In Allen v. Unum Life Insurance Company of America, after her long term disability benefits were denied, plaintiff, a pharmacy technician who suffered a serious back injury in a car accident, filed a federal lawsuit under ERISA. She included a claim for defamation based on two letters sent by the Plan administrator. One letter was to her treating physician asking for more information about her medical condition. The other letter was to her attorney explaining why her benefits were terminated.
Unum moved to dismiss the defamation count, alleging it was preempted by ERISA. A Virginia federal district court agreed with Unum and dismissed the defamation claim, holding: “Allen bases her defamation claim on two letters sent by Unum in the course of processing her benefit claim for long-term disability. As these letters–and, by extension, Allen’s defamation claim—arose in course of processing a benefit claim, Allen’s claim relates to an ERISA plan and, thus, ERISA preempts it.”
Plaintiff’s Defamation Allegations
After suffering a serious back injury in a car accident leading to a spinal fusion, Unum granted the plaintiff short term disability benefits, then partial long term disability benefits. After 24 months, the definition of long term disability under the Unum plan changed, so near the end of the 24 month period, Unum began a review of her medical condition to determine whether or not to extend the long term benefits.
In its course of review, Unum sent a letter to her treating physician. Unum later sent a letter to her attorney explaining why it decided to deny her long term disability benefits.
- Letter from Unum to Allen’s treating physician which she alleged to be defamatory: The letter stated that Unum was trying “to gain a better understanding” of the medical data. It included the sentence, “Inconsistencies were noted on this call between Ms. Allen’s report that she had difficulty with sitting, and her report that she sits in a kitchen chair to perform a number of household chores, including unloading dishes from dishwasher and folding her laundry.”
- Letter from Unum to Allen’s attorney explaining why it denied her claim for long term disability benefits: In this letter, Unum explained it found inconsistencies between statements made by Allen in comparison.
Plaintiff based her defamation allegations on the content of these two letters.
ERISA Preempts Defamation Cause of Action When Allegations Based on Routine Claim Review Process
The Virginia federal district court noted that the purpose of ERISA’s preemption provision is “to ensure that employee benefit plan regulation would be ‘exclusively a federal concern.'” Since Allen’s defamation claims were based on Unum’s fiduciary conduct during the claim review process, she was essentially seeking an alternative remedy to that afforded her under ERISA.
The court noted that there are cases where the allegations of defamation are based on conduct of a Plan Administrator that have nothing to do with the processing of the claim. In those cases, ERISA will not preempt the state law claims. But, the Allen case is not in that category.
In this case, the behavior about which a plaintiff complains was “undertaken by the plan administrator in the course of carrying out its plan responsibilities.” Accordingly, the sole remedy is under ERISA which preempts the defamation claim.
This case was not handled by our office, but it may provide claimants guidance if they think they have a claim for defamation against their disability insurer. If you need assistance with a similar matter please contact any of our lawyers for a free consultation.