Recent Developments in Health Insurance, Life Insurance, and Disability Insurance Law

• Pages: 259-310
• Date: 01 July 2024
• Published date: 01 July 2024
• Author: Elizabeth G. Doolin,Julie F. Wall,Joseph R. Jeffery
• Subject Matter: Derecho Público y Administrativo

259

Elizabeth G. Doolin (edoolin@cmn-law.com), Julie F. Wall (jwall@cmn-law.com), and

Joseph R. Jeffery (jjeffery@cmn-law.com) are members of Chittenden, Murday & Novotny

LLC in Chicago. The authors thank the following attorneys for their invaluable assistance:

Kaitlyn E. Luther, Craig M. Bargher, Aimee I. Clare, Ryan H. Voss, and Alex J. Verdugo.

RECENT DEV ELOPMENTS IN HEALTH

INSURANCE, LI FE INSURANCE ,

AND DISABILITY INSUR ANCELAW

Elizabeth G. Doolin, Julie F. Wall, and Joseph R. Jeffery

I. Accidental Death ..........................................................................261

A. Drug Overdoses: “First you take a drink, then the drink

takes a drink, and then the drink takes you.” ........................ 262

B. Sickness/Infirmity and Treatment Exclusions: “There’s

no need for fiction in medicine . . . for the facts will

always beat anything you can fancy.” .................................... 263

II. Disability ...................................................................................... 269

A. Cognitive Abilities Loom Large in Disability

Determinations: “Cognition Reigns but Does Not Rule.” ... 269

B. Claimant’s Work History Not Determinative: “We Ought

Not to Look Back, Unless It Is to Derive Useful Lessons

from Past Errors, and for the Purpose ofProfiting

by Dearly Bought Experience.” ............................................276

C. Improving Medical Conditions’ Effect on Ongoing Claims

Determinations: “I’ve Got to Admit It’s Getting Better.” ....277

III. ERISA .......................................................................................... 281

A. Courts Open the Door to Equitable Relief . . . but Only

Against Fiduciaries ................................................................281

1. Plans’ alleged unfairness works in participants’ favor

for Section 502(a)(3) claims: “The world isn’t fair,

Calvin.” “I know, but why isn’t it ever unfair

in my favor?” .....................................................................281

TIPS_59-2.indd 259TIPS_59-2.indd 259 9/27/24 12:19 PM9/27/24 12:19 PM

Tort Trial & Insurance Practice Law Journal, Summer 2024 (59:2)260

2. Third-party administrator lacked the control necessary

to make it a functional fiduciary: “You seem to be

mistaken about how much control you exercise

over this arrangement.” ....................................................285

B. Procedural Irregularities That Aren’t Bad Enough

to Be Fatal to a Benefit Denial: “I’m Not Bad; I’m Just

Drawn That Way.” ................................................................287

C. The Parity Act and Looking at Different Medical

Necessity Guidelines: “When You Change the Way

You Look at Things, the Things You Look atChange.” ......290

IV. Health Insurance ..........................................................................292

A. Are Some Affordable Care Act Mandates Built on Unfirm

Foundations?: “And I Discovered That My Castles Stand

Upon Pillars of Salt and Pillars ofSand.” .............................292

B. Scrutinizing How Plans Select Medical Necessity Guidelines

and How They Affect Rights Under the Parity Act. “It’s

About Who Controls the Information: What We See and

Hear, How We Work, What We Think . . . . It’s All About

theInformation!” ..................................................................295

C. The Departments of Labor, Health and Human Services,

and Treasury Propose New Parity Act Regulations

for Plans Adopting Medical Necessity Guidelines:

“If We Don’t Get Some Cool Rules Ourselves—

Pronto—We’ll Just Be Bogus, Too!” .................................... 299

V. Life Insurance .............................................................................. 301

A. Revocation on Divorce: “Seems to Be Fair. Split Right

Down the Middle. The House to Barbara; The Mortgage

Payments to Me. The Furnishings, Color TV and Piano

to Barbara. The Monthly Payments to Me. The Insurance

Benefits to Barbara. The Premiums to Me.” ........................ 301

B. Material Misrepresentations: “Why Do People Have

to Tell Lies?” “Usually It’s Because They Want Something.

They Are Afraid the Truth Won’t Get It for Them.” ...........304

C. STOLI Questions: “Whoever You Are, I Have Always

Depended on the Kindness of Strangers.” ...........................308

VI. Conclusion ................................................................................... 310

The issues decided or addressed in this year’s collection of accident, disability,

ERISA, health, and life insurance decisions will be familiar to practitioners

and to regular readers of this article. As always, cases involving accidental

death coverage give rise to provocative questions. Is medical malpractice

TIPS_59-2.indd 260TIPS_59-2.indd 260 9/27/24 12:19 PM9/27/24 12:19 PM

Health Insurance, Life Insurance, and Disability InsuranceLaw 261

an “accident?” Is a heroin overdose an intentionally self-inflicted injury?

When an unprescribed supplement combines with prescription medica-

tion to cause or contribute to an insured’s death, is the supplement a “drug”

for purposes of a policy’s drug exclusion? Several disability insurance deci-

sions this survey period took a close look at the circumstances under which

pain and other physical conditions affect claimants’ cognitive abilities and

arguably prevent them from performing the duties of their occupations.

Another disability insurance decision considered whether an insured’s full-

time work during a period of claimed disability automatically defeated her

claim for benefits. This year’s ERISA discussion reviews two circuit-level

decisions that examined the type of relief available under ERISA Section

502(a)(3), as well as another circuit-level decision that examined whether

a third-party administrator’s claims repricing services made it a plan fidu-

ciary. This year’s health insurance section discusses a district court decision

that vacated and enjoined the enforcement of several Affordable Care Act

coverage mandates, and it examines regulations proposed by the Depart-

ments of Labor, Health and Human Services, and Treasury concerning

non-qualitative treatment limitations under the Mental Health Parity and

Addiction Equity Act. Finally, this year’s article discusses several signifi-

cant life insurance decisions that were issued this survey period. The Texas

Supreme Court settled longstanding disputes over an insurer’s ability to

rescind a life insurance policy due to material misrepresentations made in

applications for insurance, an Illinois Appellate Court concluded the state’s

revocation-on-divorce statute did not have a retroactive effect, and the

supreme courts of Arizona and Georgia clarified the application of their

states’ statutes concerning stranger-originated-life-insurance policies.

I. ACCIDEN TAL DEATH

When it comes to accidental death jurisprudence, Rust Cohle and Fred-

erich Nietzsche may have been right that “time is a flat circle.”1 The focus

once again of the most significant accidental death and dismemberment

decisions this survey period was whether an incident was an “accident.” And

where a death was deemed accidental, courts were called upon to deter-

mine whether the form of accident was excluded from coverage, often in

the context of sickness/infirmity and medical-treatment exclusions. Before

we dive into this year’s medical mayhem, however, we have an update on a

drug overdose decision discussed in last year’s article.

1. T D: T L B D (Home Box Office television broadcast Jan.

12, 2014).

TIPS_59-2.indd 261TIPS_59-2.indd 261 9/27/24 12:19 PM9/27/24 12:19 PM