Every month, the International Foundation releases the Legal and Legislative Reporter, a compilation of new employee benefits-related case summaries. Below is a summary we thought you’d be interested in. Content provided by Morgan, Lewis & Bockius LLP.
The U.S. District Court for the Western District of Louisiana denies the defendant insurance company’s motion to remand the case to it for further administrative proceedings.
The plaintiff is a participant in her employer’s employee benefits plan. The defendant is the insurance company that insures and administers the accidental death and dismemberment benefits under the plan. The plan is governed by the Employee Retirement Income Security Act of 1974 (ERISA).
The plaintiff’s husband died as a result of a car accident when the car he was driving inexplicably crossed a center line and caused a head-on collision. The toxicology report included positive findings for an oral over-the-counter cough suppressant and an antihistamine, sedative and anti-nausea drug. Side effects from the two drugs may include sedation, confusion or even hallucinations. The plaintiff filed a claim for life insurance and accidental death and dismemberment insurance benefits under the plan.
The defendant approved the life insurance claim, but denied the accidental death and dismemberment benefits claim, arguing that the husband’s death did not meet the definition of an accident under the plan after reviewing the accident report, autopsy report and toxicology report. The plan requires an accident to be a sudden and accidental event that results independently of other causes or any other illness, disease or other bodily malfunction. The defendant also determined that the claim was subject to an exclusion for loss due to or resulting from committing criminal acts, notwithstanding the fact that the state police noted that no illegal contraband or narcotics were found in the toxicology report.
After exhausting administrative remedies, the plaintiff filed suit to challenge the defendant’s decision under the applicable ERISA standard of review. The defendant now moves to remand the case back to it for further administrative review, arguing that its basis for denying the claim was not thoroughly evaluated during the administrative review process and is therefore, not ripe for judicial determination. The defendant argues that remand is the appropriate remedy to allow a full and fair review that thoroughly discusses the toxicology report before any judicial review of its decision.
Courts have found that remand to a plan or claims administrator for a full and fair review may be appropriate as a remedy to a claimant when the ERISA plan did not substantially comply with ERISA procedures by changing its basis for denying coverage. The claimant should not be denied the opportunity to fairly address at the administrative level the basis for denying her claim. Here, however, the defendant relied on a decision at all levels of the administrative process that the circumstances of the plaintiff husband’s death did not meet the definition of accident under the plan.
It wasn’t until the plaintiff filed suit that the defendant wanted to point to other evidence, including the toxicology report, as the basis for the decision that the husband’s death was not caused by an accident. The court notes that the record shows that the defendant had the toxicology report in its possession early in the administrative process and had more than ample opportunity to explore the effect of the substances before the case arrived in court. The court finds that the defendant should not have the opportunity to flesh out a new basis to deny the claim now.
While remand may be appropriate to provide a remedy to a claimant who has been denied a full and fair opportunity to address an issue during the administrative process, it is not appropriate for the plan or insurer to wait until a case is in federal court and then seek remand to build a new basis for denial that it reasonably could have developed during the administrative process. Because the defendant had the toxicology report since the beginning of its review, it should not be allowed to further delay the proceedings now to go back and attempt to improve its prior position.
Accordingly, the court denies the defendant’s motion to remand for administrative review.
Rushing v. Sun Life Assurance Co. of Canada, No. 5:22-cv-01454 (W.D. La., November 1, 2022).
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