Disability Benefits Cutoff Is an ERISA Matter

October 20, 2009 (PLANSPONSOR.com) - An employee cannot move forward with her state law claims a disability benefit plan administrator conspired with an outside doctor to terminate her payments because the issue is completely preempted by federal law, a court has ruled.

Chief Judge Claire V. Eagan of the U.S. District Court for the Northern District of Oklahoma rejected claims by plaintiff Robin Cameron that her collusion allegations against Kemper National Services and Dr. Horace C. Lukens were not related to whether she was entitled to continued disability payments because of a psychiatric disorder.   

Eagan ruled that Cameron’s state law claims dealt with the management of her plan and the termination of her benefits and therefore were properly handled under the Employee Retirement Income Security Act (ERISA).

In addition, the court said that Cameron’s claims against a fiduciary under ERISA fell within the scope of Section 502(a). Eagan found that AEP and Kemper qualified as ERISA fiduciaries and the claims against them could be treated as ERISA claims so that gave Eagan proper jurisdiction in the matter.

In a related issue, Eagan found that, to the extent that Cameron’s claims were not preempted by ERISA, her allegations were foreclosed by Oklahoma’s two-year statute of limitations for fraud.

Cameron had received benefits under a plan sponsored by her employer, American Electric Power Services Corp. (AEP).

She charged that the administrator conspired with Lukens, an independent doctor brought in to assess the extent of Cameron’s disability, by relying on a fraudulent medical exam. Lukens decided Cameron was no longer totally disabled, and based on that judgment, Kemper cut off Cameron’s payments.

According to the court, the Oklahoma Board of Examiners of Psychologists entered a consent order that Lukens had committed ethical violations during Cameron’s exam by misinforming her of the rules of patient/doctor confidentiality.

Cameron then filed her lawsuit alleging, among other things, that Lukens’s exam was a “sham” and that the defendants, including Lukens’s employer, Forest Hills IPA, conspired to keep her from getting continued benefits.

The case is Cameron v. Forest Hills IPA Inc.,N.D. Okla., No. 09-CV-0311-CVE-PJC.