The Third Circuit is finally catching up to other Circuits in recognizing the importance that a conflict of interest plays in an insurer’s decision to accept or deny a disability claim. The Third Circuit in Miller v. American Airlines noted that the claim administrator acted unreasonably by imposing additional requirements under the Plan; failing to include in its denial letter exactly what the claimant needed to provide in order to satisfy the plan requirements, failing to adequately consider all medical diagnoses and even the occupation in evaluating the case.
On the heels of Miller, our New Jersey Courts have issued another well considered opinion. Connor v. Sedgwick Claims Mgmt. Servs., 2011 U.S. Dist. LEXIS 67988 (D.N.J. June 24, 2011) The court in Connor embraced the reasoning of Miller, requiring that the termination letter provide the “precise information necessary to advise” a plaintiff “how to perfect his claim.”
The denial letter must detail how the claimant “could achieve a favorable disability determination.”
This should improve the quality of denial letters which are necessary to help claimants understand what is really needed to convince the company of their disability.
The Miller also noted that an insurer cannot simply change its mind about paying a disability claim once payments have been issued, unless there is evidence to support their new decision to terminate benefits. The Third Circuit noted “in the absence of any meaningful evidence to support a change in position,” a plan administrator’s “abrupt reversal” of a prior award of benefits is arbitrary and capricious when the plan administrator justifies its reversal on the same type of medical evidence which it initially used as justification for an award of benefits.”
This rationale is ground-breaking in New Jersey, and it will be interesting to see its impact on cases involving long-term disability beneficiaries.
We at Bonny G. Rafel have already been citing these important cases in our briefs to the Court and in our appeals. We can assist you with your pending case, just contact us!