Merck's Laundry List
A recent case caused Merck & Co. to go down swinging on every pitch served up by the Third Circuit when it comes to being arbitrary and capricious.
Kosiba v.Merck & Company, 2011 WL 843927, set forth a procedural laundry list of errors by a plan administrator which would lead a court to find an administrator’s decision terminating LTD benefits to be arbitrary and capricious.
In any other “world” but ERISA any procedural error from the following list would almost automatically call for an “arbitrary and capricious” reversal of a decision favoring an administrator, but in ERISA law, where the administrator is highly favored, such a reversal is news.
Here’s the Third Circuit list. See if you don’t agree.A reversal of benefits determination without additional evidence. A disregard of opinions previously relied upon . A self-serving selectivity in the use of evidence or reliance on self-serving paper reviews of medical files. A reliance on the opinions of non-treating doctors over treating doctors without explanation. A reliance on inadequate of incomplete investigation. A failure to comply with notice requirements of Section 504 of ERISA. Failure to analyze all relevant diagnoses. Failure to consider claimant’s ability to perform actual job requirements.
With all of these strikes against it, one would think that the Court would automatically reinstate the claimant’s benefits without question. Not so in ERISA.
Although the Court did restore claimant’s benefits, it took pains to declare that if the administrator had denied claimant’s “any occupation” LTD benefits from the start, it would have remanded the claim rather than reinstate her right to benefits.
How come? Defendant had multiple swings at the ball.
On this sorry record, why give it more?
The Malpractice NONdeterrent
Some doctors who examine for insurance companies feel free to play fast and loose with the truth when making reports on the condition of out of work employees because they do not have to fear malpractice claims. Although fear of malpractice claims has been heavily overplayed by doctors and insurers in recent years, the plain fact is that insurance company doctors don’t have to fear malpractice claims since the person being examined is not the doctor’s patient. There is no duty owing from the physician to the ERISA claimant being examined.
An ordinary patient’s doctor has a duty to treat a patient in accord with the standards of the medical profession as practiced in the doctor’s geographic area. Insurance company doctors do not treat the patient and so have no duty to him or her.
Owing no duty to the party being examined, the insurance doctor faces no malpractice threat if doctor’s report omits or misinterprets the patient’s condition. What an incentive for insurers to hire and remunerate examining physicians who don’t mind playing fast and loose with the medical facts because doing so poses no danger to the doctor.
This major difference in the consequences of overlooking or misinterpreting the patient’s diagnosis or disability has led to insurers playing games with how they obtain medical information with which they contest ERISA claimant’s claims to being unable to perform the duties of their occupation.
ERISA gives all of the advantage to the employer who in most cases hires an insurer to operate its ERISA plan. Although the employer is a highly interested party, ERISA gives the employer the right to make the “yes or no” decision on a claim. And once that decision is made it stands as the law in the matter until it is overturned.
Fortunately, courts have just begun to take closer look at the insurers’ system for providing medical evidence in ERISA cases. Many insurance companies have tried to appear to obtain independent medical opinions by retaining so-called independent medical services to examine and render medical evidence in ERISA matters.
The problem with this system is that it turns out that these so-called “independents” make most if not all of their fees from the same insurers. How can they be considered “independent”?
Putting a fake third party entity in the mix is just an attempt to obscure the fact that the examining physician is actually working for the insurer.
This system may be good for insurance companies and those doctors who want to make easy money in examining claimants.
But, it’s bad for fairness and truth.
ERISA Insurers Love Frustration
You don’t have to be overly smart to understand why ERISA insurance companies do things in the most frustrating way imaginable.Frustration is the primary tool of the insurance companies. If they can get a claimant thinking he or she is battling an impenetrable wall of bureaucracy, they are more than halfway home to getting the claimant to give up the claim. And that’s where a good part of the money insurance companies make can be found. Insurers have a wide variety of arrows in their frustration quivers: They deny even the most obviously valid claims. They “lose” claimant paperwork. They hire doctors who believe it is more important to keep their relationship with insurers than it is to “do no harm” when it comes to claimants. They deny, deny, deny because they know that denying claims is and insurance company’s best friend. It doesn’t take a superior intellect to know that a certain percentage of people don’t have the stomach or personality to fight with others. So, if the insurance company denies a claim it knows that a certain number of claimants will just fold up their tents and give up. Such conduct results in immediate cash in the insurer’s pocket. And, after 35 years of fighting with insurance companies, we know that such an outcome is the primary goal of most insurers. Whether you are a claimant or an attorney pursuing an ERISA claim, the one thing you have to have is “stick-to-it-iveness”. Without it you fall prey to frustration. Once you lose your cool, the insurance company has you right where it wants you. To be able to fight insurers, you should be familiar with their tactics and know what to expect. No move by them should surprise. They will do whatever it takes to try to discourage the lawyer or the client from continuing the claim. They will use the sometimes complex rules and law of ERISA to delay claim progress. They know that most of us have limits that prevent clear thinking about a problem. While many people become angry because of such conduct and vow to keep going, that very anger is also the insurer’s friend because many times anger prevents clear thinking and clear thinking is required in pursuing an ERISA claim. Keeping an eye on the ball is difficult when you are steaming. Stay cool and smart. Don’t be distracted by insurance company tactics. Pursue what is necessary to prove the elements of your ERISA claim. Frustrate the insurer for a change.
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