Life, Health, Disability & ERISA Litigation
Winter 2022 | First Circuit e-Report 
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.
FIRST CIRCUIT HOLDS PLAN NOT ARBITRARY OR CAPRICIOUS IN FINDING CHRONIC FATIGUE AND FIBROMYALGIA ENCOMPASSED WITHIN SELF-REPORTED SYMPTOMS LIMITATION PROVISION

In Ovist v. Unum Life Insurance Company of America, 14 F.4th 106 (1st Cir. 2021), the First Circuit Court of Appeals affirmed a decision by the District Court of Massachusetts that Unum Life’s decision limiting Ovist’s benefits to 24 months under the self-reported symptom provision of the ERISA plan was proper. In doing so, the First Circuit rejected a contrary decision by the Seventh Circuit in Weitzenkamp v. Unum Life Ins. Co. of Am., 661 F.3d 323 (7th Cir. 2011). 

Ovist, a college professor, became disabled due to chronic fatigue and fibromyalgia. Unum Life determined that Ovist was disabled but informed her at the outset that her benefits would be limited to 24 months in accordance with the self-reported symptoms provision of the plan. When Unum Life ended benefits, Ovist brought suit. 

The district court found in favor of Unum Life on cross motions for summary judgment. Ovist then appealed. 

The key dispute in the case was whether fibromyalgia was encompassed within the self-reported symptom provision. Ovist, relying primarily on Weitzenkamp, argued that because the trigger –point test is used to diagnose fibromyalgia, it qualified as a clinical examination accepted in the practice of medicine and thereby fell outside of the provision. She also argued that the results of a Cardiopulmonary Exercise Test (“CPET”) made her condition one that was verifiable using a test standardly accepted in the practice of medicine. 

At the outset, the First Circuit acknowledged that Unum Life was granted discretionary authority under the plan. The court found that Ovist raised three challenges to Unum Life’s determination. First, that it was unreasonable for Unum Life to require objective evidence of her functional loss; second, that she did provide such evidence through the CPET results; and three, that Weitzenkamp should control. 

The court first held that it was reasonable for Unum Life to require objective evidence of Ovist’s functional limitations. In doing so, the court cited multiple decisions it had rendered on the ability of an insurer to require objective evidence in support of diagnoses like fibromyalgia and chronic fatigue which are not subject to objective verification. The court also stated that the fact that Unum Life had found Ovist unable to work did not have any relevance given that the self-reported symptom limitation was designed to pay those who were disabled but only for 24 months. The court found that Unum Life simply followed the plan’s provision.

The court next found that Unum Life’s denial of benefits on the information presented to it was reasonable. The court found that Unum Life’s conclusion that Ovist’s functional limitations were inconsistent with or not supported based on clinical examinations or diagnostic findings, procedures or other clinical findings was supported by substantial evidence and consistent with a reasonable review of the record as a whole.

With regarding to the CPET results, the court noted that Unum Life’s medical consultant had reviewed the results and concluded that the test was not time relevant and did not reflect Ovist’s maximal effort. The court held it was not unreasonable for Unum Life to credit its consultant’s opinion over the therapist who administered the CPET. The court did note, however, that the CPET arguably provided some objective proof of Ovist’s functional loss. 

Finally, the court rejected Weitzenkamp on the grounds it was in conflict with First Circuit law. The court did so on the grounds that Weitzenkamp was in tension with the First Circuit’s long-held diagnosis-disabling symptom distinction as articulated in prior cases and the underlying principle that the physical limitations imposed by the symptoms of such illnesses as chronic fatigue and fibromyalgia do lend themselves to objective analysis. The court found that Unum Life’s requirement that Ovist provide objective evidence was reasonable because it calls for the claimant to establish a causal relationship between her disability and her alleged functional limitations and furthers the purposes of the self-reported symptom limitation. 

Joseph M. Hamilton represented Unum Life Insurance Company of America
FIRST CIRCUIT FINDS ERISA PLAN REQUIRED TO PRODUCE EVIDENCE GENERATED DURING ADMINISTRATIVE APPEAL UPON REQUEST, EVEN UNDER “OLD” VERSION OF DOL CLAIM REGULATION

In Jette v. United of Omaha Life Insurance Company, 18 F.4th 18 (1st Cir. 2021), the First Circuit, disagreeing with other circuit courts of appeal, found that United of Omaha failed to provide a “full and fair review” when it refused to produce a medical report generated during the administrative appeal that was requested by Jette.
 
Jette was covered by a long-term disability plan provided by her employer, which was governed by ERISA. The plan was funded by a group policy issued to the employer by United of Omaha. Claims were also administered by United of Omaha. 

After being paid benefits for a period of time, United of Omaha discontinued benefits. Jette pursued an administrative appeal. United of Omaha upheld its decision.

Jette filed suit. The district court upheld United of Omaha’s decision, finding that it was not arbitrary and capricious. At the district court level, Jette also argued that United of Omaha had not provided her with a full and fair review because she was not given the report of an independent medical examination conducted during the appeal. Jette had requested during the administrative appeal that United of Omaha disclose any new medical opinions generated during the appeal process and provide her an opportunity to respond prior to making its final determination. United of Omaha refused stating it was not required to provide Jette with a copy of the report. In United of Omaha’s view, ERISA claim regulations required only that it provide information generated prior to the appeal, and not again until after its decision on an appeal was rendered.

Before the First Circuit, Jette argued that United of Omaha violated 29 C.F.R. § 2650.503-1(h) by failing to allow her to review and rebut the IME report prior to the final decision on appeal. The First Circuit agreed. It is noteworthy that United of Omaha was administering Jette’s claim under the DOL claim regulation in place prior to its amendment in 2018. While the new regulations unequivocally require a claim administrator to provide information generated during the administrative appeal and allow the claimant to respond, most circuit courts of appeal that addressed this issue have found that the claim administrator is not required to produce such materials under the prior claim regulation.

Under the First Circuit’s review of the regulation, however, it found such an obligation to exist. In the court’s review, based upon its interpretation of the regulation, upon a claimant’s request for documents after an initial adverse determination, the claim administrator must disclose any new documents relevant to the claim regardless of whether it is used to support the decision on appeal. The claimant then must be given the opportunity to respond to the new information as the claimant deems appropriate. At that point, the plan administrator is required to take into account the new submissions. In Jette’s case, by failing to do so, the First Circuit found United of Omaha denied Jette a full and fair review of her claim.

Given that the IME report was not provided by United of Omaha, the court found that Jette had been prejudiced by the procedural violation and therefore remanded the claim to United of Omaha where Jette would have the opportunity to submit a response to the IME report and United of Omaha would make a new determination based upon the supplemented record.

Administrators reviewing claims arising within the First Circuit are warned that regardless of the version of the DOL claim regulation being applied, information generated during the appeal, if requested, must be produced to the claimant with an opportunity to respond.
FIRST CIRCUIT AFFIRMS NO VIOLATION OF CHAPTER 93A FOR MERE BREACH OF CONTRACT

In Ivers v. Lincoln National Life Insurance Company, 2021 WL 4239642 (1st Cir. 2021), the First Circuit Court of Appeals affirmed the dismissal of Ivers’ Complaint alleging a breach of contract and a violation of the Massachusetts Consumer Protection Act, Chapter 93A. 

Ivers purchased a deferred variable annuity contract from Lincoln National. When he was prevented from depositing additional amounts, into guaranteed minimum interest rate accounts he sued Lincoln National, pro se. Lincoln National moved to dismiss the Complaint and the district court allowed it. In its decision, the district court held that even if Ivers demonstrated a breach of contract, a mere breach of contract did not rise to the level of a Chapter 93A violation unless it had an extortionate quality that gave it the “rancid flavor of unfairness.” Finding none, the district court dismissed the complaint.

On appeal, the First Circuit found that Ivers failed to develop any argument as to the contract claim thereby waiving any claim of reversible error. 

With regard to the Chapter 93A claim, the court held none of Ivers’ arguments effectively challenged the specific legal conclusions underlying the district court’s rejection of the Chapter 93A claim.

The court affirmed the judgment.
FIRST CIRCUIT FINDS AMENDMENT TO ANNUITY CONTRACT AMBIGUOUS UNDER NEW YORK LAW

In Aronstein v. Massachusetts Mutual Life Insurance Company, 15 F.4th 527 (1st Cir. 2021), the First Circuit Court of Appeals upheld a decision of the U.S. District Court of Massachusetts that an amendment to an annuity issued by MassMutual with a reduced minimum guaranteed interest rate was ambiguous, and therefore, interpreted the contract in favor of the insured, Aronstein. 

In 2003, Aronstein was looking for a secure investment with better interest rates than his local bank was providing on certificates of deposit. Aronstein was pointed towards an annuity product issued by MassMutual. The brochure he received stated he would receive a 3% minimum interest rate. Between the time that Aronstein inquired about the annuity and actually purchased it, MassMutual had reduced the guaranteed interest rate to 1.5%. When Aronstein purchased the annuity he was not told by his broker that the guaranteed rate had been reduced.

While the annuity included an endorsement which described the reduction in the guaranteed interest rate, the court found that it was ambiguous. MassMutual’s own staff warned that the endorsement could cause consumer confusion. The district court, applying New York law, found the annuity to be ambiguous. The First Circuit affirmed.

The First Circuit also upheld the district court’s denial of Aronstein’s motion for class certification.
SUPREME JUDICIAL COURT OF MAINE HOLDS STATUTE OF LIMITATIONS DOES NOT BEGIN TO RUN UNTIL ADMINISTRATIVE APPEAL COMPLETED

In Estate of Sprague v. Bankers Life and Casualty Company, 264 A.2d 1243 (Me. 2021), the Supreme Judicial Court of Maine held that the time for bringing suit under Maine law did not commence until after a claimant had completed the administrative appeal required under her long term care insurance policy.

Marion Sprague owned a home health insurance policy issued by Bankers Life. The policy contained a rider that described the company’s internal review procedures, including the provision that required the policyholder to exhaust those procedures before filing a lawsuit. 

Sprague filed a claim that was denied on July 10, 2014. On August 7, 2014, following instructions given in the claim denial letter, Sprague requested her administrative appeal. On September 25, 2014, Bankers Life issued a written decision upholding the original determination to deny the claim. Sprague subsequently died and her estate filed suit on September 4, 2020. 

Bankers Life moved to dismiss the complaint on the grounds that it was barred by Maine’s six-year statute of limitations. The trial court allowed the motion and the estate appealed.

Bankers Life contended that suit needed to be filed within six years of July 10, 2014, the date of the original denial. The estate argued that the limitations period commenced on September 25, 2014, when it exhausted the internal review procedure. 

The court agreed with the estate. The court held that the limitation period did not commence until the cause of action accrued. The court noted that parties are free to contract for conditions precedent to filing suit. Given the language contained in the policy, the court determined that the cause of action did not accrue until September 25, 2014 when the administrative appeal was decided. Therefore, the complaint was timely.  
COURT REJECTS ERISA BENEFIT CLAIM BASED UPON ALLEGED MISSTATEMENT BY PLAN ADMINISTRATOR

In Femino v. Sedgwick Claims Management Services, Inc., 2021 WL 3190817 (D. Mass. 2021), the U.S. District Court of Massachusetts dismissed a complaint seeking disability benefits under a plan governed by ERISA.

Femino was covered by a disability plan provided by his employer. The plan provided that if an employee became disabled before their 61st birthday they could receive disability benefits until the first day of the month following the employee turning 65.  

Femino became disabled and received benefits through the month following his 65th birthday. He alleged, however, that he was due benefits for an additional year. His claim was rejected by Sedgwick and Femino filed suit.

Femino based his claim on two events. First, he alleged that a Sedgewick representative told him that his disability benefits were approved through October 2019. He also pointed to a letter he received from Sedgwick that stated his disability leave had been approved to October 2019. Sedgwick brought a motion to dismiss.

The court first found that Femino’s benefit claim was dependent upon the terms of the plan. The plan was unambiguous in stating that benefits ended the month after Femino turned 65, and those were the benefits that he received. The court held that Femino was attempting to amend the plan and to do so the amendment must be in writing and must state that it alters the plan. The court then found that the oral communication referred to by Femino could not constitute an amendment because it was not in writing. 

The court also rejected the written communication from Sedgwick because it did not address the date his disability benefits would end, but rather only the date of his leave from his employer.

In addition to making a claim for benefits under ERISA, Femino made an alternative claim pursuant to 29 U.S.C. §1102(a)(3), the catchall provision for equitable relief. Finding that the complaint appeared to be one seeking equitable relief under estoppel, the court analyzed it on that basis. The court rejected the claim because it found that in order to recover Femino would need to show that he reasonably relied on an incorrect statement interpreting an ambiguous plan term. Because the court found that the plan term was unambiguous, any reliance by Femino on an informal statement that contradicted the plan was unreasonable. 

The motion to dismiss was granted.

J. Christopher Collins represented Sedgwick Claims Management Services, Inc.
MEDICAL BENEFIT CLAIM REMANDED DUE TO PROCESS ISSUES

In Estate of Paul Nelson Chambers v. Blue Cross and Blue Shield of Massachusetts, Inc., 2021 WL 4079794 (D. Mass. 2021), the U.S. District Court of Massachusetts remanded a benefit claim for long-term acute care due to procedural flaws. 

Paul Nelson Chambers was covered by an employee health benefit plan that included services for long-term acute care. However, the plan, insured by a policy issued by Blue Cross did not provide benefits for custodial care, even when medically necessary.

After Chambers underwent laparoscopic surgery to remove his gallbladder, he developed sepsis resulting in serious complications. After his condition stabilized, he had several admissions to a rehabilitation hospital. After many months of care, Blue Cross determined that benefits were no longer payable because the care being given was not likely to improve Chambers’ functional ability. Therefore, it was considered custodial care.

After Chambers' administrative appeal to Blue Cross was denied, he then appealed to the Massachusetts Office of Patient Protection (“OPP”), a Massachusetts agency that conducts external reviews and benefits decisions. OPP assigned the case to MAXIMUS, a company used by OPP to review benefit claims. MAXIMUS upheld the denial of benefits but on different grounds. It found that the services provided to Chambers were not medically necessary. Chambers then brought suit. 

On cross motions for summary judgment, the court found that the review process suffered from several significant flaws. The first was that Blue Cross had used one of their physicians multiple times in connection with the prior decision on the benefit claim. The benefit plan required that the professionals who reviewed an appeal would be different from those who participated in prior decisions. The court held that the use of the same physician in prior reviews, and then utilizing him on an appeal review violated that provision. 

Secondly, the court found that Chambers was not provided a full and fair opportunity for review because the MAXIMUS decision was based on whether the care was medically necessary, and Blue Cross had made its determination on whether the treatment being provided was custodial care. Therefore, the court held that MAXIMUS did not appropriately review the claim, thereby prejudicing Chambers. Thus, the court ordered a remand for a new review.  
COURT HOLDS INDIVIDUAL DISABILITY POLICIES NOT GOVERNED BY ERISA

In Cay-Montanez v. AXA Equitable Life Insurance Company, 2021 WL 4251338 (D. P.R. 2021), the U.S. District Court of Puerto Rico granted the defendants’ motion to dismiss on the grounds that Montanez’s individual policies were not governed by ERISA.

Montanez obtained two disability insurance policies from AXA. Subsequently, he filed a claim for depression and received benefits for several years. After benefits were discontinued, and an administrative appeal, he was told by AXA that he could file an action under ERISA. Montanez did so, but also included common law claims under Puerto Rico law.

AXA moved to dismiss on the grounds ERISA did not apply. The court agreed. The court found that the Complaint did not allege facts sufficient to establish an employee benefit plan. In fact, the court found that the allegations in the Complaint made it clear that Montanez obtained the policies as an individual, not through his employer.

The court also rejected Montanez’s claim that AXA was equitably estopped from asserting that ERISA did not apply. The court held that equitable estoppel had never been used in this fashion. Moreover, equitable estoppel could not be used to establish subject-matter jurisdiction in federal court. The court stated there would be a massive implication if a court was permitted to hear an action over which it had no subject matter jurisdiction based upon equitable estoppel against a party.

The court also dismissed the common law claims because Montanez had failed to allege diversity.  
ATTEMPT TO EXCLUDE DOCUMENTS FROM THE ADMINISTRATIVE RECORD AND TO CONDUCT A DEPOSITION IN AN ERISA CASE DENIED

In MacNaughton v. The Paul Revere Life Insurance Company, 2021 WL 5180238 (D. Mass. 2021), the U.S. District Court of Massachusetts denied MacNaughton’s motion to exclude plan documents from the Administrative Record. It also denied a request to conduct a Rule 30(b)(6) deposition regarding Paul Revere’s structural conflict.

MacNaughton, a radiologist, after being paid long-term disability benefits for a number of years, was found to be able to return to her occupation after undergoing an independent medical examination. MacNaughton is from Kansas. The IME was conducted in Chicago because Paul Revere was unable to schedule an examination closer to MacNaughton’s home. 

MacNaughton elected to file suit in Massachusetts, even though at all times she has been a resident of Kansas. In the process of determining the contents of the Administrative Record, MacNaughton objected to the inclusion of a Notice to Applicants, a one page document included in the employer’s application for the insurance plan which included clear discretionary review language, and to substantively similar versions of the plan’s Group Insurance Booklet-Certificate that echoed the grant of discretionary review. MacNaughton also sought to conduct a Rule 30(b)(6) deposition.

The court referred the matter for review by a Magistrate Judge. The Report and Recommendation from the Magistrate was that the documents should not be excluded from the Administrative Record and that the request for a deposition be denied. MacNaughton filed an objection to the Report and Recommendation. The district court adopted the Report and Recommendation. 

MacNaughton was opposed to the inclusion of the documents in the Administrative Record because they support the application of an abuse of discretion standard in reviewing Paul Revere’s claim determination. MacNaughton argued exclusion was required because Paul Revere did not produce the documents pre-suit to her counsel. The court agreed with the Magistrate Judge that the Department of Labor claim regulations do not mandate the disclosure of those plan documents. The court also found that MacNaughton failed to cite any authority for the proposition that undisclosed documents must be excluded from the Administrative Record. Moreover, the court found that the document in question did not relate to the substance of Paul Revere’s decision as the documents only related to the standard of review. 

Finally, the court upheld the recommendation as to the taking of a deposition. The court agreed with the Magistrate that MacNaughton had not shown that Paul Revere’s decision to terminate benefits was influenced by a structural conflict. The court rejected MacNaughton’s argument that a conflict was shown by requiring MacNaughton to travel to Chicago for her IME. The court agreed that Paul Revere was justified in sending her to Chicago because attempts to schedule the examination closer to MacNaughton’s home were unsuccessful. The court also said there was no evidence of conflict due to the fact that Paul Revere had offered to buy out MacNaughton’s claim two years before benefits were discontinued given that the termination of benefits was based on the IME physician’s opinion that MacNaughton could return to work without restrictions.

J. Christopher Collins represented The Paul Revere Life Insurance Company
DISCOVERY ALLOWED REGARDING THE ADMINISTRATION OF A LIFE INSURANCE BENEFIT PLAN 

In Leavitt v. Sonoco Health and Group Benefits Plan, 2021 WL 5500469 (D. Me. 2021), the U.S. District Court of Maine allowed Leavitt’s request to engage in written discovery regarding the administration of a benefit plan, governed by ERISA, which provided life coverage. 

The deceased, Brian Leavitt, was covered under a benefit plan provided by his employer, Sonoco, which provided, among other things, life insurance. Leavitt had the basic life insurance provided to all employees, but also elected supplemental life insurance benefits. The plan was insured by a policy issued by Metropolitan Life Insurance Company.

After Leavitt’s death, the beneficiaries were paid the basic life insurance, but denied the supplemental insurance. The dispute regarding the supplemental insurance was with regard to Leavitt’s status at the time of his death, including whether he had shown proof of total disability and whether premiums were paid for the supplemental insurance. 

Leavitt brought suit and requested leave to serve written discovery on both Sonoco and Met Life. After reviewing the details of the claim and its administration, which outlined a confusing sequence of events, the court allowed targeted discovery to be issued to both Sonoco and Met Life.
COURT AWARDS ATTORNEY’S FEES IN INTERPLEADER ACTION

In Sun Life Assurance Company of Canada v. Haroian Irrevocable Insurance Trust, 2021 WL 3375407 (D. Mass. 2021), the U.S. District Court of Massachusetts awarded attorney’s fees in an interpleader action filed by Sun Life. 

Sun Life had issued a $250,000 life insurance policy covering Henry Haroian and his wife. After the death of both, Sun Life prepared to pay the death benefit to the Haroian Irrevocable Insurance Trust. Thereafter, a dispute arose between the co-trustees of the trust, the son and daughter of the Haroians, as to how the proceeds would be paid to the Trust.

After multiple attempts to resolve the dispute, Sun Life filed an interpleader action. In accordance with Federal Rule of Civil Procedure 22 and 28 U.S.C. §1335(a)(1), the court permitted Sun Life to deposit the insurance proceeds with the clerk of the court. Sun Life then requested a discharge and an award of attorney’s fees.

The court awarded approximately $13,000 in fees. The interesting aspect of the case is that when the court allocated the amount of fees to be paid between the two potential beneficiaries, it did so based upon its finding that one beneficiary was more responsible than the other for obstructing the payment of the proceeds to the Trust. The final award was apportioned based upon the work required by Sun Life’s attorneys “distinctly related to [the beneficiaries] contribution to the litigation.” 

J. Christopher Collins represented Sun Life Assurance Company of Canada
LIFE, HEALTH, DISABILITY AND ERISA LITIGATION TEAM
TEAM NEWS
Joe Hamilton and Chris Collins successfully tried an individual disability income insurance matter involving whether a disability was caused by an injury or by a sickness. The case, which lasted a full week, was tried in Suffolk Superior Court in Massachusetts. The Court entered a judgment for our client.

Joe and Chris are among the authors of the latest edition of the ABA's ERISA Survey of Federal Circuits. They are also both scheduled to speak at the May 2022 meetings of the New England Claim Association, and the International Claims Association.
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Mirick O'Connell's Life, Health, Disability & ERISA Litigation Group represents clients throughout New England. With offices in Boston, Westborough and Worcester, our attorneys are within an hour of all the major courts in Massachusetts, Hartford, Connecticut, Rhode Island, and southern New Hampshire. In addition, our attorneys are admitted to practice not only in Massachusetts, but in Connecticut, New Hampshire and Rhode Island as well. We have repeatedly and successfully represented clients in each of these jurisdictions. So remember, we are not here for you just in Massachusetts - think New England!
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