Can Employer’s Transfer of Coverage Effect an Employee’s Disability Claim?

In the case of Cheryl L. Wallace v. Oakwood Healthcare, Inc. (Oakwood), Plaintiff was employed by Oakwood Healthcare, Inc. Health System as a registered nurse when she became ill in October 2012 and took medical leave. She returned to work on April 7, 2013, but stopped working again on May 13, 2013, and did not return.

Plaintiff filed a claim for long-term disability (LTD) benefits. There were some procedural hurdles she had to jump through since at the time she initially took medical leave in October 2012, Oakwood’s employee welfare benefit plan was funded and insured by Hartford Accident Life Insurance Company (Hartford). The Oakwood Hartford relationship ended on December 31, 2012.

Effective January 1, 2013, Reliance Standard Life Insurance Company (Reliance) became the administrator of Oakwood’s employee benefit plan. Reliance was in charge when Plaintiff returned to work in April 2013 and stopped working in May 2013.

There was some confusion about when, and with what company, Plaintiff filed her initial claim for LTD benefits. Ultimately, she filed a claim with Hartford, but her claim was denied. The denial letter told her that her “failure to request a review within 180 days of [her] receipt of this letter may constitute a failure to exhaust the administrative remedies available under [ERISA] and may affect [her] ability to bring a civil action under [ERISA].”

Plaintiff did not file an administrative appeal, but instead filed an ERISA lawsuit in the U.S. District Court for the Eastern District of Michigan at Flint. She initially named as defendants Hartford, Beaumont Heathcareformerly known as Oakwood Healthcare, and Reliance. Beaumont Helathcare and Hartford were dismissed and the case proceeded only against Reliance.

After reviewing the administrative record, the District Court held that:

1) exhaustion of remedies was not required since Oakwood’s Plan did not affirmatively require exhaustion;

2) Plaintiff proved she was entitled to LTD benefits and calculated the amount to which she was entitled; and 

3) Plaintiff was entitled to attorneys’ fees and costs.

Reliance appealed the District Court’s decision to the U.S. Court of Appeals for the Sixth Circuit (Appeals Court). That Court held that Plaintiff had exhausted her remedies. As for the other issues, the Court determined the administrative record was not developed enough for it to make a decision and remanded to the lower court for further consideration consistent with the Appellate Court’s direction.

Exhaustion of Remedies

The Appeals Court noted that “the district court found that Plaintiff was not required to exhaust her administrative remedies because Defendant’s plan document did not affirmatively require exhaustion, but ‘[t]his court can affirm a decision of the district court on any grounds supported by the record, even if different from those relied on by the district court.’”

The Appeals Court carefully reviewed Reliance’s plan documents, ERISA rules and Sixth Circuit precedent and concluded that “because Defendant did not describe any internal claims review process or remedies in its plan document, the plan did not establish a reasonable claims procedure pursuant to ERISA regulations; therefore, Plaintiff’s administrative remedies must be deemed exhausted.”

The Appeals Court Found the District Court’s Decision Finding Plaintiff Covered Under the Transfer of Insurance Provision Was Not Based on Sufficient Evidence and Remand was Required to Develop the Record.

Plaintiff argued she was covered under the transfer of insurance provisions at the time that Hartford’s policy ended and Reliance’s went into effect. The district court agreed with her. Based on the dates of her disability and dates of the transfer of coverage, defendant argued she was not covered.

The Court of Appeals concluded that because the facts relied on by the district court were “insufficient to allow us to determine whether Plaintiff is covered under the transfer of insurance provision and the corresponding pre-existing conditions limitation credit, we vacate the district court’s judgment and remand for further factfinding.”

Areas the Appeals Court found need to be developed include:

The Appeals Court vacated the district court’s judgment and remanded for further factfinding on the issues as they were articulated by the Appeals Court. The Court instructed: “On remand, the district court may take what additional findings of fact it can based on the administrative record, but it may not look beyond the administrative record. If the district court remands the case to the plan administrator, in view of the court’s familiarity with the record, it may want to retain jurisdiction over future proceedings should the case subsequently return.”

This case was not handled by our law firm, but we feel it can be instructive to those who may have issues concerning the transfer of coverage when their employer changes insurance companies while the employee is on medical leave. If you have questions about this case, or any question concerning your short term disability (STD) benefits or LTD benefits, contact one of our disability attorneys at Dell & Schaefer for a free consultation.

DISABILITY INSURANCE COMPANY INFORMATION
Videos, Questions, Resolved Cases, Lawsuit Summaries & Company Reviews

disability insurance companies complaints

FAQ

Do you help Hartford claimants nationwide?

We represent Hartford clients nationwide and we encourage you to contact us for a FREE immediate phone consultation with one of our experienced disability insurance attorneys.

Can you help with a Hartford disability insurance policy?

Our disability insurance lawyers help policy holders seeking short or long term disability insurance benefits from Hartford. We have helped thousands of disability insurance claimants nationwide with monthly disability benefits. With more than 40 years of disability insurance experience we have helped individuals in almost every occupation and we are familiar with the disability income policies offered by Hartford.

How do you help Hartford claimants?

Our lawyers help individuals that have either purchased a Hartford long term disability insurance policy from an insurance company or obtained short or long term disability insurance coverage as a benefit from their employer.

Our experienced lawyers can assist with Hartford:

  • ERISA and Non-ERISA Appeals of Disability Benefit Denials
  • ERISA and Non-ERISA Disability Benefit Lawsuits
  • Applying For Short or Long Term Disability Benefits
  • Daily Handling & Management of Your Disability Claim
  • Disability Insurance Lump-Sum Buyout or Settlement Negotiations

Do you work in my state?

Yes. We are a national disability insurance law firm that is available to represent you regardless of where you live in the United States. We have partner lawyers in every state and we have filed lawsuits in most federal courts nationwide. Our disability lawyers represent disability claimants at all stages of a claim for disability insurance benefits. There is nothing that our lawyers have not seen in the disability insurance world.

What are your fees?

Since we represent disability insurance claimants at different stages of a disability insurance claim we offer a variety of different fee options. We understand that claimants living on disability insurance benefits have a limited source of income; therefore we always try to work with the claimant to make our attorney fees as affordable as possible.

The three available fee options are a contingency fee agreement (no attorney fee or cost unless we make a recovery), hourly fee or fixed flat rate.

In every case we provide each client with a written fee agreement detailing the terms and conditions. We always offer a free initial phone consultation and we appreciate the opportunity to work with you in obtaining payment of your disability insurance benefits.

Do I have to come to your office to work with your law firm?

No. For purposes of efficiency and to reduce expenses for our clients we have found that 99% of our clients prefer to communicate via telephone, e-mail, fax, GoToMeeting.com sessions, or Skype. If you prefer an initial in-person meeting please let us know. A disability company will never require you to come to their office and similarly we are set up so that we handle your entire claim without the need for you to come to our office.

How can I contact you?

When you call us during normal business hours you will immediately speak with a disability attorney. We can be reached at 800-682-8331 or by email. Lawyer and staff must return all client calls same day. Client emails are usually replied to within the same business day and seem to be the preferred and most efficient method of communication for most clients.

Reviews   *****

H. W.

When I first called Dell & Schaefer from half way across the country, Steven Dell called me backed and he took my case very seriously and acted quickly to help me apply for benefits. His work got me the benefits I deserved. When I stopped getting benefits because the insurance company thought they no longer had to pay them, Steven Dell appealed the decision in a timely fashion all the while reassuring me as I panicked. His knowledge of the law and of my policy made my appeal very strong.

When they denied my appeal he was immediately on the phone with the attorneys for the insurance company and with very strong arguments, he negotiated a significant settlement for me. All during this time he responded to my emails and phone calls in a timely fashion and he was able to reassure me regarding the time that the process took. His staff was also very pleasant and helpful, especially Merlin.

I have really come to respect Steven Dell’s abilities and his integrity. My only regret is that I have never met him in person and have not been able to shake his hand and thank him for all he has done for me.

Read 424 reviews

Speak With An Attorney Now

Request a free legal consultation: Call 800-682-8331 or Email Us