New Jersey Disability Lawyer Blog

The recent Good Morning America November 11, 2009 expose on Hartford's abusive use of video surveillance of its disabled policyholders is just a sample of the rampant use of video as a way to trap insureds and deny claims. Chris Cuomo reported that Jack Whitten, who suffers from a broken neck from a fall, pain and memory loss was captured on videotape reading a magazine, getting into a car and eating taco chips, which formed the basis of Hartford Insurance Company terminating his disability benefits. His doctors assured Hartford that Whitten has severe headaches, short term memory problems and cannot work at his prior job with Walmart. Hartford denied benefits anyway. Fortunately for Mr. Whitten, once the GMA story ran, his benefits were reinstated.
Other disabled people who are surveilled are not so fortunate. Some examples of Hartford's misuse of Video surveillance include Montour v. Hartford Life &Accident Ins. Co., 2009 WL 2914516 (9th Cir.)The 9th Circuit found that Hartford relied on surveillance which did not represent Montour's ability to engage in full time work.
Recently, in Finley v. Hartford, 2009 U.S. Dist. LEXIS 105516 (N.D.Cal. Oct. 26, 2009), Hartford was again admonished for shoddy surveillance. Hartford relied on three doctors who only reviewed medical records and did not examine Mr. Finley The court noted that the activity shown on the video did not prove that Finley can work full time.
The abuses are not limited to Hartford insurance company.
In fact, surveillance companies, hungry for the business send emails to clients offering reduced rates for special all day surveillance over holidays! We recently received an unsolicited offer from such a company, (confusing us with an insurance company), offering their services on Thanksgiving at a reduced rate of $499.00 for the day, since many people are more active on holidays and least suspecting of being followed. This gamesmanship being directed at the disabled is deplorable.

Three recent New Jersey District Court Decisions threaten to undo years of progress in the growing body of law pertaining to long term disability cases in New Jersey. In the aftermath of MetLife v. Glenn, 128 S.Ct. 2343 (2008), we expected that more, not less judicial scrutiny of the acts of claims administrators would occur. The closer the courts inspect the procedures utilized to decide disability claims, the better chance our disabled clients have for a full and fair review of their claim.
New Jersey has unfortunately been moving against this tide. The first case, Scotti v. The Prudential Welfare Benefits Plan, 2009 U.S.Dist LEXIS 64559 (D.N.J.July 23, 2009) involves a man disabled by depression, pseudodementia and cognitive impairments. All of Mr. Scotti's treating and examining physicians confirmed the diagnoses and the functional impairments. The court limited its review to whether Prudential abused its discretion, which means that Scotti carried the burden of proving that the administrative record did not contain substantial evidence to support Prudential's denial. The court found that Prudential had enacted sufficient safeguards to minimize the chance that its decision was tainted by its own self interest to promote its financial interests. The court denied summary judgment for each party, finding that whether Scott's impairments can be validly diagnosed by personal examination is a genuine issue of material fact.
RAFEL COMMENTARY: The Court accepted the opinions of the medical consultants hired by Prudential's captive third party without evaluating their credibility. In other circuits, the courts recognize that these doctors could be "doctors for hire", and their opinions far less than independent. See, for example the evidence discovered in Soloman v. MetLife, 2009 U.S.Dist. LEXIS 51507 (S.D.N.Y. June 18, 2009), showing that the reviewing doctors derived 90% of their income from paper medical reviews for third parties. We can learn alot from our neighbors across the Hudson River. BGRafel

In this New Jersey disability claim based on a back condition including disc herniations, the Court affirmed the District Court's opinion and outlines some important pointers to keep in mind when proving in an ERISA case that the insurer's procedural irregularities require the denial to be overturned.
The Court faulted Liberty who was acting under a conflict of interest {pursuant to Glenn v. MetLife} for its "decisions that disfavored the employee at each crossroads and reliance on experts who merely reviewed incomplete medical records."

Interestingly the peer reviewer suggested that Liberty undertake surveillance of its insured to check her functionality,which Liberty declined to do, noting "surveillance is an aggressive tactic" that itself may constitute procedural irregularity." How can Liberty then, in other cases rush to surveil our clients who have confirmed, significant medical problems which cause functional limitations and restrictions?

Liberty used a Nurse Case Manager to review the appeal, who acknowledged an inconsistency in the views of their hired medical reviewer and the treating physician but then failed to pursue further medical consult to clarify which view to accept. The court reasoned that Liberty cannot turn a "blind eye" to faults in the evidence supporting its consultant's opinions and then use that opinion to support a denial.

The New Jersey Supreme Court recently issued a disappointing decision in Shore Orthopedic Group, LLC v. The Equitable Life Assurance Society of the United States, 972 A. 2d 381 (NJ 2009) with regard to the payment of counsel fees in insurance disputes. Shore Orthopedic had purchased a disability policy to cover some of the expenses of the practice, if their associate orthopedist became disabled.
When the time came to pay on the policy, Equitable denied coverage, claiming the disabled doctor had not revealed a medical condition that had become apparent between the initial application for coverage and the payment of the first premium.
In litigation The Equitable failed to produce its own claim handling guidelines. In the lower court proceeding Shore Orthopedic obtained a court order requiring Equitable to produce its claims manual and awarded Shore Orthopedic $50,000 as a sanction against Equitable's improper conduct in intentionally misrepresenting that such a manual did not exist. However, the court denied plaintiff's counsel's motions for counsel fees.

In a disappointing decision, the New Jersey Supreme Court upheld the lower courts' decision to deny an award of counsel fees. Thus the insured remains saddled with both fighting the unjust denial of his case, and paying his own counsel fees. The Supreme Court refused to consider this a "third party claim" for insurance coverage, although the policy insured a doctor and the beneficiary of the policy proceeds was the entire orthopedic practice.
My concern is that our New Jersey Supreme Court overlooks the extreme financial distress experienced by insureds in New Jersey when their insurance company, who readily accepts the premium payments refuses to pay a legitimate claim without justifiable reason. When the insured is forced to litigate the action, he is faced with an additional expense, that of competent counsel to represent him. Experienced counsel will typically spend hundreds of hours fighting for their client's legal rights to insurance money. But when New Jersey counsel wins the case, the client has to pay their fee, often from the proceeds of the insurance claim. Therefore the insured is not "made whole" by the successful litigation. Until our Supreme Court and Legislature take a closer look at this issue, unfortunately insureds will continue to suffer financially even when they win the battle.