to have premium increases approved by the Massachusetts Commissioner of Insurance as stated in the plans. While it was agreed that the Commissioner has had the authority to regulate employment-based group long-term insurance policies since 2013, the Commissioner has never chosen to exercise that authority.
The court denied class certification on the grounds that the purported classes did not share an “obvious” common question. The First Circuit in its prior ruling had found that the key phrase in the plan, “subject to” with regard to Prudential obtaining Commissioner approval, was ambiguous. Given that, the district court held the question could not be answered universally for the classes. Because different employers negotiated the ERISA plans at different times, the court found that the particular employers’ understanding of the meaning of the “subject to” clause and evidence about the negotiations between the employers and Prudential could lead to varying interpretations of the clause. The court held that the dispute in the case could only be resolved by examining extrinsic evidence that is individualized in nature. The court rejected the notion that an ambiguous clause in seven different contracts could be interpreted homogenously.
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