Helton v. AT&T

Unpleasant surprises are waiting for workers who are denied employee benefits by their employer or insurance company and want to sue for the benefits they were promised. These claims are likely governed by the Employee Retirement Income Security Act of 1974 (ERISA). The text of this long and complex statute does not say so specifically, but court decisions interpreting it have decided that the plaintiffs in these lawsuits does not have many of the basic rights most people expect in a trial. In an ERISA case, there is no jury and rarely are the parties allowed to call witnesses to testify about disputed facts. The plaintiff’s ability to take depositions or receive responses to written discovery requests is also limited. Instead, the trial court in an ERISA case acts much like an appellate court in an ordinary case, asking itself not whether the worker is entitled to benefits but, depending on the language of the benefit plan, whether the insurance company’s decision- making process was reasonable. An ERISA “trial” usually consists of the parties’ lawyers arguing before the judge over the meaning of a paper record generated by an insurance company or other plan administrator.

Just as appellate courts frequently find there is no need for them to decide a dispute because the party complaining about a possible legal error never brought their complaint to the attention of the trial judge, trial courts hearing ERISA cases often refuse to consider medical records, expert opinions, or other documents because the plaintiff failed to provide them to the claims administrator before filing a lawsuit. Most sick or injured employees submit their applications for benefits before it occurs to them that they might need a lawyer. But because of ERISA’s unusual procedural requirements, hiring the right lawyer early in the process is often necessary to prevent the employee from waiving his or her right to have the evidence most favorable to them considered by a reviewing court in the event that a lawsuit becomes necessary.

In Helton, the plaintiff, when she was approaching 65, learned she had been eligible to receive pension benefits eight years earlier, and requested that her former employer, AT∓T, pay her the total amount of her past-due benefits. AT∓T denied the request, claiming that the plan did not allow “retroactive pension payments.” AT∓T argued their denial was reasonable because they sent the plaintiff letters with the forms necessary for the plaintiff to begin receiving benefits at age 55, but she never responded. The plaintiff claimed she never received the letters. At trial, the plaintiff introduced evidence that, around the time AT∓T sent the letters, it received an e-mail message from the plaintiff asking for confirmation that she could not begin receiving benefits until she was 65. She also introduced “screen shots” from AT∓T’s records indicating two failed mailings of the benefits package to her address and the testimony of an AT∓T employee, and two former employees concerning the mailing process. The trial court considered all of this evidence and awarded the plaintiff her past due benefits.

AT∓T appealed, and the U.S. Court of Appeals for the Fourth Circuit decided the trial court was correct to consider all of this evidence, except for the testimony of the two witnesses who were no longer employed by AT∓T at the time of the benefits decision. AT∓T cited Sheppard & Enoch Pratt Hospital v. Travelers Ins. Co., 32 F.3d 120 (1994) to support its argument that the trial court was not allowed to consider anything outside the “administrative record”, i.e., the materials the plan administrator considered in making the benefits decision. The Fourth Circuit rejected this argument: “Had Sheppard allowed plan administrators the unchecked opportunity to pick and choose what evidence in their possession to include in the administrative record, as AT∓T argues, we would have effectively surrendered our ability to review ERISA benefit determinations because plan administrators could simply omit any evidence from the administrative record that would suggest their decisions were unreasonable.” Helton at 12.

The Court reasoned that AT∓T’s position was also inconsistent with some of the factors which trial courts were instructed to consider in Booth v. Wal-Mart Stores, 201 F.3d 335 (4th Cir. 2000). According to the Court, factors (3) “the adequacy of the materials considered to make the decision”;(4) “whether the fiduciary’s interpretation was consistent with … earlier interpretations of the plan” and (8) “the fiduciary’s motives and any conflict of interest it may have” will usually require the Court to consider evidence outside the administrative record. “Thus, were we to accept AT∓T’s reading of Sheppard and its progeny as absolutely barring considerations of extrinsic evidence, we would preclude our district courts from assessing many of the factors we have directed them to consider in determining whether an ERISA administrator abused its discretion.” Helton at 14.

Evidence is “known to the administrator” – and may be considered by the trial court – if the information was acquired by the company’s employees or is within the company’s books and records. Helton at 18. The testimony of witnesses who were not AT∓T employees at the time of the benefits decision did not pass this test, but all of the other extrinsic evidence introduced by the plaintiff in Helton did.

The Helton decision has also more explicitly clarified the plaintiff’s right to pre-trial discovery in ERISA cases. When representing plaintiffs, our firm usually sends discovery requests to insurance company defendants seeking the details of the insurance company’s conflict of interest as the party with authority to decide whether the worker is eligible for benefits and also the party responsible for paying those benefits if it determines that the worker is eligible. For example, we ask for information about the financial incentives facing the employees making the claims decision and, in disability insurance cases, statistics about how often the insurance company’s hired medical experts have previously found applicants to be disabled. As recently as this February, we have received objections to these requests on the grounds that the admissible evidence in the case is limited to the administrative record and the applicable plan documents.

I doubt similar objections will be successful after Helton because the decision favorably cites decisions from the Tenth and Fifth Circuits explicitly recognizing the need for discovery related to the plan administrator’s conflict of interest. “Without discovery, a claimant may not have access to the information necessary to establish the seriousness of the conflict of interest.” Helton at 14 (quoting Murphy v. Deloitte & Touche Group Ins. Plan, 619 F.3d 1151, 1158 (10th Cir. 2010)). And Helton’s reference to the need for extrinsic evidence to evaluate three of the routine Booth factors will make it more difficult to argue that discovery should only be permitted in exceptional cases.

But even under the reasoning of Helton and similar recent cases, which have made ERISA proceedings look a little bit more like normal lawsuits, the ERISA plaintiff who forgets to make an important piece of information available to the insurer or claims administrator prior to filing a lawsuit will be under a serious disadvantage. For this reason, it is hard to exaggerate the importance of hiring a lawyer who understands the urgency of protecting the worker’s rights at the earliest stages of the claims process.

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