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An insurer-friendly court decision making it harder for individuals to challenge benefit denials in court should be overturned, the Labor Department told a federal appeals court ( Ariana M. v. Humana Health Plans of Tex., Inc. , 5th Cir., No. 16-20174, amicus brief filed 8/15/17 ).
The U.S. Court of Appeals for the Fifth Circuit should overturn its 1991 decision in Pierre v. Conn. Gen. Life Ins. Co., because that decision is out of step with “nearly every sister circuit” and with the policy goals of the Employee Retirement Income Security Act, the DOL argued in a brief filed Aug. 15. Pierre also makes it harder for ERISA plan participants to get a full and fair review of their benefit claims, the DOL said.
Pierre forces courts to give deference to an ERISA plan administrator’s factual determinations, regardless of what a given plan document says. Last month, the Fifth Circuit voted to rehear a case in which the Pierre rule was used to uphold Humana Health Plan of Texas Inc.'s refusal to cover a teenager’s eating disorder treatment. Although the judges who heard that case sided with the health plan, they all signed on to a “special concurrence” saying that Pierre should be re-examined or overturned.
This brief by the Labor Department is the third significant ERISA-related amicus brief the department has filed since the Trump administration began on Jan. 20. During the Obama administration, the Labor Department filed an average of 13 ERISA-related amicus briefs per year, including 15 filed in 2009 alone, according to a Bloomberg BNA analysis.
By contrast, the Trump-era DOL has weighed in on just two other ERISA cases so far. On July 12, it asked the Sixth Circuit to block pension plan administrators from imposing strict requirements before accepting domestic relations orders that award benefits to a participant’s former spouse. Two weeks later, it argued that workers who are denied benefits based on undisclosed plan terms should be able to pursue equitable claims against their plans, even if there’s no evidence of intentional deception. The department also signed onto a multiagency amicus brief in a U.S. Supreme Court case involving ERISA’s church plan exemption.
In the Fifth Circuit case, the DOL joined a growing chorus of voices calling for the overturn of Pierre. Four groups filed briefs urging this outcome: AARP, the Alliance for Eating Disorders Awareness, the Texas Department of Insurance, and the state’s Office of Public Insurance Counsel. The insurance department argued that Pierre frustrates a Texas regulation attempting to give insured individuals a more favorable standard of judicial review when they challenge benefit denials in court. The eating disorder group argued that insurers with “ Pierre deference” are encouraged to deny coverage for monetary gain and to avoid making impartial evaluations of medical necessity.
For its part, the DOL argued that Pierre undercuts ERISA’s guarantee that benefit claims will receive a “full and fair review.” The decision also allegedly creates an increasingly “disuniform system of ERISA enforcement,” as more states adopt bans on discretionary clauses in insurance contracts, which have the effect of forcing courts to review benefit denial decisions more skeptically.
“An ERISA plan that is national in scope may well have its decisions reviewed de novo in most jurisdictions (due to the increasing prohibition of discretionary clauses), but for participants in that same plan who happen to bring their claims in the Fifth Circuit, the administrator will be entitled to deferential review of its factual findings,” the DOL said.
The brief was filed by DOL attorneys Nicholas C. Geale, G. William Scott, Thomas Tso, Jeffrey M. Hahn, and Katrina Liu.
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