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Breaking News Post-Loper Bright: ERISA Regulations Stand Strong in Rappaport v. Guardian Life

ÌÇÐÄÖ±²¥ is excited to share a significant victory for our client, Jason Rappaport, in his ongoing case against Guardian Life Insurance Company of America.  On November 22, 2024, Judge Jennifer L. Rochon of the United States District Court for the Southern District of New York issued a ruling that reaffirms the strength of ERISA’s procedural safeguards for claimants in the Second Circuit and beyond.

The decision addresses questions raised by the U.S. Supreme Court’s recent Loper Bright Enterprises v. Raimondo ruling, which eliminated Chevron deference to agency interpretations of ambiguous statutes.  Despite Loper Bright, Judge Rochon confirmed that ERISA’s Department of Labor regulations remain firmly grounded in law and continue to protect claimants within the Second Circuit.

What Does Loper Bright Mean for ERISA Regulations?

The Loper Bright decision created uncertainty for claimants and insurers alike, as some speculated it could undermine the Department of Labor’s authority to enforce ERISA’s claims regulations.  These regulations are essential for ensuring fair and timely handling of disability claims.  Guardian sought to use Loper Bright to argue that ERISA’s procedural safeguards were invalid, but Judge Rochon rejected this argument.

The court reaffirmed that the regulations are rooted in clear statutory authority under §§ 503 and 505 of ERISA, and their enforcement is supported by longstanding federal common law.  Importantly, the Second Circuit’s Halo v. Yale Health Plan precedent, which requires de novo review for procedural violations, remains binding.

Key Rulings in Rappaport

This decision underscores the critical importance of procedural compliance under ERISA and sets significant precedent:

1. Procedural Safeguards Upheld: The court found that Guardian’s procedural violations — including untimely appeals and unjustified extensions — warranted a de novo review of Mr. Rappaport’s claim denial, despite Loper Bright.
2. Reformation Claim Advances: Mr. Rappaport’s claim to reform his policy to include bonuses and commissions as insured earnings will proceed to trial, as Guardian’s motion for summary judgment was denied.
3. Counterclaims Dismissed: The court rejected Guardian’s claim for overpayment recovery, ruling that the relief sought was not permissible under ERISA.

Implications for Insurers

The Rappaport decision is a crucial reminder for insurers:

• • In the Second Circuit: The Halo precedent remains strong, ensuring procedural violations lead to stricter judicial review.  Insurers operating in this jurisdiction must strictly comply with ERISA’s procedural rules to avoid heightened scrutiny.
  • Nationwide: We believe we will see similar outcomes nationwide.  Courts across the country are likely to continue supporting ERISA’s claims regulations due to their clear statutory foundation.  Loper Bright does not diminish these protections, which are critical to ensuring fairness in the claims process.

Looking Ahead

The case now moves toward trial, with pretrial filings due within 30 days.  Our team remains committed to ensuring Mr. Rappaport receives all long term disability benefits he is entitled to under the policy.

A Broader Win for Claimants

This decision is a significant win for claimants in the Second Circuit and nationwide, affirming that ERISA’s procedural safeguards remain a powerful tool for protecting claimants’ rights — even in the wake of Loper Bright.

This outcome reflects the work of Partner Scott Riemer, Partner Jennifer Hess, and Senior Associate Ryan McIntyre.

Stay tuned for further updates as this case progresses. For more information, please feel free to contact us at Riemer Hess.