MacNally v. LINA (CIGNA) highlights the complications that can occur when a person has both a disability and life insurance policy with the same insurance company. The terms of the policies can vary slightly. In this case, LINA claimed that the provisions under the life insurance policy held by William MacNally were different from the provisions under his long-term disability plan. Even though the life insurance policy included a clause waiving premiums if MacNally became disabled, LINA claims that the life insurance policy had a stiffer requirement than the long term disability policy.
Because MacNally’s long-term disability plan also had an earnings clause requiring LINA to continue paying him benefits if he was unable to earn 80% of his predisability earnings, even if he was able to work in an occupation for which he is education and experience qualified him for, he could still collect long-term disability benefits under the “any occupation” terms of his disability plan. The life insurance policy required that MacNally not be able to work at all in a full-time job in order to qualify for the waiver of his life insurance premiums.
While CIGNA ultimately found that MacNally was disabled and qualified for long-term disability under “any occupation” as defined in his LTD plan, the life insurance company found that he still did not qualify for a waiver of his life insurance premiums.
A summary of Mr. MacNally’s history will demonstrate why the Court found LINA’s decision wrong.
When MacNally first applied for long-term disability benefits in July 2002 he was able to present documentation from his physicians that demonstrated that his condition had worsened over time. He had resisted the advice of his doctors and his employer for two full years, preferring to continue working as long as possible before he could bring himself to accept the label of “disabled.” It wasn’t until his employer finally pressured him into disability leave, then downsized his executive position, that MacNally finally applied for disability benefits, and the waiver of life insurance premiums included as a benefit in his life insurance policy.
Long-term Disability Attorney Argues Against LINA’s Actions
It was with some struggle that MacNally succeeded in perfecting his long-term disability claim, LINA claiming that he had not supplied sufficient medical information. He wisely hired a firm that was skilled in long-term disability insurance litigation to represent him through the appeals process. His disability attorneys supported his appeal with 18 pieces of evidence– medical records, letters from colleagues, letters from MacNally and his wife, a job description of MacNally’s responsibilities as an executive, and general information about multiple sclerosis.
This information wasn’t enough, because LINA asked for more records. After these were supplied, MacNally’s file was sent to a neurologist who confirmed that MacNally was unable to do his job. His application for long-term disability under the “own occupation” provision of his disability plan was approved retroactive to July 3, 2002. Shortly after, LINA approved the waiver of premium benefit for MacNally’s life insurance plan.
Over the next four years, MacNally applied for Social Security disability income benefits, for which he was approved in February 2004. Social Security found that he was disabled as of September 1, 2003. When the “any occupation” reassessment of MacNally’s qualifications for benefits rolled around in 2004, LINA approved his continuing benefits under the stricter definition of disability. It wasn’t until he had been receiving benefits from LINA for four years, that the life insurance plan chose to reassess whether or not he qualified for the waiver of insurance premiums.
In order to retain his disability benefits, MacNally had been providing supplemental information on a regular basis. It was asked to update his information in July 2006. He did so by completing a new claim form. His treating neurologist also filled out a physical ability assessment (PAA) form. He also provided other medical records in August 2006.
Information that LINA saw on the physical ability assessment form suggested that MacNally might actually be able to return to work, so the life insurance company ordered a transferable skills analysis (TSA). Two jobs were identified, one being his former position as an administrator in a healthcare facility. Even though his disability insurance plan could not terminate his benefits because the positions would not allow MacNally to earn over 80% of his previous income, his life insurance policy was worded slightly differently. His premiums would only continue to be waived if he was unable to work in any position at any wage level.
MacNally was unable to successfully convince LINA that he was unable to work in any position. No amount of information presented by his treating physicians would reverse LINA’s conclusion that he could return to work using the skills that he already had if he chose to. In fact before he had completed his appeals process, LINA had concluded that he was able to do five different sedentary jobs, not just two. He had no option but to take his claim to Court.
Court Reviews LINA’s Decision Through Fresh Eyes
So how did the Court review LINA’s decision? LINA agreed that the Court should look at the life insurance company’s decision through the evidence present in MacNally’s administrative record. His disability attorney agreed that this was the proper form of review.
MacNally’s disability attorney challenged LINA’s conclusion that he could work on two grounds. First, he argued that MacNally was not capable of working in any occupation, including the five identified in LINA’s TSA’s. Secondly, the disability attorney argued that the life insurance policy included an implied wage threshold.
While the Court could not agree with the second argument, there was no question that MacNally’s medical records supported his complete disability from any occupation. While this might not have been true in 2002, when his own occupation required that he be able to work 60 to 70 hours per week, the evidence suggested that by September 2006 when LINA terminated the waiver of life insurance premium, MacNally would no longer be able to work a 40 hour day.
The Court found that MacNally would be unable to work not only because his fatigue was so severe when it occurred, but it was also completely unpredictable. Notes in his medical record reflected that there were days in which he could not drive because he was too exhausted to manipulate the brake and gas pedals.
The Court also found that the Social Security administration’s decision finding MacNally disabled was a factor worth considering. While LINA was not obligated to consider this information, it rejected the Social Security decision, depending instead on the opinion of a physician that had no expertise in the area of multiple sclerosis. The Court found showed a bias against continuing to pay the waived premiums. LINA had also depended on a neuropsychological test report which did not consider any of the complicating symptoms of multiple sclerosis, only whether MacNally had any mental/cognitive difficulties that would keep him from working.
The Court concluded that LINA had consistently ignored medical evidence that didn’t fit into the picture life insurance plan was trying to create– a picture of someone who should be able to pay for their life insurance because they were able to work. A great deal of evidence had been distorted and taken out of context.
Not only did the Court order that LINA reinstate the waiver of his life insurance premiums, the Court also ordered LINA to pay his attorney fees. The reason behind this was twofold. LINA had not acted toward MacNally as a fiduciary acting in his best interest and in the interest of other plan participants. Rather the life insurance company had pursued a plan of action demonstrating that its goal was to deny MacNally’s claim by only considering evidence is found favorable to itself. The Court found that because LINA had behaved as an adversary rather than a fiduciary, MacNally have the right to recover his attorney’s fees.
MacNally’s only requirement in order to take advantage of the attorney’s fees was to file an affidavit document for the attorney’s fees and costs he was seeking to recover within 30 days. LINA would then have 15 days in which to respond.
This case highlights the fact that not only long-term disability benefits can be terminated. Other benefits that can be awarded because of disability, such as the waiver of insurance premium clause in MacNally’s life insurance policy, can also be wrongfully denied by an insurance company. It is very important to contact an attorney who is skilled in handling claims against these insurance companies.