Kemper National fails to perform an independent medical exam and is ordered by the court to pay long-term disability benefits to a registered nurse

Farler v. Henry Ford Health Systems., 2005 U.S. Dist. Lexis 13313; (US District Court Eastern District of Michigan 07/05/2005)


Insured worked as a registered nurse for Henry Ford Health Systems (hereinafter “HENRY”) and was insured under a group long-term disability plan administered by Kemper National Services Inc. (hereinafter “KEMPER”). The long-term disability policy provided own occupation coverage for the first 24 months and any occupation coverage beyond that period.

On September 15, 2001, Insured submitted a claim for long-term disability benefits, based upon complaints of an inability to stand or walk for longer than a few minutes. KEMPER provided disability benefits for the first 24 months and than terminated the Insured’s long-term disability benefits on the grounds that Insured was no longer disabled as defined by his policy.

Although KEMPER received supplemental medical information from both Insured’s treating physicians and from five independent peer reviewers, Kemper’s decision to deny benefits relied solely on the statements obtained from the independent peer reviews. The reviews indicated, contrary to Insured’s treating physicians’ statements, that the medical data submitted by the Insured failed to support a functional impairment that would prevent Insured from working in any position.

Insured subsequently appealed the denial of continued long-term disability benefits, but to no avail. Thus, instituting the instant suit. Insured’s primary contention is that KEMPER’s decision to terminate benefits was arbitrary and capricious because KEMPER did not have her submit to an independent medical exam, but rather relied on peer review reports from physicians who never physically examined her.


The Court held that it was arbitrary and capricious for KEMPER to rely solely on “paper reviews” to reject the opinions of Insured treating physicians. Thus, the Insured was entitled to a judgment in her favor awarding her long-term disability benefits. The Court holds that an administrator is not required to give an insured’s treating physicians’ diagnoses special weight. However, in circumstances where there is a direct conflict between medical evidence supplied by treating physicians and medical reviews supplied by peer reviewers, at the very least, an administrator should require a physical examination to arrive at a full and fair understanding of an insured’s claim. Thus, without more than a “paper review”, an administrator’s denial of benefits under these circumstances will be deemed arbitrary and capricious.

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