The ERISA Law Governing Disability Insurance Claims Favors Insurance Companies
The law that governs lawsuits brought for denial of short or long-term disability benefits through a claimant’s group disability insurance policy with their employer is called ERISA. When a lawsuit is governed by ERISA, the legal process is entirely different than one might imagine because lawyers rarely get to argue their case in front of a judge and you, as a claimant, will never get your “day in court”. This is very important to know when you contemplate filing a disability lawsuit because, due to the way disability insurance policies are written and the law under ERISA, the cards are often stacked against claimants. What is at issue in an ERISA lawsuit is not only whether or not a claimant is truly disabled and should be entitled to disability benefits, but rather, it is more often a matter of whether or not the disability insurance company complied with the terms of the Plan and the law under ERISA when making its decision.
A good example of how the ERISA law can be unfair for claimants is a recent case in New Jersey where a claimant, McCann, filed a lawsuit against Hartford for wrongful termination of his long-term disability insurance benefits. Hartford initially approved McCann and found that he was entitled to benefits due to his disability caused by his diagnosis of an aortic aneurysm. Hartford paid McCann disability benefits for 2 years before determining he was no longer disabled under the plan’s definition of disability and his benefits were terminated. McCann filed an administrative appeal, but, despite presenting additional medical documentation as evidence of his continued disability, Hartford upheld their decision to deny continued long-term disability benefits. Thereafter, McCann filed his ERISA disability lawsuit.
Discretionary Standard of Review
McCann’s disability insurance policy contained certain language, which is found in most disability policies, and granted Hartford – the Plan administrator – “full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions of The Policy.” When an ERISA disability policy, or plan, grants the administrator (Hartford) discretionary authority to determine eligibility for benefits, the job of the court is to analyze the administrative record and determine whether the decision to terminate benefits was supported by substantial evidence, or whether the decision was “arbitrary and capricious.” The Court’s job in this case was not to make its own judgment as to whether it thought McCann was disabled, but instead it had to determine if Hartford properly considered the evidence it had, such as McCann’s medical records and physician statements, and made a reasonable decision which is supported by that evidence to terminate McCann’s benefits.
McCann argued that Hartford’s decision to terminate long-term disability benefit payments was arbitrary and capricious for the following reasons: 1) Hartford reversed its position as, at first, benefits were approved but then were later terminated; 2) Hartford did not consider all of the relevant diagnoses; 3) they did not properly consider McCann’s ability to perform the Essential Duties of his Occupation; 4) they improperly relied upon reports of their own hired physicians who reviewed McCann’s medical records; and 5) there was a conflict of interest because Hartford both funded and evaluated claims.
Court’s Review of the Administrative Record
Another significant difference when a lawsuit is governed by ERISA is that the Court is only allowed to review the documents that the plan administrator had available to review at the time the final denial of benefits was made. This is known as the “administrative record”, and it contains the medical records that were submitted to or obtained by the insurance company, the claims notes, correspondence between the insurance company and the claimant, the policy documents and any other documents regarding the insurance company’s investigation into your disability claim. The fact that the Court is only permitted to review and consider the administrative record is inherently unfair for claimants because, once the final denial is made by the insurance company, you cannot introduce to the Court any new medical records, physician statements, or any other evidence which might help support your claim for disability.
In this case, the Court found that, even though Hartford had initially determined that McCann was disabled under the plan’s definition of disability, based on the record evidence, it was reasonable for Hartford to later determine that McCann was no longer disabled and terminate his benefits. The law recognizes that, even though it may be viewed with suspicion when benefits are first approved but are then later terminated, it is not improper as long as the decision to terminate is based on some new form of evidence. The Court reviewed the events that occurred between the benefit approval and the final denial. The administrative records showed that during that time, Hartford obtained updated medical records, had an Independent Medical Examination performed of McCann, obtained statements from McCann’s treating physicians, and had experts in the proper medical specialties review McCann’s medical records. Hartford’s decision to terminate benefits after the fact was based on new evidence and developments in the claim, and therefore, the Court found that the decision was reasonable (regardless of whether that decision was to terminate benefits).
McCann argued that, when the initial termination of benefits was made, Hartford did not consider his secondary diagnosis of sleep apnea, and that Hartford wrongly identified his occupation as a “Radiologist”, instead of an “Interventional Radiologist”, who performs substantially different duties. However, in his appeal McCann pointed these errors out to Hartford. Accordingly, when reviewing the claim upon appeal, Hartford did in fact take into account his diagnosis of sleep apnea and did perform an analysis of his occupational duties as an Interventional Radiologist. The Court noted that its task was to review the final, post-appeal decision. The fact that the initial decision to terminate benefits was made based upon incorrect or incomplete information was immaterial because Hartford corrected these errors upon appeal and the final, post-appeal decision did take into consideration the secondary diagnosis and correct occupational duties.
Hartford utilized physicians it hired to review McCann’s medical records and give an opinion, without ever examining or meeting him, as to whether or not his medical condition rendered him unable to work in his occupation. Disability insurance companies often employ this practice and the Courts have long-concluded that plan administrators who are granted authority to determine eligibility for benefits may not only rely on the opinions of non-treating physicians, but they may also give greater weight to the opinions of those hired non-treating physicians than those of the claimant’s own doctors who have been treating him or her for years. This poses a huge hurdle for claimants to overcome. McCann would have to prove that the hired physicians had not properly considered all of the medical records and test results or that they were not of the proper medical specialty (ie, an orthopedic specialist giving an opinion about a cardiac condition). The Court determined that the physician reviews Hartford relied upon were proper and all of the medical evidence was considered, and therefore, Hartford did not act unreasonably in relying upon them. Further, the Court found that prior to rendering its final decision to uphold the termination of benefits, Hartford was not required to provide McCann the opportunity to review the opinions of the hired physicians or provide a rebuttal to those opinions.
Was the Decision to Terminate Benefits Reasonable?
Even though the Court acknowledged that a potential conflict of interest may exist in this case because Hartford both determined a claimant’s eligibility for disability benefits, and paid those benefits, it determined that Hartford did not act improperly by reversing its position and terminating McCann’s long-term disability benefit payments. The Court found that Hartford acting properly when considering McCann’s relevant diagnoses and occupation, and properly relied upon opinions of their hired experts. The Court viewed these factors as a whole and concluded that Hartford’s decision to terminate benefit payments was reasonable and based on substantial evidence and, therefore, not arbitrary and capricious.
Attorneys Dell & Schaefer did not represent Mr. McCann in his disability lawsuit. But this should serve as an example of why it is so important to hire a qualified disability attorney with experience in handling ERISA lawsuits. It may be an uphill battle for the little guy to win a disability lawsuit against a big, corporate insurance company, but it is not impossible. The experienced disability lawyers at Dell & Schaefer have a proven track record of securing hundreds of thousands of dollars in disability benefits that their clients rightfully deserved. If you have questions regarding your claim for disability benefits, or if your disability claim has been denied, feel free to call Disability Attorneys Dell & Schaefer for a free consultation.
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