Many companies offer short and long-term disability insurance coverage to protect a portion of an employee’s monthly income in the event the employee is unable to work as a result of a sickness or injury. Employees pay the premiums for this insurance on a monthly basis so they’ll have something to fall back on if they ever become sick or injured. Of course, many individuals have a sense of security because of this. However, most employees are unaware that once a claim for disability benefits is submitted, the disability insurance company has a “structural conflict of interest”, as it is usually the long-term disability insurance company that both administers and pays any approved claim.
This structural conflict is significant as a claim denial allows the insurance company to keep the money for itself and increase its profits. Fortunately for disability claimants, the courts are required to consider this structural conflict of interest as one of many potentially bias factors that inappropriately motivate a disability insurance company to deny disability benefits.
As a disability insurance attorney that has handled thousands of claims against every major disability insurance company, I am constantly trying to educate potential claimants about the tactics of disability insurers. A recent case is a victory for disability policyholders as it exposed the “signs of bias” exhibited by Hartford Life and Accident Insurance Company throughout its decision making process.
Disability claim history
Robert Montour worked as a telecommunications manager for Conexant Systems for approximately 37 years. He was insured under Conexant’s group disability plan, which was funded and administered by Hartford Life & Accident Insurance Company. In July 2003, Montour filed for disability due to acute stress disorder, and his claim was approved in January 2004 following the plan’s 180 day elimination period. In approximately June 2004, he began treating with an orthopedic surgeon and he was diagnosed with degenerative changes to his right knee and back. Montour underwent arthroscopic surgery on his right knee in October 2004. In September 2004, Montour notified Hartford of his physical disabilities. Montour completed psychotherapy treatment in April 2005 and his primary disabling condition was back pain which was documented by his orthopedic surgeon during appointments in April 2005, December 2005 and May 2006.
Montour’s orthopedic physician maintained that he was physically unable to work in any occupation because of back and knee pain and placed the following restrictions on his physical activities:
- no sitting for more than 15-20 minutes at a time;
- no prolonged walking;
- no standing greater than 15 minutes at a time;
- no lifting or carrying greater than 10 pounds;
- no work at or above shoulder level;
- no moderate pushing activities;
- no moderate pulling activities; and
- no driving greater than 30 minutes.
Hartford’s calculated plan to deny disability benefits to Montour
Although Hartford had been paying Montour since January 2004, in November 2004 they began to orchestrate their plan in order to deny future disability benefits.
STAGE 1: In November and December 2005, Hartford hires two private investigating companies to conduct disability video surveillance on Montour over the course of four nonconsecutive days. During the surveillance, he was observed making two twenty minute trips to pickup his grandchildren from school and one trip of about 2.5 hours conducting errands at various stores. He was also observed to be away from his home on two occasions for about an hour and forty minutes. During this time he was observed bending once at the waste and picking up a small bag of medication.
STAGE 2: In March 2006, a Hartford investigator conducted a 4.5 hour personal interview with Montour at his home, during which time Montour reviewed Hartford’s video surveillance and explained why he cannot work. The investigator documents his observation of Montour and documented Montour’s complaints of pain during the interview.
STAGE 3: In May 2006, a Hartford nurse case manager submitted letter’s to Montour’s treating orthopedic and primary care physician surmising that Montour was capable of performing “sedentary to light” work and soliciting their agreement. Montour’s orthopedic doctor returned the letter indicating that he disagreed with Hartford’s conclusions.
STAGE 4: In July 2006, Hartford hired Dr. Brown, a consulting physician to conduct a file review of Montour’s medical records for the 2003-2006 period, including X-rays and MRIs of Montour’s back, pharmacy records, Hartford’s video surveillance and the personal interview report. Dr. Brown acknowledged that medical evidence supported Montour’s chronic pain but found that Montour nevertheless was capable of working full-time with modest restrictions, such as changing positions every thirty to forty-five minutes.
STAGE 5: In July 2006, Hartford hired a vocation rehabilitation expert to complete an Employability Analysis Report, which evaluated Montour’s experience, qualifications, and the physical restrictions indentified by Dr. Brown. The expert concluded that Montour was capable of working in a high-level managerial capacity in five different fields.
STAGE 6: In August 2006, Hartford terminates Montour’s benefits and advises him that he no longer meets the policies definition of disability.
Montour takes action following his denial of disability benefits
Following the denial of disability benefits, Montour’s disability plan required him to submit a written appeal to Hartford with any additional information that would further support his claim. Montour hired a vocational expert and submitted a vocational appraisal report stating that he was “not employable in any setting”. Furthermore, he submitted information showing that the Social Security Administration (SSA) considered him to be totally disabled. In response, Hartford once again hired a different consulting physician to review Montour’s records and the additional evidence submitted. The new Hartford doctor once again concluded that the activities depicted on the surveillance videos exceeded the activity requirements of a sedentary job and he could therefore perform a sedentary job. In February 2007, Hartford affirmed their previous decision to deny disability benefits.
In June 2007, Montour filed a lawsuit against Hartford in the California United States District Court seeking payment of his long-term disability benefits. In April 2008, the district court entered a judgment in favor of Hartford and concluded that although Hartford had a structural conflict of interest as both the administrator of the insurance policy and payor of benefits, it did not abuse its discretion in determining that Montour failed to provide sufficient evidence to demonstrate disability within the meaning of the policy.
Following his defeat at the district court level, Montour submitted an appeal to the United Stated Court of Appeals For the Ninth Circuit. In September 2009, the appellate court reversed the district court decision and held that Montour is entitled to long-term disability benefits as Hartford abused its administrative discretion and was “improperly motivated” by its conflict of interest. The appellate court concluded that Hartford abused their discretion and wrongfully denied benefits for the following reasons:
- Hartford overstated and over relies on the video surveillance of Montour;
- Hartford’s nurse case manager took an advocacy position in her letter’ to Montour’s physicians soliciting their agreement with her lack of disability conclusion;
- The doctors hired by Hartford failed to appropriately review the video surveillance;
- Hartford failed to present evidence on its part to “assure accurate claims assessment” in order to ensure a neutral review process.
- Hartford conducted a “pure paper” review rather than conduct an in-person medical evaluation of Montour;
- Hartford failed to consider SSA’s determination of disability when it was Hartford that required Montour to apply for social security disability.
While Mr. Montour finally won his entitlement to disability benefits, it is an extreme injustice that he had to battle Hartford for more than three years without receiving payments. In many cases, the involvement of a disability insurance attorney from the initial submission of an application for benefits can prevent a disability insurance carrier from implementing and executing a calculated plan to deny disability benefits.