Aside from the fact that many disability insurance companies already have a conflict of interest for being both the administrator of benefits and the entity that decides whether or not an employee qualifies for disability insurance, there are some cases in which it appears that insurance companies simply decide they don’t want to pay disability benefits.
Pamela Alexander began suffering with pain in 2002, when she worked as a transplant coordinator at a hospital. Having long-term disability insurance through her employer, Pamela applied and was denied in 2003, and two subsequent denials by Hartford Life occurred in March and September of 2004, after administrative appeals.
In 2003, Alexander had a Functional Capability Examination (FCE), which stated that while she was technically ‘qualified’ to lift 17 pounds occasionally and 9 pounds frequently; lifting this amount more than 5 times a day would put her at medical risk. The examining doctor clearly stated in the FCE that Alexander should be lifting no more than 13 pounds occasionally and 7 pounds frequently. The FCE also stated that the ‘Return to Work Status’ was NO.
Hartford hired Dr. Elizabeth Roaf to conduct a paper review of Alexander’s medical records. It should be noted that Dr. Roaf never personally examined Alexander. However, Hartford’s final denial for benefits letter denying Alexander’s appeal stated that Dr. Roaf “noted the results of your June 3, 2003 Functional Capacity Evaluation, which indicated that you could function in a light duty capacity.” Hartford misinterpreted the facts – as the FCE stated that Alexander “should not return to work at all”.
Therefore, the final denial for disability benefits makes no sense at all, especially since that letter stated that Alexander was ‘limited to 15 pounds pushing and pulling.’ Hartford’s occupational requirements for Alexander’s job stated she would be ‘lifting, carrying pushing, and pulling 20 lbs occasionally.’ In response to Hartford’s denial of Alexander’s disability benefits, Alexander filed a lawsuit in the United States District Court of the Northern District of Texas. The District court found in favor of Hartford, however, Alexander quickly appealed the courts decision.
Hartford’s Wrongful Denial Overturned on Appeal
The appeal court overturned the decision made by the district court, stating “that the insurer abused its discretion in denying the employee’s long-term disability claim because there was no rational connection between its conclusion that the employee was not disabled and the information on which it relied to support that conclusion.” There was a conflict of interest present which had to be considered in court as well, since Hartford was the plan insurer and administrator. The appeals court found that Hartford abused its discretion and wrongfully denied Alexander her long term disability benefits.