New Jersey Disability Lawyer Blog

In the third of recent decisions in New Jersey District Court regarding Long Term Disability claims, "Dunn v. Reed Group, Inc and Johnson & Johnson" 2009 U.S.Dist. LEXIS 78857 (D.N.J. Sept. 2, 2009), the Court noted that deference should be given in the "lions share" of ERISA claims and that a conflict of interest should be simply one factor for the courts' consideration.

Here, Dunn pointed out that since Johnson & Johnson stopped all benefits such as medical and life insurance when they denied her disability claim, they benefited financially from their own decision. But the court noted that Johnson & Johnson did not pay for such benefits since the insurance benefits are funded through a trust. Further, the court held the Johnson & Johnson Pension Committee, the claims administrator is walled off from any conflict of interest since a trust funds the LTD program.

The court next considered whether a procedural irregularity, bias or unfairness in the processing of the claim exists. The court found that requesting an IME when all evidence in the record supported disability was a procedural irregularity. Deciding that Dunn could perform a sedentary job without a discussion of her skills or capacity and how these skills transferable to sedentary job was also not based upon substantial evidence. The court reasoned "Defendant has failed to connect the medical evidence to Dunn's actual physical capacity." The court remanded the case for further review by Johnson & Johnson.

B. Rafel commentary: The court's decision regarding the structural conflict disregards evidence regarding The Reed Group's incentive to recommend the denial of claims. The contractual relationship between such a third party claims administrator must be closely examined through discovery. The decision to remand this case will give the administrator the opportunity to repair its mistakes. In the meantime, this disabled person is deprived of disability benefits for years, and without the funds to pay its counsel. Although Dunn is the "prevailing party", the court did not make a decision regarding counsel fees. In such cases, the plaintiff should be awarded fees, as a deterrent to similar claim denials in the future. Otherwise, these ERISA abuses will continue unabated.

The second case, Kao v. Aetna and Towers Perrin Forster & Crosby, Inc. 2009 U.S.Dist LEXIS 75181 (D.N.J.August 25, 2009) involves a 59 year old woman disabled by the after affects of breast cancer. Her disability involved her cognitive problems which are caused by the chemotherapy, fatigue and arthralgias related to her disease process and treatment regimen, including medication. Her doctors viewed her as a credible historian and not malingering.

Aetna's peer reviewers denounced the disability without ever evaluating her, basing their opinions, in part, on Kao's ability to perform home chores such as laundry and her ADL's. The medical reviewers challenged Kao's claims of her cognitive impairment, claiming that there were no valid tests of her cognitive ability. The court upheld the denial on many bases.

The court rejected Kao's assertion that only in the final denial did Aetna disclose what type of clinical evidence Kao should have collected to refute the denial. Although Kao proved that Aetna's doctors had not reviewed a crucial medical form completed by her doctor, the Court found that to be inconsequential. The court rejected Kao's expert vocational analysis since it was based on the "platform of subjective data that Aetna rejected as untenable." The court rejected Kao's claim that she was entitled to review the medical reviews before the final decision was made so that she could rebut the evidence since there was no new evidence relied upon, only medical reviews conducted of the evidence in existence.

Bonny Rafel commentary: It remains to be seen how performing some home chores and taking walks correlates with an ability to work full time on a sustained basis for a demanding employer. We are troubled by the court's acceptance of an argument that Kao's disability needed to be proven with "objective evidence", when the very opinions of her board certified medical treating doctors are considered "objective."

One bright light in this otherwise dark outcome is that the court expressed no opinion as to whether, during the pendency of administrative appeal a claimant is entitled to rebut appeal-level documents that raise a novel ground for denial or otherwise implicate the issues that the claimant had no opportunity to address in preparing the appeal.

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