This week’s notable decision is Rudel v. Hawai’i Management Alliance Association, No. 17-17395, __F.3d__, 2019 WL 4302895 (9th Cir. Sept. 11, 2019), where the Ninth Circuit made three significant determinations with respect to ERISA preemption of state laws regulating insurance.  The first is that ERISA § 502(a) completely preempts two Hawai‘i Statutes prohibiting insurers from seeking reimbursement for general damages from third-party settlements, which allowed the case to be removed to federal court.  Second, the Hawai‘i Statutes are saved from preemption pursuant to ERISA § 514.  Lastly, the Hawai‘i Statutes provide the rule of decision for the restated federal ERISA action. Continue Reading Ninth Circuit Holds that Hawaii Statutes Restricting Insurers’ Subrogation Recovery Rights Are Saved from ERISA Preemption

Should an employee’s disability caused by malignant melanoma be subject to a disability policy’s pre-existing condition exclusion where during an alleged “look-back” period the employee was referred to a dermatologist on suspicion of having basal-cell carcinoma?  The First Circuit recently answered this question in today’s notable decision, Lavery v. Restoration Hardware Long Term Disability Benefits Plan, No. 18-1885, 2019 WL 4155038 (1st Cir. Sept. 3, 2019).  In short, the answer is no.

Facts:  Lavery worked for Restoration Hardware as a Construction Associate and then as a Regional Facilities Manager effective May 14, 2014.  In his new position he became eligible for long-term disability (“LTD”) coverage as of June 1, 2014 under a policy insured by Aetna Life Insurance Company.  The LTD Policy contains the following pre-existing condition exclusion:  

Long Term Disability Coverage does not cover any disability that starts during the first 12 months of your current Long Term Disability Coverage, if it is caused or contributed to by a “pre-existing condition.” Continue Reading First Circuit Holds that Aetna Life Insurance Company Abused its Discretion in Applying Pre-existing Condition Exclusion to Malignant Melanoma

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.

Attorneys’ Fees

Eighth Circuit

Lapidus v. Life Insurance Company of North America, No. 4:18 CV 01291 JCH, 2019 WL 4089395 (E.D. Mo. Aug. 29, 2019) (Judge Jean C. Hamilton).  In this dispute over long-term disability benefits under de novo review, the court found in Plaintiff’s favor on the merits of her disability claim but denied her attorneys’ fees.  The court explained that LINA’s mismanagement of Plaintiff’s claim does not conclusively show bad faith and is only one of several factors the court must consider.  LINA’s ability to pay is the only factor weighing heavily in Plaintiff’s favor.  Though LINA’s denial of benefits was improper, LINA relied on legitimate portions of the policy. Continue Reading Your ERISA Watch – Week of September 3, 2019