Reliance Standards’ unreasonable and bad faith claims handling , was carefully scrutinized by Judge Reeves, sitting in the Southern District of Mississippi. Reliance and its competitors in the industry, as the Judge notes, “have conflicting missions of deciding who qualifies for benefits and ensuring those decisions do not undermine their own bottom line.” Nichols v. Reliance Std. Life Ins. Co., No. 3:17-CV-42-CWR-FKB, 2018 U.S. Dist. LEXIS 109526 (S.D. Miss. June 29, 2018). This conflict of interest has become very evident to the courts, which frequently criticize the practices of disability insurers; yet insurers refuse to change their ways, seeking to preserve their financial interests.
The case involved 62 year old Ms. Nichols who spent her entire life working as a Hazard Analysis and Critical Control Points Coordinator at a chicken processing plant in Mississippi. Her duties included training employees on quality assurance procedures and inspecting, packaging, and exporting meat products in processing areas, which were maintained at near-freezing temperatures. Ms. Nichols suffers from circulatory disorders, including Reynaud’s Syndrome rendering her unable to tolerate cold temperatures because doing so would cause her arteries to spasm and could lead to serious medical complications, such as gangrene.
Ms. Nichols’ medical conditions clearly prevented her from performing the duties of her occupation, which required exposure to cold. Reliance sought a way to deny Ms. Nichols’ claim turning to the policy’s definition of “regular occupation”—which defines a claimant’s occupational duties as they are “normally performed in the national economy,” rather than “the unique duties performed for a specific employer or specific locale.” Reliance excluded Ms. Nichol’s duties associated with exposure to the cold by generally classifying her job to ignore the meat inspection, packaging, and exporting duties of Ms. Nichols’ occupation and denied her disability claim. Ms. Nichols brought suit in federal court, and she won a resounding victory.
Judge Reeves concluded that Reliance’s determination Ms. Nichols could perform the duties of her regular occupation “ignored both common sense and the record evidence.” The Judge criticized Reliance for selecting an occupation from the DOT which best suited the insurance company denying the claim and ignored material job duties. In fact, Judge Reeves observed, the DOT contains an occupational title that requires meat inspection and packaging, which “has cold temperatures built into its name: Cooler Room Worker (Meat Products).” Judge Reeves determined that it was arbitrary and capricious to deny a claim based on a vocational review that considered only a portion of a claimant’s occupational duties. He further noted that Reliance has acted similarly in the past, citing over one hundred cases that “describe the behavior underlying Reliance’s claims administration as ‘arbitrary,’ ‘blind,’ ‘conclusory,’ ‘extreme,’ ‘flawed,’ ‘fraught,’ ‘illogical,’ ‘inadequate,’ ‘inappropriate,’ ‘incomplete,’ ‘indifferent,’ ‘lax,’ ‘misguided,’ ‘opportunisti[c],’ ‘precursory,’ ‘questionable,’ ‘remarkable,’ ‘selective,’ ‘self-serving,’ ‘skewed,’ ‘tainted,’ ‘troubling,’ ‘unfair,’ ‘unreasonable,’ and ‘unreliable.’”
The court awarded Ms. Nichols past due benefits, court costs, and attorney fees, and ordered payment of all future benefits under the policy. Additionally, the court noted that, given the pervasiveness of Reliance’s unfair claim practices and its failure to respond to courts’ admonishments, punitive damages might be appropriate in the future. The court noted that Reliance has long attempted such claim handling acrobatics in unfairly defining a claimant’s regular occupation. In an earlier case, Reliance relied on multiple accounting sub-specialties in the DOT to define a forensic accountant’s occupational duties, intentionally failing to include travel requirements because Reliance agreed the claimant was medically unable to travel. Shahpazian v. Reliance Std. Life Ins. Co., 388 F.Supp.2d 1368, 1378 (N.D. Ga. 2005).
Unfortunately, Reliance is not alone in manipulating policy language to deny claims contrary to the law. Insurers commonly select occupational titles from the DOT which ignore material and substantial duties of a claimant’s occupation. Not every occupation fits cleanly within a prescribed title, and under such circumstances, disability insurance companies must blend two or more occupational titles to fairly include all of a claimant’s duties.
Bonny G. Rafel LLC represents the disabled to ensure that insurance companies fairly review our client’s claims and to remind insurance companies that the law forbids ignoring evidence that supports a legitimate disability claim.