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An undiagnosed pre-existing condition will not result in denial of long-term disability benefits

On November 4, 2009, a ruling was handed down in the Sixth Circuit Court of Appeals that will surely have insurance companies looking at how they define “pre-existing condition”. Ruth Mitzel is certainly happy that the court affirmed the lower court’s decision that Anthem Disability Insurance Company, her employer and insurer, had wrongfully denied her long-term life insurance benefits.

When Mitzel was diagnosed on June 18, 2004 with Wegener’s granulomatosis (WG), an auto-immune disease that is life-threatening. Her diagnosis came just five days after she qualified for her employer’s long-term disability plan. She continued working until her condition required hospitalization on June 3, 2005, just shy of a year later.

She applied for short-term disability leave from work first, which she exhausted. Mitzel then filed a claim with Anthem Life Insurance Company (“Anthem”) on Nov. 1, 2005 for long-term disability. Anthem denied Mitzel’s claim on May 18, 2006, claiming that Mitzel had a pre-existing condition as defined by the LTD Benefit Booklet.

In the denial letter, Anthem cited three visits to her doctor in the three months before her coverage began. The company claimed that this look-back proved that Mitzel had “a sickness or injury for which” she had “received medical care or services (including doctor visits, prescriptions and diagnostic tests) during the three months prior to” her “effective date of coverage.” The words “for which” would prove pivotal in the court’s decision.

The problem for Anthem arose from a discrepancy between different documents defining the conditions for long-term disability benefits. One 35-page document known as the LTD Benefit Program excluded anyone with a pre-existing condition from coverage whose disability began less than 12 months after the effective date of coverage. The definition of a pre-existing condition in this document was a sickness or injury “for which you received treatment, or where symptoms were present to the degree that an ordinarily prudent person would seek treatment” within the three months before “your effective date of coverage.”

Anthem provided policy holders with two additional resources: 1) Descriptions of Anthem’s Flexible Benefits Plan and Summary Plan Description (“Summary Plan Description”), a condensed summary of the plan on the internet and 2) Long-Term Disability: 2005 Benefit Booklet” (“LTD Benefit Booklet”), an 11-page booklet. The definition of pre-existing condition in the LTD Benefit Booklet was not as sweeping as that in the LTD Benefit Program document. Anthem claimed that the disclaimer on the last page of the LTD Benefit Booklet deferred any conflict to the plan document.

Mitzel appealed the denial of long-term disability on June 8, 2006, claiming that she had not been under treatment for a known ailment. Anthem hired a physician to evaluate Mitzel’s medical history. His conclusion was that Mitzel was already ill and under a doctor’s treatment for the symptoms of WG and thus was disqualified from receiving benefits under her employer’s long-term disability insurance plan. Her appeal was denied.

Submitting letters from the two physicians who had treated her, Mitzel made one final appeal. Both physicians noted that at the time they were treating her they had no idea that her symptoms were in any way related to WG. One physician suspected lupis, and the other an injured ligament.

Anthem hired another physician to review this new information. His conclusions supported Anthem’s original denial. On February 1, 2007, Anthem denied Mitzel’s final appeal.

Mitzel filed a lawsuit in the US District Court for the Northern District of Ohio against Anthem on July 3, 2007, seeking a reversal of her disability claim denial. On July 14, 2008, the magistrate judge overruled Anthem’s denial of Mitzel’s long-term disability benefits, finding that Anthem’s interpretations of “pre-existing condition” were arbitrary, capricious and contradictory. Anthem appealed the decision to the Sixth Circuit Court of Appeals.

The case was reviewed by a three judge panel. The primary focus was on the definition of “pre-existing condition” as this had been the basis of the lower court’s decision. The Court applied a rule that has arisen from numerous cases; this rule construes any ambiguities against the drafting parties. Anthem wanted the Court to rule that a pre-existing condition is “a sickness or injury for which [Mitzel] received medical care or services.”

No one disputes that Mitzel was under treatment in the three months prior to qualifying for coverage, but her doctors did not know what they were treating. Both of the primary policy documents, while listing what treatment consisted of, assumed that doctors would be treating a specific condition. Thus, she was not being treated “for” a condition, even though she was under treatment.

This was a contested point, with one of the judges favoring Anthem’s broader definition of pre-existing condition. The other two judges argued that because Mitzel’s physicians were not treating her for a diagnosed disease, Anthem’s denial of benefits based on the fact that she had been under treatment for “a” sickness was arbitrary and capricious. By of vote of two to one the United States Court of Appeals for the Sixth Circuit Court affirmed the Northern District of Ohio’s decision, therefore awarding benefits to Ms. Mitzel.

If you have been denied long-term disability insurance benefits under similar circumstances, contact a disability insurance attorney today. In claims for disability benefits, a claimant should always be aware that an insurance company will always look for pre-existing medical conditions as an excuse to deny benefits. The laws related to pre-existing condition clauses are not the same in every state.

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