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July 2018


In the recent decision, Sveen v. Melin (No. 16-1432, filed June 11, 2018), the United States Supreme Court held that a Minnesota statute automatically revoking a policyholder’s ex-spouse as beneficiary of a life insurance policy following divorce did not violate the Contracts Clause of the United States Constitution. (U.S. Const. Art I § 10, cl. 1.)  The Court recognized that the Contracts Clause only prohibits states from enacting laws which substantially impair contracts. A statute substantially impairs a contract only when it undermines the parties’ intent, interferes with party’s expectations, or prevents a party from safeguarding its rights. The Minnesota statute did none of these things.  Individuals are motivated to buy life insurance to protect their families, not enrich their ex-spouses. Courts generally have broad authority to divide property upon divorce, so the statute could not be construed as interfering with the policyholder’s expectations. Finally, the Court noted that revocation of a beneficiary upon divorce did not prevent the parties from safeguarding contractual rights because a policyholder need only re-designate an ex-spouse as beneficiary following a divorce.



December 2017

Submitted by: Thayla P. Bohn


Noteworthy Case

In the case of Marin v. Dave & Buster’s, Inc., S.D.N.Y., No. 1:15-cv-03608, a New York federal district court judge rejected a proposed settlement between the restaurant chain and the worker who alleged that Dave & Buster’s illegally reduced employees’ hours to keep them from receiving healthcare benefits.  This case is noteworthy as a first of its kind under the Employee Retirement Income Security Act under a theory that the employer intentionally interfered with workers’ benefits by cutting hours to avoid the mandate under the Affordable Care Act. The Court denied the settlement, in part, on the grounds that the plaintiff failed to provide damages calculations or other evidence to show the proposed settlement was fair and reasonable.  Last year, the court declined to dismiss the suit, finding sufficient evidence that the company acted with an “unlawful purpose” when it reduced the work hours of employees, making them ineligible for the company’s health benefits plan.






In Williby v. Aetna Life Ins. Co., 2017 BL 284683, 9th Cir., No. 15-56394, 8/15/17, a federal appeals court ruled a California law making it harder for benefit plans to insulate themselves from judicial scrutiny through a discretionary clause applies differently depending on whether the plan is fully insured or self-funded by the employer.

The U.S. Court of Appeals for the Ninth Circuit ruled on Aug. 15 that California's ban on discretionary clauses in employee benefit plans doesn't apply to plans that are self-funded by the employer because the law is preempted by the Employee Retirement Income Security Act (“ERISA”). This decision appears to distinguish a decision issued in May, Orzechowski v. The Boeing Company Non-Union Long-Term Disability Plan, 9th Cir., No. 14-55919, 5/11/17, which held the California insurance law was not preempted by ERISA.

According to the Ninth Circuit, the different outcomes are because the benefit plans at issue in the two cases—both sponsored by Boeing Co. and administered by Aetna Life Insurance Co.—have different sources of funding. Boeing's long-term disability plan is fully insured by Aetna and thus subject to the California law making it easier for participants to challenge benefit denials in court. Boeing's short-term disability plan is funded by Boeing's general assets, which means the California law doesn't apply to it because of ERISA preemption, the court said.



MAY 2017


Tenth Circuit LHD Review, January to May, 2017:  A View from the Trial Courts

Matthew Y. Biscan

Satriana & Biscan, LLC

Denver, Colorado


A thorough investigation of the plaintiff’s disability claim, which included medical evaluations, third party evaluation, and surveillance, was approved in Stone v. Unum Life Ins. Co. of Am., 2017 U.S. Dist. LEXIS 1419, Case No. 15-CV-0630-CVE-PJC (N.D. Ok. January 5, 2017).  Among other facts, Plaintiff earned both a bachelor of science and a master of science degree after the onset of her disability.  The court rejected plaintiff’s argument that the investigation by the carrier was “too aggressive.”  Rather the court termed the investigation, which included examinations, record review, a background investigation, and surveillance, as thorough and anything but “too aggressive.”  The denial of disability benefits was affirmed as “well within the ‘continuum of reasonableness.’”  The court refused to apply the Texas ban on discretionary clauses (see Tex. Admin. Code §3.1203) retroactively and applied the standard of review called for under ERISA.

Applying Utah law to a governmental disability plan not governed by ERISA, the court in Williams v. Hartford Life & Accident Ins. Co., 2017 U.S. Dist. LEXIS 18144; 2017 WL 519215, Case No. 2:14-CV-304-DN (D. Utah February 8, 2017) determined that the carrier breached its contract in terminating benefits.  In a trial to the court on briefs, the finder of fact concluded that a determination that the plaintiff was not disabled based on record reviews (without the benefit of examination by defense witnesses) and surveillance failed to outweigh the testimony of treating physicians. 

The decision to terminate disability benefits was determined not to be arbitrary and capricious in Johnson v. Life Ins. Co. of N. Am., 2017 U.S. Dist. LEXIS 45643, Case No. 15-cv-0699-WJM-MEH (D. Colo. March 28, 2017).  A case construing both short term and “regular occupation” long term claims, the court did not consider that the carrier’s determination contrary to the conclusion of the Social Security Administration was improper, rejecting plaintiff’s argument that the carrier “failed to reconcile” its determination with the granting of benefits by SSA.  It expressly recognized the right of an ERISA plan to make a determination based on conflicting evidence.  Again the evidence in support of denial of benefits included medical examination and surveillance.  Here the court considered plaintiff’s argument that the Colorado ban on discretionary clauses (C.R.S. §10-3-1116(2)) should be applied.  After an evaluation of Colorado law and particular reference to the precise language of the statute, the court reluctantly refused to apply the ban retroactively, even in the face of renewals of the plan subsequent to the ban’s enactment.  The court also refused to grant plaintiff a remedy for the plan’s failure to timely respond to requests for documents, exercising its discretion where no prejudice was found.

In a review of a decision to terminate residential mental health treatment for a minor, the court granted the carrier’s motion for summary judgment in John B. v. Conn. Gen. Life Ins. Co., 2017 U.S. Dist. LEXIS 51331, Case No. 1:16-CV-00041-BSJ (D. Utah April 3, 2017).  Applying a deferential ERISA standard of review, and recognizing that the plan explicitly provided that treatment covered was “[r]equired to be rendered in the least intensive setting that is appropriate for the delivery of health care,” the court found the termination of residential care not to be arbitrary and capricious.  The plan’s decision was based on record review, peer-to-peer conference with the treating facility, the involvement of an independent psychiatrist, and a plan employed psychiatrist.

Finally, a reasonably concise order granting approval of a class action settlement can be found at Woods v. Std. Ins. Co., 2017 U.S. Dist. LEXIS 70528, Case No. 1:12-cv-01327-KBM/KRS (D.N.M. May 9, 2017).  The court described the case as “vigorously litigated.”  See Woods v. Std. Ins. Co., 771 F.3d 1257 (10th Cir. 2014).

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