A recent case known as Laake v. Western &Southern Financial Group Co. Flexible Benefits Plan, et al. in the 6th Circuit, illustrated what a maximum recovery in an ERISA case looks like. Sherry Laake was unable to work due to an undifferentiated inflammatory arthritis (most consistent with seronegative rheumatoid arthritis), significant osteoporosis, chronic pain, chronic fatigue, chronic recurrent pulmonary/sinus symptoms, recurrent abdominal pain/vomiting, and IgG subclass deficiency. Suffice it to say, she was in daily pain, constantly tired, and frequently ill. Western & Southern Financial Group Co. (WS) allowed her claim to be paid for the first 24 months, but then denied her claim contending an exclusion barred further payment on the claim.
WS at first said there was a mental illness exclusion. The pain symptoms she experienced constituted a mental illness, and therefore under the policy terms benefits would not be paid for past 24 months. Ms. Laake went through the process challenging that decision, but WS would not change its mind. She filed a lawsuit.
In the lawsuit WS contended that the mental illness exclusion actually was a reference to chronic pain syndrome and chronic pain syndrome was limited to 24 months of payments. This was based on the peer review of Dr. Sarah Kramer, a physician hired simply to provide an opinion and who never examined Ms. Laake. The district court found that WS was required to provide a specific basis for its decision and not a general basis, and therefore there was not proper notice to Ms. Laake as to why her claim was denied. The court was using the arbitrary and capricious standard of review, so it found the conduct arbitrary but decided to remand the case back to WS to again decide the claim again. This time it must give specific notice of the basis of its decision.
Ms. Laake provided further information of her disability and demonstrated that she did not have Chronic Pain Syndrome, but rather she suffered chronic pain from multiple conditions. This did not matter to WS, which considered the remand a complete waste of time. It again denied the claim. Back to district court.
The court again reviewed the evidence, but this time it applied the de novo standard of review. When a proper delegation is made to a specific entity the court normally applies the arbitrary and capricious standard of review if that entity decides the claim. Here, because the plan reserved discretion to the Benefits Committee, and given that this committee did not actually decide the claim, de novo was appropriate. The delegation of discretion was only valid as to the entity given that discretion. The court again found Ms. Laake disabled using both objective and subjective proof presented by Ms. Laake.
The court awarded the maximum recovery allowed Ms. Laake for her disability claim. She received all back benefits, but also attorney's fees and costs. Ms. Laake was eligible for ongoing future benefits subject to WS's further review.
There had been a plan document request during the process made by counsel for Ms. Laake with a delayed response. As a result, the court awarded statutory penalties too at the maximum rate of $110 per day, for each day after the first 30 days and until all plan documents were received. That was the maximum recovery allowed for penalties under the law.
Altogether the maximum recovery then is past benefits, fees and costs, the right to an ongoing review of the claim for future benefits, and then statutory penalties. This was all affirmed on appeal to the 6th Circuit. So for all she had been through … waiting on benefits for years, going to district court twice and then an appeal … is that enough? That is all there is under the law unless a breach of fiduciary duty claim arose separately. And that only affords equitable relief. Is it time for our lawmakers to bring more fairness into the arena of ERISA?