The case of Spears v. Liberty Life Assurance Company of Boston (Liberty) began when Plaintiff was employed by United Technologies Corporation (UTC) and covered by a disability insurance program offered by her employer and administered by Liberty. It was undisputed that prior to the onset of numerous symptoms, including nausea and daily migraine headaches, Plaintiff was a good worker in her job as an executive administrative assistant.
After her symptoms began, she was unable to focus on her job, so in March 2008 she quit working. Liberty granted her short-term disability (STD) benefits for a few months, but then denied her STD benefits as well as her application for long term disability (LTD) benefits. Thus began a long road where Liberty would deny Plaintiff Spears disability benefits, Plaintiff would file an administrative appeal, Liberty may extend benefits briefly and then deny them again until ultimately, Plaintiff filed an ERISA lawsuit in the United States District Court for the District of Connecticut.
In response to both parties filing Motions for Summary Judgment, on March 31, 2015, the Court remanded the case to Liberty and “found that Liberty’s handling of Spears’ claim for Short Term Disability (“STD”) and LTD benefits was arbitrary and capricious. The Court so found because it was ‘deeply disturbed by the pervasive errors underlying Liberty’s review of her claim, despite its many opportunities to perform a proper review.’ Specifically, the Court found that ‘each and every peer review report upon which Liberty relied to deny STD and LTD benefits suffered from numerous and serious flaws, which render[ed] them insufficient to supply the substantial evidence necessary to support Liberty’s denial decisions.” [Citations omitted.]
The Court’s remand order included specific instructions on how Liberty should handle its reevaluation of Plaintiff’s claims. The Court’s remand order also noted that since the Plan gave Liberty the discretion to determine benefit eligibility and to construe the terms of the policy, it had reviewed Plaintiff’s lawsuit under the abuse of discretion standard. In its remand order, the Court cited numerous errors Liberty had made in denying disability benefits and included four specific instructions:
- Liberty must evaluate whether Plaintiff’s medical records support a finding of disability, not whether they support a diagnosis of Lyme disease or any other particular diagnosis.
- Liberty must pay close attention to deficiencies in peer review reports. The Court recommended that, due to the multiple deficiencies in the reports, Liberty should consider ordering an independent medical evaluation (IME).
- The Court instructed Liberty “to perform a full and fair review that complies with the ERISA claims regulations.”
- Liberty must not discount post-elimination period medical records as irrelevant without a reasonable explanation.
After reevaluating Plaintiff’s claim for LTD benefits on remand, on June 16, 2016, Liberty once again denied Plaintiff LTD benefits stating essentially that her medical records did not support her claim. The Court noted that this denial completely overlooked a multitude of tests that supported her claim including an MRI and CT scan that verified brain abnormalities and a positive test for Lyme disease. Once again, Plaintiff pursued an administrative appeal. Ultimately, LTD benefits were again denied and Plaintiff again appealed to this ERISA court.
This time around the Court reviewed the denial de novo and disagreed with Liberty’s denial of Plaintiff’s LTD benefits. The Court found that Liberty did not follow the Court’s instructions on remand in addition to missing certain deadlines. Ultimately, the Court agreed with Plaintiff and ordered Liberty to pay her LTD benefits.
Liberty’s Failure to Comply with ERISA Claims Procedure Deadlines on Remand Triggered De Novo Review
At the time of the Court’s March 2015 remand order, it held that Liberty had substantially complied with its ERISA obligations and therefore, applied the abuse of discretion standard of review. In the intervening time period, on April 12, 2016, the Second Circuit “rejected the substantial compliance doctrine, finding it “flatly inconsistent with” ERISA, and held that de novo review would be triggered by a plan administrator not following the ERISA claim review procedures.” Halo v. Yale Health Plan, 819 F.3d 42, 56 (2d Cir. 2016).
Liberty tried to convince the Court it was not required to follow all the ERISA claims procedures, particularly established deadlines, on remand, but only needed to follow the Court’s four specific instructions. The Court was not convinced and held that because Liberty “not only continued to violate the ERISA claims procedure regulation on remand, some of the errors it committed were identical to the ones Liberty committed pre-remand and which the Court identified in its March 2015 Remand Order remanding the case to Liberty. Even worse, Liberty violated portions of the Remand Order that expressly required it to take certain actions.”
Accordingly, the Court determined de novo review of Liberty’s denial of LTD benefits was the proper standard.
De Novo Review Shows Plaintiff Sustained Her Burden of Proof and is Entitled to LTD Benefits
In addition to missing many ERISA deadlines, Liberty made many substantive errors in its denial of LTD benefits on remand. Some of them included:
- Providing incorrect peer review information to several different peer review physicians of different specialties which included a primary diagnosis of simple headaches. This downplayed the severity of her migraine headaches which were persistent and caused her to go to the Emergency Room. This gave an erroneous picture of her medical issues to peer reviewers who were supposed to be impartial.
- Selecting two peer review specialists, one in gastroenterology and one in endocrinology, when her symptoms were debilitating migraines and other related issues. Liberty asked the wrong specialists the wrong questions.
- There was no global assessment of Plaintiff’s physical and mental condition, but each reviewer was asked a discrete question, so there was no comprehensive analysis of how her medical condition affected her ability to work.
- Each one of Liberty’s peer reviewers issued opinions that were flawed. The Court conducted a detailed analysis of each report and explained why the report could not be relied upon as a basis to deny Plaintiff LTD benefits.
- Liberty’s IME did not support its denial of LTD benefits to Plaintiff. The questions the examiner asked, which were provided by Liberty, did not properly assess Plaintiff’s medical issues.
- In its denial following remand, Liberty cited four reports that the Court specifically found to be flawed in its remand order.
- Liberty “made light” of the Social Security Administration (SSA) award of disability benefits to Plaintiff when the administrative law judge (ALJ) who made the award made a “detailed credibility assessment” of Plaintiff.
- Liberty’s denial ignored the report of the vocational expert for the State of Connecticut’s Labor Department who found Plaintiff disabled.
- Liberty failed to use new peer reviewers following remand.
The Court concluded that, “In sum, the Remand Appeal violated ERISA claim procedures and does not provide sufficient evidence supporting Liberty’s denial of Spears’ LTD benefits.” The Court held there was ample evidence to support Plaintiff’s claim that she was disabled within the meaning of the LTD plan, and she was entitled to benefits. The Court ordered her to submit a damages brief in order to determine the amount of the final award.
If you have questions about this case, or any other question about your disability claim, whether for STD or LTD benefits, or whether with Liberty or any other disability insurance company, contact one of our attorneys at Dell & Schaefer for a free consultation.