Hey, I'm Nancy Cavey. I'm a national ERISA and individual disability attorney, and I wanna welcome you to this episode of Winning Isn't Easy. We're gonna talk about the standard of review and why it matters in your ERISA disability claim. But before we get started, I have to give you a legal disclaimer. The Florida Bar Association tells me that I have to give this legal disclaimer. It's not legal advice. This whole podcast is just my thoughts and commentary, but I'll am going to, in this process, give you a overview of what's happening in the disability insurance world, the games the carriers play, and what you need to know to get the disability benefits you deserve. So, off we go. Now, you have heard me mention the standard of review in many podcast episodes and YouTube videos, but it's time that we dedicate a whole episode to discuss what the standard of review is and why it's important. So the topics are going to be disability plan documents matter concerning the standard of review that courts will use to determine whether your benefits have been correctly denied or terminated. Next's gonna talk about can a disability carrier plan's failure to reference specific plan provisions? Change the standard of review, and I'm gonna talk to you about the 11th circuit's standard of review in the de Novo case. And that's important because the alternative standard of review, uh, is something called de novo standard of review. And that's all important and it's one of the first things I always wanna know when I'm looking at a case and talking to a prospective client. Let's take a break before we get started.
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Nationwide ERISA Attorney Nancy L. Cavey:Welcome back to Winning Isn't Easy. Disability Plans and Documents matter when it comes to the standard of review. And this is what a court is going to look at in determining whether or not your claim denial was correct. That's the theme of this, uh, uh, portion of our podcast because unfortunately, many ERISA disability policies or plans have what I call a get outta jail free card. That jail, uh, card, if you will, get outta jail free card handcuffs, a federal judge's review of a disability insurance claim, denial or termination. That standard that get outta jail free card is called Arbitrary and capricious, and it favors the insurance company. Now, as a disability policy holder attorney, I would prefer a de novo standard or review. That means that a federal judge isn't bound by the insurance carrier's denial. They can use their own independent judgment to see the games that disability carriers play and use to justify a claims denial or termination. Now, there sometimes, you know, I'll read a policy or a plan and it, the language is clear, I know what it says, but there are other times when there's conflicting language and you don't know what the standard of review is. That is what happened in the Decry Farro versus Life Insurance Company of North America case. It's a case outta Rhode Island. And I think it's instructive because it talks about both kinds of standards of review. Now, did Tano argue that the standard of review should be Denovo, obviously favorable to, to them, while Cigna of course, argued that the standard of review was an abuse of discretion and that that was, you know, the handcuff, uh, on the federal judge. So what did the court do? How did they go about resolving this conflict? Well, the first thing they do is they look at documents. You know, we're lawyers and we don't wanna look at documents cuz documents are binding. The court started by determining what documents it was gonna look for and documents, as I think make all the difference. And they looked at two documents. One was the group policy and the other one was the group long term disability insurance certificate. Okay? Now, language matters. The group policy said it was the sole contract and the certificate of insurance said it's not part of the plan, it's not part of the insurance contract. Guess where the discretionary language was that, uh, Cigna was relying on for its argument that there was an abuse of standard of review. Um, guess what? It was in the certificate, which was not part of the plan. So as a result, the court said, Hey, the correct standard of review is de novo. Now that's also important, uh, because as I said, this does not handcuff the judge and the the judge can apply their own independent judgment. There are also situations in certain states where they have banned discretionary clauses. Um, that means that a disability carrier or plan can't put in the, uh, policy or the plan, this abuse of discretion standard or review. And I love it when I have a client who's in a state that prohibits, uh, these types of discretionary clauses. Cause you know, I'd rather have the judge look at this with a fresh set of eyes than having to look at it with a set of blinders on and, and, uh, and handcuffs. Now in this case, the court said, look, the correct standard review is de novo. And, and even if the policy had had discretionary language, we would not have allowed that to be used because there's a ban on discretionary clauses in Rhode Island. So it was going to be, um, de novo de novo de novo. The intent of, uh, a discretionary ban is to provide a more balanced and even relationship between the insured and the insured. Um, and that's really in my view, an understatement. The de novo standard of review starts to level the playing field where an arbitrary Capris standard of review is like trying to climb up a grease pole. I wanna contrast what happened, uh, in the Rhode Island case with what happened in a case called merch versus Sun Life, uh, insurance. And this is, uh, a case outta Illinois. And once again, the issue was what's the standard of review? Sun Life argued that the policy had a clause providing Sun Life with the entire discretionary authority to make all final determinations regarding claims for benefits under the benefit plan insured by this policy. And that that language made this a deferential, uh, review, uh, arbitrary to preach the standard of review. Now, on the other hand, merch gave the court three reasons to support an argument for a de novo standard of review. The first one was, look Judge, I'm an Illinois resident. Illinois regulations prohibited discretionary clauses for policies or plans issued in Illinois. Number two, there was no discretionary language in a planned document called the summary planned description. And number three, there was no evidence that his employer had delegated authority to Sun Life. So there was an inadequate delegation of authority to Sun Life. Now these are common arguments that we make as plaintiff policy holder lawyers. Unfortunately, in this case, the judge looked at each one of these arguments and shot'em down. And in this particular case, the plan stated that it was delivered in Florida and subject to the rules of that jurisdiction. And sad to say, Florida does not ban discretionary clauses. Secondly, the policy clearly included a discretionary clause and Sun Life's failure to include that in the summary plan description didn't matter, it's the policy or plan language that matters. And I will tell you that not all courts are of that particular view. And then the court said, look, I think this policy expressly delegated authority from the employer to Sun Life. You can see or hear, if you will, that the right words in the right place matter and each policy or plan and the plan documents have to be analyzed for those words, the location of the words, and be read together to determine what the right standard of review is. And unfortunately, in Merck's case, the court found that it was governed by the arbitrary and Capri's standard of review, which means most likely merch lost his case. Got it. Even those lawyers have difficulty figuring this out. But you've got a great baseline for understanding the difference between discretionary review and de novo review. Let's take a break and give your brain a rest. Okay, Welcome back to Winning Isn't Easy. Can a disability carrier or plan's failure to reference specific policy or plan provisions change the standard of review in an ERISA disability claim? Now, the ultimate question for federal courts in reviewing disability insurance, uh, claims, uh, or plans, is to determine whether or not the carrier made the correct decision. But in the case of an arbitrary and capricia standard of review, the issue is not necessarily wasn't the right decision, but whether or not there was a reasonable basis for that decision. In other words, you could have made the wrong decision, but if it was a reasonable decision, a reasonable decision based on the facts of the case, then that wrong decision still stands. I think that's absolutely crazy and it's obviously hard for people to understand this crazy standard of review. So what is a standard of review when a court gets a an risid disability case up on appeal? The issue, of course, is whether or not the decision deny or terminate the benefits is one that should be overturned. And the court starts out by looking at the plan documents to or policy to see whether or not we have what's called the de novo standard of review. Uh, or we have the arbitrary and caprice standard of review. I, as a policy holder attorney, want the Denovo standard of review. I want the court to be able to substitute their own judgment for that of the disability insurance company or plan because obviously they've denied the claim. Now the second, but the, and the most common standard of review is called the arbitrary and capricious standard of review. I call it the Get Outta Jail Card Review. Um, it puts strict limits on what the policyholder plan beneficiary has to prove to overturn an incorrect denial or termination of benefits and makes it like a slippery slope. It's really hard to overcome a, an incorrect wrong denial or termination of benefits based on the arbitrary and CAPA standard of review. So what am I looking for? Well, I'm looking for, uh, the terms of the plan or the policy for specific language that says that the disability carrier has the discretion to make the decision. Uh, and um, that type of language is sort of the key language that a court is gonna be looking for discretion to make the decision. Now the failure to follow ERISA regulations can impact the standard of review, and I think that's important, and I'm gonna have to give you some legal sites. But the failure to comply with Department of Labor's claims Procedure Regulation 29 CFR section 2 5 6 5 3 1 will result in the claim being reviewed de novo unless the plan or policy established procedures in conformity with the regulations and it show that it's failure to comply with the claims procedure regulations was both inadvertent and harmless. Um, and the disability carrier plan has the burden of establishing that. Now, one of the ways that we go about arguing this is that section 29 CFR section 2 56 0 503 dash one G one. Uh, little romal two requires that in the notification of any adverse benefit determination that the plan set forth in a manner calculated to be understood by the claimant reference to the specific plan provisions in which the determination is based in English. That means one expects to see in the denial or uh, termination letter a reference to the specific policy or plan, uh, that is being used to deny or terminate benefits. Now, another argument we make is based on section 29 CFR 2 5 6 5 0 3 dash one H three H three Roman, uh, little Roman rule two. Those two sections entitle you to a full and fair review of a claim in an adverse benefit to termination. The plan is not on review to be, um, to be giving deference to the initial adverse benefit determination and it should be conducted by an appropriate fiduciary of the, of the carrier or the plan who wasn't the person who made the initial adverse benefit determination. So we need a new person with a second set of fresh eyes looking at this. The, and the regulation also says, look, whoever's assigned to handling this appeal can't defer to the initial adverse benefit determination. Uh, and I will tell you that is exactly what happens. But the court's gonna be looking for a detailed letter from the carrier of the plan reviewer summarizing the review and why they upheld the decision, uh, to deny or terminate benefits to begin with. And they're gonna be looking for evidence of improper deference. Now, the fact that each reviewer independently sought, uh, similar documents, but not even the iden documents, is not evidence of improper deference. Um, but you will see generally that the carrier on appeal is going to be addressing what evidence was reviewed initially and any new evidence and distinguishing that and explaining how they arrived at the decision to uphold the, um, initial denial. The decision is gonna be upheld by the court, um, unless there is evidence that the decision to deny or terminate benefits is without reason and is unsupported by substantial evidence or is erroneous as a matter of law. Now those are lots of loaded words, but the reality is that the court review under the substantial evidence, um, criteria is rather narrow and the court can't go substituting its own judgment for that of the insurers if it was considering the issue independently. The definition of substantial evidence is evidence that a reasonable mind might accept as adequate to support the conclusion and requires more than a scintilla, but less than a preponderance of an EV evidence. It's sort of like saying that red crumbs from a sandwich is enough evidence to support a denial. It's what I call the red Crumb theory of substantial evidence. Now, this is a difficult evidence, uh, evidentiary standard to meet because the disability carriers will cherry pick the medical evidence and they'll use liar for higher peer review doctors to not only justify the claims to dollar termination, but they'll use these opinions to rebut what your physician, the training physician has had to say. So as a result, the disability carrier is gonna hire a liar for higher, uh, medical provider is gonna fight about what your doctor has to say and is then gonna try to justify the claims denial or termination under this arbitrary capricious standard or review, even if that's not necessarily the case, cuz that's where they're going to draw the line, plant their flag, and fight out what the standard of review is. And you can see that's gonna make all the difference between whether the court upholds or overturns a wrongful decision to deny or terminate benefits. And we, as policy holder claimant attorneys, we take the same stand, but our hill is the de novo standard of review time for a break.
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Nationwide ERISA Attorney Nancy L. Cavey:Welcome back to Winning Isn't Easy, the 11 circuit holes that the de novo review requires the courts to consider all relevant evidence. Now, if you've purchased your disability insurance policy or plan from your employer, any claim that you make is gonna be governed by a federal law called the Employee Retirement Income Security Act. Um, or as we sometimes refer to it, everything ridiculous, uh, uh, in the in the state, uh, since Adam, um, ERISA is a very funny, it's a very strange statute and it's been interpreted by years over the years by federal courts and the United States Supreme Court. And one of the strangest things about ERISA is something called the standard of review. And that's the standard that a court uses to review a denial of disability benefits or termination of benefits. And that standard of review can make or break, um, your case. So let's start out with a little, uh, history. Um, the Supreme Court in a case called Firestone Rubber versus Birch held at the denial of claims under arrest should be reviewed de novo by the courts unless the benefit plan or policy has language that says that the court has to defer to the decision of the plan or the disability carrier, uh, denying the claim of terminating benefits. De novo means the court consider this case independently. So the, the, in my view, the arbitrary and capric standard of review ends up being a handcuff on the judge. And I'll explain why in a moment, uh, versus the de novo standard of review where the judge gets to substitute their judgment and this will make all of the difference in the world. By the way, I wanna tell you there's nothing in the ERISA statute that even addresses the concept of a standard of review. This is something that's been created by the courts. Now, if I had a choice, I wanted de novo standard of review. So what evidence does a court consider under de novo? Now, I'll tell you there hasn't been a uniform answer to this question. In the multiple federal circuits in the United States, there have been three approaches. The first is that the review is limited to what was in the claims file when the denial or termination was issued. The second approach is the review is limited to what was in the claims file when the denial or termination letter was issued, but under certain circumstances will allow additional evidence. And then thirdly, review should be based on all of the relevant evidence regardless of what was before the disability carrier or the plan. Now there are 11 federal circuits in the District of Columbia and each has its own approach. I am primarily based in the 11 circuit, which covers Florida, Georgia, uh, and Alabama. I do practice all over the United States and I'm familiar with each circuit's rule. But for the first time, the 11th circuit answered what, uh, should be reviewed in a de novo situation. This is the case of Harris versus Lincoln National and Harris file a claim for benefits against Lincoln. And at trial, Harris attempted to submit updated medical records at an affidavit. The lower court said no, and ultimately he appeals to the 11th circuit. Lincoln said, look, there shouldn't be an unfettered right to introduce new evidence. There should be a showing of good cause at, at a minimum to present new evidence in an ERISA case, the 11th, uh, circuit shut down that argument and sent the case back to the Federal district court to consider new evidence. Now we don't know ultimately what happened in this case, but that was a great win, particularly in the 11th surrogate, which tends to be rather conservative, uh, in its approach to ERISA disability cases. So that was a great win for Mr. Harris. It was a great win for those in the 11th circuit where the applicable standard is the de novo standard of review. I hope you have learned a lot today about the difference between the de novo standard of review and arbitrary and capricious because as I've said, this really is the first thing that I wanna know. I mean, I wanna know who's the disability carrier. Uh, I wanna know what your medical problems are, but the next thing I wanna know is what's the standard of review because that will impact our remedies, how we go about framing the appeal and ultimately the, uh, decision that we can anticipate from the court. Remember, the um, de novo standard review is a fresh set of eyes where the arbitrary and capricia standard review is that handcuff on the judge. Got it? All right, and I promise there's no quiz here. I'm not gonna send you a quiz at the end of this, uh, podcast or episode so that you can see if you understood the difference between de Novo standard review and the arbitrary appreciate standard review. Okay, I hope you've enjoyed this week's episode of Winning Isn't Easy and I would ask that you consider liking this page, leaving a review and sharing it with your friends and family. Better yet, we just subscribe to this podcast. You'll get notification every week when a new episode comes out. And I hope you tune in to our next episode of Winning Isn't Easy. Thanks.