Articles Posted in Recent Court Decisions of Interest

Insurance policies often have different terms of coverage for disabilities caused by “accidental injuries” and “sickness” so it is important that your claim is correctly classified.  A recent case by an endodontist disabled by advanced degenerative arthritis in her hands illustrates the tactics used by insurers to limit coverage.  Chapman v. Unum Life Ins. Co. of Am.  Unum asserted that her claim was based on sickness, which limits disability benefits to age 65.  Dr. Chapman claimed that she was entitled to lifetime benefits under the “accidental injury” clause in her policy on evidence that her arthritis condition was caused by repetitive stress injuries to her hands from work, causing micro traumas evidenced in x rays.

Secondly, Unum claimed that even if the condition was caused by injuries, it was not an accident, imputing knowledge to Dr. Chapman that she was highly likely to suffer this injury by her work.  The court disagreed, explaining, that it “strains credulity to conclude that any endodontist views the possibility of disabling arthritis simply by practicing endodontia as highly likely.  If this were the case, the dental field would be suffering a severe shortage of endodontists.”

The court considered the reasonable expectation of the insured:

The disabled must navigate the maze of insurers’ roadblocks to maintain their disability benefits often when they are too ill to tend to the demands of the insurers.  Insurers aggressively find ways to deny the payment of bona fide disability claims.  Over a decade ago, the Supreme Court recognized that insurers have an incentive to hold onto the benefit dollars they owe to claimants because it clearly improves the company’s finances. Insurance companies have what is referred to as a structural “conflict of interest when a plan administrator both determines eligibility for benefits and pays benefits claims.” Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S. Ct. 2343, 171 L.Ed.2d 299 (2008).

A common thread in disability denials is the company’s decision that the insured can perform “sedentary work” despite their restrictions and limitations.  Sedentary work, simply considers the physical condition of the person- can they sit most of the time, and walk or stand for brief periods of time.  The DOT definition for sedentary work conveniently focuses exclusively on the physical demands and disregards any other aspect such as cognitive.

In Smith v Reliance, Reliance paid LTD benefits out for several years to an executive who had strokes and suffered from heart problems. Reliance then reversed course and concluded Mr. Smith could return to work, alleging he had to prove that he could not perform sedentary work due to a physical limitation on, for example, sitting, typing, or speaking.  The court disagreed, holding that if someone had to prove they could not sit, speak or type, in order to receive disability benefits, “such a rule would erase disability eligibility for all but the bedridden. Some serious diseases are debilitating because of their effect on the mind or because they worsen with stress.” Smith v. Reliance Standard Life Ins. Co., 2019 U.S. App. LEXIS 18518, at *14 (4th Cir. June 20, 2019)

We regularly file appeals of disability insurance denials of long term disability claims.  Our clients are bound by ERISA regulations which require that all appeals must be filed within 180 days of the insurance company denial. We meet with our clients as early as possible following their receipt of the denial, to strategize what evidence to collect to challenge the wrongful denial of LTD benefits. We always demand a copy of the insurance company’s entire claim file, because we have a right to the record and it often provides great insight as to the thoughts of the insurer as they planned their denial of the claim.

The insurance companies that administer these claims are required to adhere to the ERISA regulations as well, which require them to make their appeal determination within 45 days of their receipt of the appeal, unless they establish “special circumstances” to extend the deadline another 45 days, for a total of 90 days.  In our experience, insurance companies regularly ignore these deadlines.  They wait until the first 45 days has gone by, and then ask our client to provide medical information or documentation, even to undergo an insurance medical examination.  The insurance companies state that since they have to wait for this information, they can toll the deadline to make their decision on appeal until our client adheres to their demands.  Aggressive lawyers like us have challenged the insurance company’s right to “toll” the deadline.  Of special concern is the insurance company waiting until we file an appeal to require our client to undergo a medical examination with their doctors.  We object to our clients having such an exam during the appeal.  It is our view that once the denial has been issued, the contractual obligations of our clients stops and is not restored until the denial is overturned.  Of note is a recent case, McIntyre v. Reliance Standard Life Ins. Co., 2019 U.S. Dist. LEXIS 88536 (D. Minn. May 28,, 2019) where the court explained that Reliance could toll the deadline until it received medical records it had ordered from the providers which was not within their control, but could not toll the statutory period for the IME since they could have scheduled it earlier.  We have recently filed several lawsuits against insurance companies when they have not decided the appeal we filed within the statutory deadline.  Our disabled clients are entitled to a full and fair review of their claim on appeal, obviously the insurers are not interested in the financial havoc their denials have on our clients and their families.

For those of us handling long term disability claims for people suffering from chronic back conditions, a clause in the MetLife LTD policies has caused us much tsuris (Yiddish word, “worry”). Their policies contain a limitation for “neuromuscular disorders” providing coverage for only two years for disorders of the spine unless one of six exceptions are objectively proven. Simply stated, this clause impacts a large pool of disability claims, since many of the disabled have back conditions that impair their ability to sustain static positions required for most work, such as prolonged sitting or standing. Some long term back conditions linger despite an absence of radiographs or MRIs, or EMGS documenting evidence of progression. A whole other category of disability, that caused by chronic pain and the side effects of necessary narcotic pain medication, is often overlooked by the insurer eager to deny claims.

We have handled many long term disability cases involving “failed back syndrome” where our clients have neuro-stimulators permanently installed in their backs to help them manage pain. Despite that evidence of the severity of their despairing condition, the absence of an “objective” test showing the precise cause of the spinal dysfunction was used to deny their claim.

Fortunately, the 7th Circuit Court of Appeals recognized the significance of various elements of proof establishing the existence of a neuromuscular disorder which qualifies under the exceptions to the MetLife limited coverage. While MetLife emphasized that there were some equivocal test results showing ongoing radiculopathy (an exception to the limit), the Court of Appeals considered the clinical examination results of the claimant’s own specialists, ongoing consistent testing which aligned with the disorder and past positive EMGs as the objective evidence MetLife arbitrarily disregarded. They reversed the District Court in Hennen v. Metro. Life Ins. Co., 2018 U.S. App. LEXIS 26114 (7th Cir. 2018). This decision fortifies that the insurers must not require only a certain “objective evidence” to establish the necessary proofs.

Our clients often ask how to retain employee benefits while on disability leave.  A source of this information should be an employee handbook or summary of benefits available from the employer.  Often all benefits such as medical coverage or life insurance continues while the employee is on short term disability.  Then if the employee does not return to work and receives long term disability, they are offered to continue such ancillary benefits providing they start to pay the premiums or convert the coverage in some way.  For instance an employer will issue a letter explaining the employee is eligible for COBRA medical coverage for a set period of time if they pay the premiums for the coverage.

An issue arises when the employee indicates an interest in continuing the coverage but the employer fails to submit the necessary paperwork to them. A recent example of this problem occurred in Erwood v. Life Ins. Co. of N. Am._ 2017 U.S. Dist. LEXIS 56348. Erwood left work on disability, but the employer did not inform him or his family of his need to convert life insurance coverage to own it himself in order to remain covered and did not  provide him with the conversion forms. When Erwood died and his family sought life insurance, the carrier, CIGNA denied the claim because no conversion forms were on file. The employer defended its position by claiming that there was a packet of materials sent to Erwood, but the Court held  the packet was inadequate because it did not include the materials necessary to convert life insurance coverage or inform where to access such materials or even where to send them. The employer’s excuse that Dr. Erwood did have access to the life insurance program on its benefits internet portal was not enough. The Court held that “merely making an SPD on its portal does not satisfy its disclosure obligations of the plan administrator, the employer, especially in light of the fact that once Dr. Erwood’s FMLA leave expired, his access to the portal was terminated.” The Court entered judgment for the full life insurance benefit from the employer.

The Court explained that once Erwood, an ERISA beneficiary, requested information from the employer who was aware of his status and situation, the employer has a fiduciary obligation to convey complete and accurate information material to the beneficiary’s coverage and rights even if he has not specifically inquired about it. The fiduciary, in this case the employer, has a duty to inform when he knows that silence might be harmful. So if an employer makes an affirmative misrepresentation or fails to adequately inform a plan participant, that misrepresentation or inadequate disclosure can be material and when the employee detrimentally relies upon it and loses coverage, the employer can be liable.

An action taken by the U.S. Department of Labor to protect the disabled fortunately passed on December 19, 2016, on the eve of the Obama’s departure and will go into effect January 1, 2018.  Claimants counsel breathed a sigh of relief when the amendments to the Employee Retirement Income Security Act of 1974 (ERISA) remained intact despite the new administration’s clawing back on many consumer rights.

We will issue several blogs on the important changes to the regulations to demonstrate how significant the changes are to repair fundamental flaws in ERISA.  The Department of Labor explained that the regulations were enacted

“to promote fairness and accuracy in the claims review process and protect participants and beneficiaries in ERISA-covered disability plans by ensuring they receive benefits that otherwise might be denied by plan administrators in the absence of the fuller protections provided by this final regulation.”

We have been following the Courts’ treatment of mental or nervous disorders limitations in group long term disability policies. (See blog, Disability Caused by Physical Impairment, July 2015)  Recently, the 6th Circuit Court of Appeals joined other courts holding that a claimant is disabled by physical conditions alone, then the mere presence of a psychiatric component does not justify application of a mental health limitation to a claim.  In Okuno v. Reliance Std. Life Ins.Co., 2016 U.S. App. LEXIS 16423 (6th Cir. Sept. 7, 2016),  Reliance applied the one year limit on benefits because there was the presence of a psychiatric component to her claim regardless of the physical component to her disability. The court rejected Reliance’s rationale that as so long as there is a comorbid psychiatric condition the limitation applies.

Every federal circuit court to consider the meaning of the phrase “caused or contributed to by” has read it to exclude coverage only when the claimant’s physical disability was insufficient alone to render him totally disabled. See George v. Reliance Standard Life Ins. Co, 776 F.3d 349 (5th Cir. 2015).  The insurer bears the burden to show that the exclusion applies to the case.  “The effect of an applicant’s physical ailments must be considered separately to satisfy the requirement that the review be reasoned and deliberate.”  See Okuno . In order to overcome the insurers’ application of this mental health limitation to continued benefits, the claimant must claim total disability as the result of a purely physical condition.

What if a physical condition is covered, but the symptoms include depression, which is a mental illness? Courts caution that policy terms and precise medical facts of the claim must be examined.  See, for example, Leight v. Union Sec. Ins. Co. 2016 U.S. Dist. LEXIS 68412 (D.Or. May 24, 2016).   Leight’s Aspergers’ Disorder is expressly exempt from the definition of “mental illness” in the policy but Union Security attempted to apply the mental illness limitation, since the disorder produces disabling symptoms of anxiety and depression.   The court determined that the mental illness limitation did not apply since Aspergers was a ‘covered condition.”

Insurers often balk at paying a disability claim for a condition that has existed for a long time before the individual stops working.  It seems that people that struggle to continue working despite progressive medical impairment are not rewarded for their heroism. An interesting case was recently published in California regarding a woman suffering from pain from chronic migraines.  In Leetzow v. Metro. Life Ins. Co., 2016 U.S. Dist. LEXIS 173698 (C.D. Cal. Dec. 5, 2016), the court recognized that long absences from work show that her condition worsened over time and that it is likely that she was unable to perform with reasonable continuity the substantial and material acts necessary to perform her job, leading up to her disability claim.   The court found it unnecessary for Plaintiff’s condition to abruptly change on that particular day, for her to be disabled for the entirety of the elimination period.

Ms. Leetzow suffered from migraines for 20 years getting more severe, more frequent, (2-5 per week) and more resistant to treatment. Metropolitan Life challenged the viability of the claim, since there was no “objective evidence” of her crippling pain.  Another roadblock to recovering disability benefits is if the impairment is based on a claim of chronic pain.  The court laid the groundwork for a claim such as this.  Since there are no neurological exams for migraines that are likely to be positive, claimant’s personal accounts of her migraine related pain are to be credited, “migraines are an invisible illness and there is often no objective medical evidence to confirm their existence, patients’ personal accounts are the strongest, and often only, evidence of disability in such cases”.

The frequency of medical visits to the doctor was less critical to the Court, since Ms. Leetzow stated that her disability makes it harder for her to initiate and arrange and attend doctors appointments. And she had in the past tried all reasonable treatment for her condition. The court noted,

Many physicians in private practice are offered group discounts for signing up for disability insurance through their medical practice.  While the policies seem to be private contacts, when it comes time for file for benefits, often the insurers assert that the contract is governed by ERISA which grossly limits the rights of policyholders to benefits and suitable, just relief in Court if benefits are denied or terminated.  The Department of Labor’s safe-harbor provision (29 C.F.R. Section 2510.3-1(j).) exempts from ERISA any group-type insurance program an insurer offers to employees or members of an employee organization if all of certain criteria are met.  This fact sensitive analysis requires consideration of who pays the premiums, who collects them; whether the employer endorses the plan whether the employer receives consideration in connection to the program and how involved the employer is in the program administration. In Gooden v. Unum Life Ins. Co. of Am._ 2016 U.S. Dist. LEXIS 75363 (E.D. TN 3/30/16) the court analyzed the facts and determined, against Unum’s objection that the plan qualified under the safe harbour provision.  The clinic received correspondence from UNUM as a request for updated income information. The court determined that a plan that gives group discount solely on the basis that a group of doctors used their employer’s payroll deductions in a  “Flex-bill” arrangement to pay insurance premiums is not considered to be an employer financial contribution.  Here the clinic, the doctor’s employer’s organization did not endorse the program  but remained neutral.  Allowing an insurer to publicize its program is permitted under safe-harbor.  The court explained, “[T]he safe-harbor nowhere requires an employer to stay out of the arrangement altogether-remaining neutral does not require an employer to build a moat around a program or to separate itself from all aspects of program administration”. Finally merely completing a claim form for an employee seeking disability benefits is not a strong indication of endorsement of the policy.

Here at Bonny G. Rafel, LLC  we litigate against the application of ERISA when the facts justify safe harbor protection.  Our clients deserve the right to access to the justice system, and all available remedies, not blunted by the constricts of ERISA regulation.   Bonny G. Rafel, Esq.

Disability insurers love to deny claims based on their medical consultant’s conclusion that the claimant has “sedentary capacity.” The insurer’s vocational counselor swiftly identifies various jobs that the claimant can allegedly perform without performing a full or fair investigation of the transferable skills. Does the inquiry end at the point it is established that the individual can sit in a chair at a desk for a period of time?

Just as important is whether the individual has marketable skills to perform a “desk job”, since virtually every “sedentary” job requires strong computer skills.  In our experience, the qualifications related to real time computer and technology use are under investigated in the insurers’ rush to deny.

We have seen some changes in the collateral information the insurers collect regarding our clients.  For instance. on the “activities of daily living” forms they must complete, our disabled clients are asked whether they own a computer, whether it is a desktop or laptop, what they use the computer for (pay bills, read news, facebook).  Be prepared for these are not innocent questions. It’s direct purpose is to establish that the claimant has full use of a computer and a skill that is “transferable” to the workforce.   In short, claimants should not overstate their computer use at home.

Contact Information