ERISA Preemption

Preemption is a word that is often heard in connection with lawsuits involving employee benefits. Basically, preemption means that any claim asserted under state law which relates to matters governed by the federal statute, known as ERISA, are made ineffective as to that particular claim. Federal laws that relate to interstate commerce or tax matters are supreme, or “trump” the state laws.

Congress found that the protection of employee benefit rights was a matter that affected interstate commerce as well as the federal taxing power, and so Congress made the ERISA statute supreme as far as matters relating to employee benefit plans. Under state law, an insurance contract in Alabama is also subject to bad faith law. When a claim for bad faith is established, it may give rise to claims for mental anguish damages and punitive damages. However, as to insurance policy providing, for example, long-term disability benefits through an employer, ERISA will “trump" state law. Only the remedies found in ERISA will be allowed if there is a breach or claim. These remedies do not include claims for mental anguish damages or punitive damages. The only exception to this is the fact that the U.S. Supreme Court has left open the possibility that in some breach of fiduciary claims, punitive damages may be part of a form of equitable relief. However, for typical benefit claims, only explicitly noted ERISA damages are recoverable, which does not include mental anguish damages and (most of the time) punitive damages.

When Mild Doesn't Mean "Mild"

Many of our clients have claims denied because the insurance company will assert that there’s no objective evidence supporting any restrictions and limitations. This is often confusing because often one or two treating doctors are asserting that there are functional restrictions and limitations for the patient, and the patient, as well as co-workers, all have verified restrictions and limitations. Accordingly, it is necessary to look at the claim record to try to figure out what the insurance company is really saying.

Frequently, we find when reviewing the claim record that this boilerplate comment is made when X-rays or other diagnostic tests reflect mild loss of disk space or mild nerve impingement, or some other use of the term “mild” or even “minimal”. For example, if a client had an X-ray that showed mild loss of disk space, the insurance company may take that to mean the loss of disk space in the back is not very significant and so there must be no significant problem. This is a complete misapprehension of what the term “mild” means in the medical context.

“Mild” in the medical context refers to the degree or measurement of the loss or change and does not correlate to the level of pain or loss of functionality. For example, one patient with mild loss of disk space may have much greater levels of pain and loss of function as opposed to another patient with severe loss of disk space. In fact, even the degree or measurement utilized by the person reading the X-ray, usually a radiologist, is not standardized. This means that one radiologist may think that there is a mild loss of this space, and another may call it a minimal loss of this space, and yet a third may call it a moderate loss of disk space. The comments, therefore, are a subjective interpretation as to what is viewed in the film.

So the next time you or someone you know has a claim denied for lack of objective proof, remember that it may well be that “mild” does not mean “mild” in this situation. Obtain an attorney experienced in employee benefit litigation.

Proving Pain

When pain plays a role in a disability claim it is not safe to assume that claimants’ reports of pain will be accepted by the insurance company as proof of disability. After all, two individuals can have the same, exact condition, for example, herniated disks of the L4-5 area of the back, but one may have very little pain and the other may have excruciating pain. It is therefore necessary to prove pain to verify and weed out all those individuals who may seek a disability without having any real restriction or limitations.

Patient credibility is one area where this can be proven. A treating doctor can provide proof of physical findings that corroborate or verify the complaints of pain. The doctor may also comment on the patient’s credibility and cross test the pain complaints with various movements. Other individuals observing this person can also verify patient credibility. For example, a co-worker who sees a grimace or sweat, or signs of fatigue, by an individual in pain when that individual does not readily know he or she is being observed may be useful. Other facts may also help, such as a sudden withdrawal of activities that were previously enjoyable but which cause pain. A position of financial hardship resulting in economic loss, such as having to sell a house, car or boat, etc. can assist in proving pain. Finally a patient diary kept every day may help prove pain.

There may be many other ways unique to the facts of each person’s case. This underscores the need to obtain an experienced ERISA attorney early on in the claim person.

Is an ERISA Peer Review Really a Peer Review?

A peer review is typically a review and critique by one expert of another expert’s opinion. In order for this critique to have any merit, of course, it must explore the basis of the opinion and point out why the expert’s opinion is wrong.

In the world of ERISA, however, a physician peer review is, more often than not, a purchased opinion intended to support a termination or a denial of benefit by an insurance company. For example, if a treating physician provides an opinion as to her patient’s restrictions and limitations, then a peer review of that opinion should point out any problems with the opinion with specific reference to findings in the medical records which point to a different, or contrary, conclusion than the one asserted by the treating doctor. There may also be reference to medical or scientific literature, which might reflect that the treating doctor overlooked something. However, this is not what occurs the overwhelming majority of the time.

Instead, insurance companies will often hire a doctor to espouse a different opinion than the treating doctor without ever having examined the patient, and of course without ever pointing out why the treating doctor was wrong. The purchased opinion is often “boiler-plate” language or conjecture designed to support a prior decision made by the insurance company. Insurance companies do this because the claim procedure regulation requires that they utilize a qualified medical professional on an appeal. The purpose of the regulation, in my opinion, is to require fair evaluation of the treating physician opinions. Buying an opinion to support a preordained decision falls short of this. Nonetheless, this is what occurs in many of the cases we see. We are keeping track of the doctors doing this but their ranks are growing. It is easy money for the doctors, and certainly much easier than treating patients and worrying about reimbursement from health insurance carriers.