Cigna Dodges Iraq Veteran Lawsuit Challenging Clawback Scheme

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Carmen Castro-Pagan

Cigna Health & Life Insurance Co. defeated a proposed class action accusing it of improperly reducing the disability benefits of a veteran who served in Bosnia and Iraq.

Cigna didn’t violate federal benefits law by not reimbursing the veteran for attorneys’ fees and costs incurred during the administrative appeals process, Judge Kim R. Gibson of the U.S. District Court for the Western District of Pennsylvania held March 28. Moreover, Cigna didn’t violate the Employee Retirement Income Security Act by withholding the veteran’s disability benefits to recoup overpayments—a remedy explicitly provided for by the policy, Gibson said.

The ruling is noteworthy for rejecting a claim of loss of consortium—a claim for damages suffered by the spouse of a person who has been allegedly injured—raised by the veteran’s wife. She alleged that as a consequence of the breach of fiduciary duties, her husband had “diminished performance of his duties” and he exhibited a “marked disinclination to express intimacies or libidinous joy with his wife.”

The issue of whether a claim of loss of consortium that is based on an underlying legitimate ERISA allegation hasn’t yet been addressed by the U.S. Court of Appeals for the Third Circuit, which is the court of appeals that reviews rulings from Pennsylvania federal courts. Gibson, however, relied on several district court decisions within that circuit that have held that ERISA bars loss-of-consortium claims that are based on an underlying allegation that the ERISA fiduciary improperly administered plan benefits. The Fifth and Tenth circuits follow this rational.

In her ruling, Gibson described the veteran’s amended lawsuit as “impressively opaque and incredible difficult to decipher.” The veteran alleged that Cigna “confiscated” his long-term disability benefits to offset his three children’s Social Security benefits.

The veteran’s policy allows Cigna’s subsidiary, Life Insurance Co. of North America, to offset the veteran’s disability benefits by the amount of Social Security benefits that his children receive or are assumed to receive, Gibson said.

Terrence A. Valko represents the veteran and his wife. Morgan Lewis & Bockius LLP represents Cigna.

The case is Patchell v. Cigna Health & Life Ins. Co., 2018 BL 106734, W.D. Pa., No. 3:17-cv-00161, order granting defendants’ motion to dismiss 3/28/18.

Try Benefits & Executive Compensation News