Lisa Pakovich and her former employer’s long-term disability plan had been in and out of court for almost five years when Judge Michael Reagan listened to arguments between Pakovich’s disability attorneys and Verizon Long-term Disability Plan on March 24, 2010. It was the third time he had considered this case in less than a year. He’s not the first judge to consider Pakovich’s claim. Three U.S. Court of Appeals, Seventh Circuit judges heard arguments in Pakovich v. Broadspire Services, Inc., 535 F. 3d 601 in April 2008. The decision rendered on July 25, 2008 has been cited in a number of decisions that have involved disability insurance claims since then.
The matter before Judge Reagan this time was which side’s motion for summary judgment should be granted by the Court. In order to prepare a fair memorandum and order, a review of the history of Pakovich’s claim, while redundant to the Judge, remained important to a decision that could stand as a separate document.
Pakovich’s disability attorney filed the first lawsuit against Broadspire Services/Verizon Long-term Disability Plan (Verizon) on her behalf on June 22, 2005. Broadspire had determined that she no longer qualified for long-term disability benefits under the “own occupation” clause of the long-term disability plan. The Court found that Broadspire had wrongfully terminated her benefits because she was unable to perform the essential duties of her sales position with Verizon Wireless, her “own occupation.” Broadspire was ordered to pay the remaining disability benefits for the 24 months of “own occupation” coverage.
But the Court found that Pakovich did not qualify for long-term disability benefits under the “any occupation” terms of the Plan. Broadspire was granted summary judgment on the “any occupation” claim. Pakovich’s disability attorney filed an appeal.
Because Pakovich had not been evaluated under the “any occupation” provision of the policy, the Court of Appeals ordered the District Court to vacate its grant of summary judgment for Broadspire and send Pakovich’s claim back to the disability insurance plan for reconsideration under the “any occupation” provision of the Plan. This was done on September 4, 2008.
From July 24, 2008, when the Court ordered the Plan to review her claim, through January 30, 2009, Pakovich contends that the Plan never communicated with her. On November 10, 2008, her physician, Dr. Lawrence Harmon, delivered a report of his findings during a July 13, 2008 examination which he claimed continued to inhibit her from gainful employment of any kind through to the present.
Seven months had passed by January 30, 2009, the date Pakovich’s disability attorney filed an instant lawsuit under the Employee Retirement Income Security Act (ERISA) provision U.S.C. § 1132(a)(1)B).The disability attorney argued that the Plan’s failure to make a decision within seven months constituted a “deemed denial.” The attorney claimed this “deemed denial” robbed his client of the long-term disability benefits that were rightfully hers from July 2004 to the present. The disability attorney asked that the Court order the Plan to pay his client the unpaid benefits plus interest and cost of living adjustments. He claimed that as of July 2004, Pakovich’s minimum monthly benefit payments should have been $720.20.
In response, Verizon filed a motion to dismiss Pakovich’s claim, because it claimed that the Court did not have subject matter jurisdiction any longer. Verizon had paid Pakovich’s the full benefits demanded by her disability attorney about a month after she filed action. The disability insurance company claimed that her disability attorneys had “jumped the gun.” Verizon argued that there was nothing left for the Court to decide, thus no jurisdiction.
Pakovich’s disability attorney argued that the Court must become involved because if disability insurance companies discover that they can avoid paying benefits, but agree to pay those benefits after a suit has been filed in Court in order to remove Court jurisdiction over the matter, insurance companies could use this as a means for avoiding the payment of the claimant’s attorneys fees.
The disability attorney also argued that the fact that Verizon alleged to have settled Pakovich’s entire claim against the long-term disability plan did not in fact secure all the rights pertaining to her. Under the U.S. Constitution, Pakovich’s case was an actual, ongoing controversy. She had a right to summary judgment in her favor. Without this, what assurance would Pakovich have that the disability insurance company would not change its decision and withdraw benefits?
She had already spent close to five years seeking benefits which the insurance company now admitted it owed her. This had cost considerable fees and costs since November 2006. As the prevailing party, Pakovich could be entitled to attorney’s fees and costs. The disability attorney urged that meaningful relief still existed that would be denied his client if the Court ruled that Pakovich’s claim no longer had legal significance because the matter has already been settled.
In response, Verizon argued that Pakovich’s disability attorney was desperate. No controversy remained between the two parties. Verizon had agreed that it had owed Pakovich the money she sought during her Appeal. Indeed, the disability insurance Plan had already settled the matter and was paying her long-term disability benefits of $720.20 a month as requested in her complaint.
The Court determined that the law stood on Pakovich’s side in this matter. The existence of meaningful relief was all that the Court needed to determine that the motion before the Court for summary judgment would have some effect in the real world. The Court recognized that Pakovich had indeed spent five years seeking to recover benefits wrongfully denied her. If the Court failed to determine whether judgment should be given in her favor, she would have no mechanism in place to maintain her right to benefits. If she had to take the disability insurance company to court again, she could find herself wading through another 18 months of litigation.
On July 29, 2009, the Court denied Verizon’s motion to dismiss Pakovich’s suit. Verizon Plan then filed a cross motion for summary judgment in its favor. When a motion is filed, the Court must look at the evidence in the light that is most favorable to the person being moved against. If cross motions are filed, the Court has to carefully consider the burden of proof each side would have to present to prevail.
On March 24, 2010, Verizon raised the same objections to issuing summary judgment for Pakovich as it had for dismissing her claim as “moot.” The Court had already determined that meaningful relief could be available to Pakovich, so the claim had merit. Now, her disability attorney rightly pointed out that if the Court endorsed the result sought by the Verizon Plan, it would leave her without the power to find representation if the Plan later reversed its decision to pay benefits.
The Court rejected the Plan’s arguments against Pakovich’s motion for summary judgment. They had already been heard and rejected before. The Court granted Pakovich’s motion for summary judgment, concluding that Pakovich was currently disabled under the Plan’s definition of “any occupation” at the time the decision was rendered, making her the prevailing party in the suit. The Court ordered Verizon Long-term Disability Plan to pay her disability benefits of $720.00 by the first day of each month until she either reaches 65 years of age, or until based upon the terms of the Plan, Verizon finds that she no longer qualifies for benefits.
The Court chose to rule on Pakovich’s motions for attorney’s fees as a separate matter. The order on that matter will be discussed in another article.