Court finds Unum-Provident guilty of arbitrary decision when it denies short-term disability claim.
U.S. District Courts are holding disability insurance plans accountable for denying benefits to claimants with fibromyalgia and chronic fatigue syndrome when the claimants are unable to provide objective evidence of their symptoms. This is emphasized once again by a recent ruling in the Western District of New York. For a pre-suit history of this case read Unum Provident denies short-term disability claim to woman with chronic fatigue syndrome (Part I).
When Jean Strope’s disability attorney filed her complaint on September 15, 2006, his client had a strong case against First Unum Life Insurance Company (Unum) for wrongful denial of short-term disability benefits. Unum had denied her short-term disability benefits under a plan it issued to HSBC Bank USA because she could not provide “medical evidence” to support her disability. There are a number of important conclusions to extract from this case, so let us look at the arguments presented by both sides and how the Court evaluated the evidence.
Unum filed their answer to Strope’s complaint on November 16, 2006. The disability insurance company then went on to file a motion for summary judgment on January 19, 2007, arguing that Unum was entitled to judgment in its favor because the disability insurance company did not believe that Strope’s disability attorney would be able to prove that Unum’s decision was arbitrary and capricious. The disability attorney argued that discovery was needed to prove just that fact. First, if a conflict of interest could be demonstrated, it would change the standard of review used by the Court. Second, it was essential to demonstrated whether Unum had a practice of improperly denying claims for “subjective” illnesses such as the chronic fatigue syndrome (CFS) his client had.
On March 26, 2008, the Court ordered limited discovery so the Court could determine whether Unum operated under an actual conflict of interest. Strope’s disability insurance attorney sought additional discovery at this time, but on March 11, 2009, the Court denied the extension of the discovery. The disability attorney was ordered to respond to Unum’s motion for summary judgment. He did so on April 17, 2009. He also filed a cross motion for summary judgment.
This meant that Unum was asking the Court to validate its decision to deny short-term disability benefits, while Strope’s disability insurance attorney was asking the Court to recognize the fact that Unum’s decision had been wrong. When Unum filed its response with the Court to Strope’s cross motion for summary judgment on May 8, 2009, the Court determined that oral arguments were not needed. The Court would look at the administrative record and the arguments presented in the responses to reach a decision.
Court first determines standard of review.
When a claimant challenges the denial of disability benefits under an ERISA plan, the Court has established a clear set of guidelines. Whenever the benefit plan gives the administrator of the plan discretionary authority to determine who is eligible for benefits and to interpret how the plan’s terms apply to individual cases, the Court uses the arbitrary and capricious standard. As long as the plan administrator can demonstrate its decision was supported by substantial evidence, the Court will uphold the decision of the disability insurance company.
The balance tips more to the favor of the claimant if a conflict of interest can be demonstrated. When the disability insurance company both determines who is eligible for benefits and pays claims, the potential conflict of interest may lead to arbitrary and capricious decisions. At times it may become apparent that the conflict of interest affected the benefits decision, and when this is demonstrated the Court can consider this in determining whether a disability insurance company’s decision was wrong.
The only way Unum’s decision to deny Strope’s application for short-term disability would be overturned was “if it was without reason, unsupported by substantial evidence or erroneous as a matter of law.” If a reasonable person would say, “Yes, the disability insurance company had a good reason to draw that conclusion,” summary judgment would go to Unum.
The Court had several questions to answer to reach a decision. Was Unum’s decision based on a consideration of the relevant factors? To reach this conclusion, the Court would limit its consideration to the reasons Unum gave Strope for denying her claim. Had Unum’s application of the plan’s provisions been rational? If there was a disagreement between the two sides on what the plan promised, Unum’s interpretation would have controlling weight – as long as it was reasonable.
Disability attorney presents reasons Unum decision was arbitrary and capricious.
Strope’s disability insurance attorney’s first argument reminded the Court of Unum’s well-documented history of abuse of discretion. He went on to point to the specific reasons Unum’s decision was arbitrary and capricious.
- Unum rejected the opinion of Strope’s treating physician without seeking the opinion of an equally qualified physician.
- Unum failed to gather the necessary medical evidence to confirm or disprove his client’s disability.
- Unum gave no reasons for the decision to deny Strope’s short-term disability benefits.
- Unum failed to provide clear guidance as to what specific additional information the disability insurance company needed in order for Strope to prove her disability.
- Unum failed to perform a meaningful review of the medical evidence.
- Unum expected his client to satisfy requirements that were not specified in the plan.
- Unum failed to evaluate Strope’s occupation and job duties before determining whether she could fulfill those duties.
- Unum failed to conduct an independent medical evaluation.
- Unum denied Strope’s claim because her symptoms were self-reported and because she didn’t have future appointments scheduled with her doctor.
- Unum denied Strope short-term disability benefits, yet awarded long-term disability benefits.
When the Court looked at the record, it became clear that Unum’s original decision to deny short-term disability benefits had not been arbitrary or capricious. The disability insurance company had found the information provided by Strope’s attending physician insufficient. Dr. Derkatz went on to address this issue. She provided a more detailed description of her patient’s treatment plan. When this was insufficient in Unum’s eyes, she provided additional medical documentation, including lab results, a rheumatologist’s evaluation, and the results of a sleep study.
Unum continued to find the information insufficient and claimed that Strope’s symptoms failed to meet the criteria the CDC has established for CFS. The Court found that this was not supported by a comparison to the CDC guidelines.
- Strope had provided proof that she had suffered an Epstein-Barr infection – a common CFS factor and historically connected to severe fatigue.
- Strope had provided proof that she had mild sleep apnea, providing a logical reason for her profound fatigue and difficulty concentrating.
- Strope’s medical records recorded the pain she felt in her joints and back.
All three of these factors are listed by the CDC as common complaints connected to chronic fatigue syndrome. The conclusion of Dr. Derkatz that Strope could not work because of her fatigue, pain and inability to concentrate was logical. While Unum was not required by law to accept Dr. Derkatz conclusions, to ignore those conclusions without equally valid information to offset them was arbitrary and capricious. At the very least, Unum should have ordered a physician’s review of Strope’s medical record. Optimally, Unum should have ordered an independent medical examination. This procedural irregularity, in the light of the fact that Strope’s claim had been under review for three years, validated the arbitrary and capricious nature of Unum’s denial.
The Court also found that Strope’s disability attorney was correct in arguing that Unum had failed to provide clear guidance as to what specific medical information Strope needed to prove her disability. While the disability insurance provider noted a lack of objective testing, Unum failed to tell Strope what tests it wanted results from to prove her claim. This is a basic ERISA requirement. None of Unum’s letters to Strope gave her a clear indication of what “clinical support” she needed to substantiate her subjective symptoms of pain, fatigue, and an inability to concentrate.
When the Court considered Unum’s well-documented history of biased claims administration, in addition to the above factors, the scales of justice tipped completely to Strope’s side. Unum’s motion for summary judgment was denied. Strope’s motion for summary judgment could only be partially granted because the evidence in the medical record was not convincing enough to reach a definitive conclusion that Unum should have granted Strope short-term disability benefits.
The Court ordered Unum to conduct a full and fair review of Strope’s claim. To ensure that Unum’s review is effective this time, Strope has the right to supplement her file with additional medical evidence. We may not have seen that last of Jean Strope in the Courts.
So what are the conclusions we can draw from reviewing this case? If a disability insurance company has denied your claim for benefits without providing clear instructions on what information they need from you, you may have a good basis to overturn the denial. ERISA requires the denial letter to provide you with a clear, detailed explanation of why your claim is being denied and to give you clear instructions as to what you need to do in order to prove to the disability insurance company that you are indeed disabled according to the terms of the disability plan.
If the disability insurance company has not ordered an independent medical exam, or at least a qualified physician’s review of your medical record before upholding a decision to deny your disability benefits, your rights to a full and fair review may have been violated. Disability insurance companies do not have the right to ignore the information your treating physician supplies. It must be considered and is certainly more valid than a nurse-consultant’s evaluation.