This month’s Friday Five explores recent decisions including deference to initial benefits decisions in de novo reviews, the recovery of fees incurred in pre-litigation administrative proceedings, proof of disability due to fibromyalgia under the “gainful occupation standard, the impact of COVID-19 on changing deadlines to file administrative appeals, and an insurer unintentionally waiving its contractual right to cancel a policy.
- Does an Initial Grant of Benefits Matter? Seventh Circuit Says No in LTD Fibromyalgia Case. In Oye v. Hartford Life and Accident Insurance Company, the claimant sought reinstatement of her long-term disability benefits for fibromyalgia after the insurance company reevaluated her claim and terminated benefits. The parties agreed to proceed with a “paper trial” based on the administrative record, and the district court ruled in favor of the insurer, finding that the claimant had not established that her fibromyalgia was sufficiently disabling to prevent her from continuing in her role as a director at an international accounting firm. On appeal, the claimant argued that the district court should have deferred to the insurer’s prior determination that she was disabled, which had relied on the same physicians’ reports the court ultimately found unpersuasive. The Seventh Circuit disagreed and affirmed, holding that the insurer’s initial grant of benefits had no preclusive effect under the district court’s de novo review. The appellate court further found that the district court had sufficiently explained why it discounted the claimant’s physicians’ letters and emphasized that it was not the appellate court’s role to reweigh the evidence or determine which medical opinions were most credible. Oye v. Hartford Life & Accident Ins. Co., 140 F.4th 833 (7th Cir. 2025)
- Can You Recover Attorney’s Fees for Pre-Litigation Appeals? Tenth Circuit Says No. In Stark v. Reliance Standard Life Insurance Company, the Tenth Circuit addressed, as a matter of first impression, whether ERISA permits the recovery of attorney’s fees incurred during pre-litigation administrative proceedings. The claimant sought to recover fees and costs associated with her successful administrative appeal of the termination of long-term disability benefits. She argued that 29 U.S.C. § 1132(a)(3)—which allows ERISA-plan participants to seek equitable relief for plan violations—was broad enough to encompass recovery of fees and costs incurred before litigation began. Joining other circuits that had already considered the issue, the Tenth Circuit rejected that argument. The court explained that ERISA’s fee-shifting provision, 29 U.S.C. § 1132(g), does not authorize awards for work performed during administrative proceedings and that § 1132(a)(3) cannot be used as a backdoor to obtain otherwise unauthorized fee recovery. Stark v. Reliance Std. Life Ins. Co., --- F.4th ----, 2025 WL 1872420 (10th Cir. July 8, 2025)
- Does Ongoing Pain Defeat Termination of LTD Benefits? Only If It Precludes Sedentary Work. In Halloran v. Unum Life Insurance Company of America, the claimant sought reinstatement of his long-term disability benefits after they were terminated following a reevaluation under the plan’s “gainful occupation” standard. The claimant, a sheet metal fabricator, had injured his shoulder in 2019 and, despite surgery and physical therapy, continued to report pain and functional limitations. The insurer terminated benefits after twenty-four months pursuant to the terms of the ERISA plan under the then governing “any gainful occupation” standard. Applying the de novo review standard, the court found that the claimant failed to establish continuing disability under the plan because he was not precluded from performing sedentary work. Notably, the court discounted physicians’ notes that focused on the claimant’s inability to perform the physical demands of sheet metal fabrication, reasoning that those limitations did not prevent him from engaging in sedentary work within the meaning of the “gainful occupation” standard. Halloran v. Unum Life Ins. Co. of Am., Case No. 24-cv-199, 2025 WL 1833176 (D. Minn. July 3, 2025)
- Can a Procedural Error Trigger a Remand? Yes, When the Deadline Keeps Changing. In Sarruf v. Lilly Long Term Disability Plan, the court considered a claim for long-term disability and life insurance waiver of premium benefits under ERISA, after the plaintiff’s administrative appeal was denied as untimely. The plaintiff, who developed long COVID symptoms in 2020, submitted his appeal based on a February 2024 deadline provided by the plan administrator’s representative after months of correspondence. However, without explanation or acknowledgment of the prior correspondence, the insurer denied the appeal as untimely. The claimant challenged his denial of benefits, and the court found that the administrator’s inconsistent and erroneous representations about the deadline warranted equitable estoppel, especially given the evolving guidance tied to COVID-19 extensions. The court held that the plaintiff reasonably and detrimentally relied on the communicated deadline and remanded the matter for full administrative review, including post-denial medical evidence. While the court declined to award benefits outright, it found remand appropriate due to the procedural error and awarded the plaintiff reasonable attorney’s fees under 29 U.S.C. § 1132(g). Sarruf v. Lilly Long Term Disability Plan, Case No. C24-0461, 2025 WL 1837744 (W.D. Wash. July 3, 2025)
- Can an Insurer Cancel a Policy After Accepting Premiums for Two Years and Without Notifying the Insured? The Fifth Circuit Says No. In Edwards v. Guardian Life Insurance of America, the Fifth Circuit reversed a district court’s grant of summary judgment to an insurer that had denied a life insurance claim following a policyholder’s death. The insurer argued that the group policy had been properly canceled in 2022, after the insured became the sole covered employee at her business in 2019. Acknowledging that the insurer had a contractual right to cancel the policy, the Fifth Circuit held that the insurer waived its right by continuing to accept premium payments for 26 months after the right vested. Because the insurer accepted premiums long after learning it could cancel the plan—and provided no notice of cancellation—the court held that it was equitably barred from denying the claim and rendered judgment in favor of the claimant. Edwards v. Guardian Life Ins. of Am., --- F.4th ----, 2025 WL 1718263 (5th Cir. June 20, 2025)
