• Broadspire Disability Insurance Claim and Denial

Cytec Industries and Broadspire Services discontinue disability insurance benefits for army veteran suffering from PTSD

An Appeals Court recently upheld the decision by Cytec Industries and Broadspire Services to discontinue short-term disability benefits for an army veteran suffering from post-traumatic stress disorder. The case is a classic example of why it is imperative for the insured to respond timely to the request of the insurance company for additional/monthly forms documenting the ongoing disability. Let’s take a look at the Court’s decision.

Dennis Anderson worked at Cytec Industries in Waggaman, Louisiana since 1976. By 2005, he was working as a “panel operator,” running the computers and machinery that manufacture sulfuric acid. This job requires sharp concentration and attention to detail. In August 2005, Anderson and his disabled/wheelchair-bound wife were displaced by Hurricane Katrina. They settled in Atlanta, GA and have not returned to New Orleans.

Anderson suffered from post-traumatic stress disorder (PTSD). He had served in the Vietnam War and in the first Gulf War. While he worked at Cytec he was able to manage the PTSD with medication and treatment. Anderson did not have his medication with him when he evacuated before the hurricane but received care within weeks at a PTSD clinic at the Atlanta Veterans Affairs hospital. Treatment notes from the psychiatrist and nurse describe an increase in PTSD symptoms with Anderson, including nightmares, intermittent auditory hallucinations, and irritability. Anderson was prescribed medication and began attending a weekly support group for PTSD patients.”¨ Cytec’s facilities reopened within several weeks. The company set up trailers for employees with damaged homes and offered to place Anderson in one. He declined. On several occasions he reported that he could not leave his wife in Atlanta nor could he find appropriate housing for her in New Orleans.

As a Cytec employee, Anderson was enrolled in two disability benefits programs, the Short-Term Disability Plan (STDP) and the Long-Term Disability Plan. The STDP requires an employee to have a “total disability” or be “totally disabled” to receive disability benefits. It defines “total disability” and “totally disabled” as “the complete inability of the Participant, due to sickness, injury or pregnancy, for which the Participant is and remains under the care of a licensed physician, to perform any and every duty pertaining to his occupation with his Employer and/or any similar occupation which his Employer may provide.” Anderson applied for STDP benefits in early October 2005. He supported his claim with a form filled out by his treating psychiatrist, Dr. Aida Saldivia.”¨ Dr. Saldivia noted that Anderson “has an increase in symptoms of PTSD due to evacuation from [New Orleans] – he’s having difficulty sleeping, having flashbacks and mood is depressed. He has difficulty concentrating and focusing on any one task.” The form showed that Anderson was unable to perform one test for “cognition/memory” but was able to complete other cognitive tests. The form also indicated that Anderson was able to go about the “activities of daily living” without assistance; in fact, during the time period in question, Anderson was actively involved in caring for his wife. Dr. Saldivia prescribed medication, noted that Anderson’s plans to return to work were “undetermined at this time,” and stated that Anderson’s symptoms had intensified and “rendered him incapable of performing job duties.”

Broadspire, the third-party administrator of the STDP who determines whether an insured qualifies for benefits, found support for a functional impairment and approved Anderson for STDP benefits from September 27, 2005 through November 21, 2005. Broadspire, skeptical of the extent of Anderson’s functional limitations, sent the case for an independent “peer review” and sought additional documentation from his care providers to determine whether benefits should continue after November 21. Anderson never sent any additional forms documenting his ongoing disability from Dr. Saldivia or others.

Dr. Elana Mendelssohn, Psy.D., conducted the initial independent peer review. She examined Anderson’s treatment records from September and October 2005, the form completed by Dr. Saldivia, and Anderson’s job description; she did not personally examine Anderson. Dr. Mendelssohn found that Anderson’s medical records did “not support a functional impairment.” She considered the symptoms Anderson had reported but stated that “it was unclear how these symptoms were impacting [Anderson’s] functionality”; she emphasized the lack of “specific examination findings or behavioral observations” that would substantiate an impairment in cognitive or psychological functioning.

In December 2005, Broadspire denied an extension of Anderson’s STDP benefits. Anderson appealed and sent to Broaspdire 38 additional pages of progress notes from Steven Barrett, his therapist. Broadspire then instituted a second independent peer review, this one conducted by Dr. Lawrence Burstein, who holds a Ph.D. in psychology. Dr. Burstein reviewed Anderson’s medical file, the prior peer review conducted by Dr. Mendelssohn, and Anderson’s job description. Dr. Burstein found that the medical records did not support a finding of functional impairment that would have precluded Anderson from working from November 21, 2005 through early March 2006, when he completed his review. Like Dr. Mendelssohn, Dr. Burstein found that the medical records documented Anderson’s subjective complaints and the impressions of his clinicians, but that they did not “contain specific examples of the claimant’s behavior or measurements of the claimant’s cognitive functioning to support these impressions.”

Broadspire informed Anderson that his appeal was denied in March 2006. Anderson appealed again. His final appeal was handled by Cytec’s plan administrator, Van Rensalier. She denied relief on July 10, 2006. In May 2006 – while Anderson’s final appeal was pending – Cytec terminated his employment.”¨ Anderson’s mental health underwent a temporary but severe downturn after Cytec’s final denial of his STDP claim. Auditory hallucinations that had plagued him intermittently intensified, and Anderson voluntarily entered inpatient treatment after recognizing signs of “homicidal ideation” toward his former employer. In 2007, after retaining counsel, Anderson attempted to submit additional materials to Cytec in further support of his STDP claim, including medical records from July 2006 to early 2007 and two brief notes from Veterans Affairs psychiatrists stating that Anderson was “completely unable to work” and “totally disabled.”

After getting no response from Cytec, Anderson filed suit in September 2007. After deciding to consider the administrative record as it stood at the time of Anderson’s last appeal – and to ignore the additional material Anderson mailed in afterwards – the district court found that the plan administrator did not abuse her discretion in denying the disability benefits and dismissed the case. Anderson timely appealed.

Legal Standards

The case was then heard by the United States Court of Appeals for the Fifth Circuit. The Court stated that, first, the Court must determine if the decision made by the plan’s administrator or fiduciary was arbitrary and capricious. This standard is used where a benefits plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan, as the STDP does here. A decision is arbitrary if it is made without a rational connection between the known facts and the decision.

Secondly, the Court must determine if the plan administrator’s decision to deny benefit is supported by substantial evidence. Substantial evidence is more than a scintilla, less than a preponderance, and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

The Court’s Analysis

The Court found that Anderson had failed to demonstrate that the denial of his benefits was arbitrary and capricious. The Court concluded that the evidence presented by Anderson to be mixed. The Court noted that Anderson had a history of working while managing his PTSD, and had made statements that he could not return to work because of housing issues for his wife. Additionally, there were notes from Anderson’s therapists indicating his judgment, insight, thought processes, and memory as fair and intact. Meanwhile, the reviewing experts of Cytec did not question the PTSD diagnosis or downplay the significance of Anderson’s self-reported symptoms of depression, persistent nightmares, flashbacks, hallucinations (which he reported during early visits but repeatedly denied in most subsequent visits), and anxiety, or the observation that Anderson’s concentration was “impaired.” Instead, these experts demonstrated that Anderson had not provided anything objective showing that the PTSD-related disability prevented him from performing his job, and concluded that the medical records did not support a finding of functional impairment that would have precluded Anderson from working. The Court noted that while these experts took into consideration Anderson’s subjective complaints and the conclusions of his doctors, the experts were not required to accept the opinion of Anderson’s treating physician that his symptoms rendered him incapable of performing his job. The Court noted that in this ‘battle of the experts’ the administrator is vested with discretion to choose one side over the other. The Court held that Cytec’s decision to follow the opinion of its experts was neither arbitrary nor an abuse of discretion.

The Court then stated that Cytec’s reliance on the analyses of two medical experts, each of whom are specialists and qualified experts in fields specifically related to Anderson’s symptoms, constitutes substantial evidence supporting Cytec’s STDP determination. Cytec’s decision, the Court concluded, is supported by substantial evidence – i.e., “more than a scintilla, less than a preponderance” of relevant evidence. Also, the court mentioned the fact that the independent experts reviewed Anderson’s records but did not examine him personally also does not invalidate or call into question their conclusions. The Supreme Court has held that plan administrators are not required to give special deference to the opinions of treating physicians.

The Court stated that under these circumstances, Cytec’s decision that Anderson was not “totally disabled” was not arbitrary and capricious and was supported by substantial evidence. Thus, while the Court would not endorse Cytec’s decision to deny benefits as obviously correct, it could not say that it was an abuse of discretion. The Court thought that Cytec was entitled to require some evidence of the functional impact of his disability; it did not abuse its discretion by denying further benefits in the absence of such evidence.

Finally, on the issue of whether the lower court was correct in ignoring the additional material Anderson mailed in after the final administrative appeal, the reviewing Court concluded that the material was irrelevant and failed to answer the question. However, the Court mentioned that in ERISA cases, courts generally cannot consider evidence outside the administrative record, and whether the material would have been considered by the court if it had been relevant is questionable. The Court did mention that in Vega v. National Life Insurance Services, Inc., the Court previously stated that if a claimant “submits additional information to the administrator… and requests the administrator to reconsider his decision, that additional information should be treated as part of the administrative record.” However, in this case, the Court described the situation as thorny and would not elaborate which way it may have ruled.

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