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Federal Court Reverses Unum’s Denial of Long-Term Disability Benefits

Attorney Rachel AltersAuthor: Attorney Rachel Alters

The case of Arturo J. Otero v. Unum Life Insurance Company of America has an extensive procedural history going back to 2005 when Otero first applied for disability benefits due to his atrial fibrillation. He had a contentious bout with Unum at that time and returned to work on a part-time-basis in 2010. He continued to pay premiums to Unum for disability coverage.

In February 2013, Otero filed a new claim for long-term disability. His atrial fibrillation condition has worsened and he could no longer work even part-time. Unum fought very hard in its attempt to avoid paying Otero benefits and denied his claim. After exhausting his administrative remedies, Otero filed a lawsuit in the Alabama federal district court under the provisions of ERISA. Ultimately, in a 68-page opinion, the court sided with Otero and concluded that this was a new claim, not a reopening of the old claim, and that Otero was entitled to long-term disability benefits.

Standard and Extent of Review

1. Court concludes de novo review is appropriate.

Unum argued that the court should give its denial decision deference and not reverse its decision unless the court found Unum acted arbitrarily and capriciously. The court disagreed and, after reviewing the entire administrative file, even going back to Otero I, held that the court “will not defer to a non-decision that occurred as the result of the mechanical expiration of time as opposed to the actual exercise of administrative discretion.”

The district court then determined its review would be de novo. This means it could make its own decision without deferring to any decision made by Unum during its evaluation of the claim through its administrative review.

2. Documents to be included in court’s review.

The court noted that despite Unum’s argument that the review should be limited to documents in the administrative record and the court should not consider new evidence presented by Otero, Unum also presented documents that were not part of any administrative record. Finally, Unum was forced to agree that, under the de novo standard of review, the court was “not limited to the facts available to the Administrator at the time of the determination.”

3. The court reviewed this as a new claim and not a reopening of the old claim and referenced the current case as Otero II.

“The current claim that Dr. Otero was disabled as of February of 2013, more than six months after the termination of his prior claim, means that the court treats this claim as a new disability claim under the terms of the policy, even though it is based on a recurrent condition.”

Disability Under the Terms of the Policy

The proper standard for evaluation was not how Dr. Otero performed his duties with the group he was working for prior to his disability. According to Unum’s policy, the proper evaluation was “how the job is performed in the national economy.” Since Otero’s atrial fibrillation condition prevented him from working 40 hours a week or taking call, he was disabled from working in his own occupation.

Evidence Otero lost 20% of his income.

The policy required Otero to present evidence that he suffered a 20 percent loss in “indexed monthly earnings” for the three years preceding his February 2013 claim for disability. Unum asserted that the administrative record lacked any evidence of the loss so Otero’s claim for disability must be denied.

After a detailed discussion of evidence that was or was not in the administrative record, evidence Otero should have supplied but failed to do so, and evidence Unum should have asked Otero to supply, but failed to do so, the court concluded:

“While Dr. Otero could have done a better job of providing the relevant documents, because Unum did not address his claim, did not provide a basis for denying the claim, did not specifically request the W-2 forms, and did not clarify the issues, his confusion about what documents were key is understandable. Under these circumstances, the court will not allow Unum to take unfair advantage of the confusion that it created when the lack of information resulting from that confusion is remediable.”

The court remanded to Unum to obtain the missing W-2 forms.

Court’s Final Order

1. Unum waived its right to challenge Otero’s eligibility for coverage due to his part-time work when it continued to accept premium payments from Otero. Therefore, Otero was covered under Unum’s disability policy.

2. As of February 2013, Otero was unable to perform his regular occupation as a neurologist.

3. If, on remand, proper calculations determine that Otero’s income decreased by 20 percent as of February 3, 2013, Unum is required to pay him long-term disability benefits. Unum was given 45 days to provide the court its final determination of the claim.

Although this case was not handled by our office, we believe it can be instructive to those struggling to obtain disability benefits for a second claim for long-term disability benefits after returning to work and once again becoming disabled. Whatever stage you are at with your disability benefits, feel free to call us at Dell & Schaefer for a free case evaluation.

» More Unum disability insurance claim cases.