The language of a long term disability insurance plan is crucial when status of a totally disabled person is in question. The language needs to be considered very carefully. A case heard in the U.S. District Court’s Eastern Division of Kentucky, central Division in Lexington gives us another opportunity to look at how a company such as CIGNA can rely on medical information from their own doctors and fail to explain why they denied a claim. In this case the court explains why Cigna failed to provide claimant with a full and fair review in accordance with ERISA.
Claimant Ronald E. Cox came before the Court with a motion for summary judgment on the administrative record. On the other hand CIGNA Group Insurance, who is the holding company of Life Insurance Company of Northern America (LINA), filed a motion for summary judgment. Let’s see how the Court decided this issue.
Review of Background Behind Disability Claim
Cox was a 55 year old male who worked at Philips Lighting Company since November 1983 to November 2007 as a repairmen and tradesworker. After almost 24 years with the company, he left the Company due to incapacitation from neck, shoulder, leg, back and hip pain which prevented him from carrying out the duties of his job. These duties included:
- Installing, repairing, constructing, and maintaining plant facilities and equipment
- Fabricating and installing frames and supports for tanks, kilns, and other equipment
- Collecting pressure, temperature, kilowatt, and other data from meters
He was covered by group life insurance plan which provided Total and Permanent Disability Benefits. Cox filed a claim for Total Permanent Disability benefits on April 1, 2008. As per the plan, CIGNA, as the disability insurance company, had power to determine whether he was totally and permanently disabled or not. CIGNA denied his claim for Total and Permanent Disability benefits, claiming he was still able to work for wage and profit.
Dispute arose over the denial of Cox’s benefits under the plan, so after an unsuccessful initial administrative appeals, Cox retained an ERISA disability insurance attorney. The second appeal was also unsuccessful, which led to filing an ERISA lawsuit in U.S. District Court.
Disability Attorney and Disability Insurance Company Agree on Standard of Review
During the proceedings, both parties agreed that the language of plan mandated review under the arbitrary and capricious standard. The disability attorney pointed the Court to evidence that suggested that LINA did not considered the opinions of Cox’s two treating physicians. Therefore the decision to deny him benefits was arbitrary and capricious.
First Denial of Total and Permanent Disability Benefits
LINA’s first denial of benefits was conveyed by letter to Cox. It merely emphasized the technical content of the various medical reports, without any medical analysis of these reports. While LINA mentioned results from a lumbar spinal MRI, it failed to mention the results of a cervical spine MRI which was conducted on the same day. The letter also failed to indicate that 1) the Medical Request Form and 2) the Physical Ability Assessment Form had been considered.
Instead, LINA rejected all this evidence by saying that whatever Cox had submitted did not support an impairment that precluded him from working for wages for rest of his life as terms of the policy. The company completely discounted the opinions of two doctors who had treated him for a number of years and had provided their opinions that Cox deserved his disability status.
The only evidence on which LINA denied the claim was the results reported from a functional capacity evaluation which had been conducted at LINA’s request.
Cox filed his first ERISA appeal on July 7, 2008. He included a letter from Dr. Brain Ellis, the Philips Lighting plant physician who had treated him for seven years. Dr. Ellis gave his opinion that Cox was a danger to both himself and his coworkers on the job site. The doctor supported his claim of total disability. The other doctor treating him, also backed his claim by pointing to his multilevel degenerative disc disease.
Second Denial of Total Permanent Disability Benefits
After considering a report prepared by in house Medical Director Dr. Norton Hall and a Transferable Skills Analysis report prepared by an in house expert, LINA upheld its denial of Cox’s benefits for the same reason given in the first denial on August 21, 2008.
In LINA’s second denial letter to Cox, it upheld its prior denial on the ground of lack of any medical evidence of severe impairment. The disability insurance company also expressed the opinion that Cox’s medical reports failed to reveal or to support his physical restrictions.
LINA failed to cite a letter from Dr. Thoroughman in which he described Cox’s difficulties relating to walking, balancing and driving. This letter also failed to mention the Disability Questionnaire on which Cox explained why he could not work in his own occupation or any other due to the structural weakness caused by the disc degeneration.
Cox filed his second appeal with the help of an ERISA disability attorney on November 25, 2008. He was no more successful with assistance.
Third denial of Total and Permanent Disability Benefits
Again LINA denied his claim for Total Permanent Disability benefits on the grounds that the medical evidence did not support his physical disability as defined in the policy.
In the third and final denial of his claim by LINA, the disability insurance company stated that Cox provided only a portion of the needed documentation. But this time LINA failed to mention the report of Dr. Ellis who disagreed with LINA’s second denial and explained that Cox had chronic pain and weakness in the right lower leg.
After exhausting all these administrative remedies, Cox filed suit in Boyle Circuit Court, and that action was moved to U.S. District Court on March 11, 2009.
Consideration of Total and Permanent Disability Decision by the Court
Once an ERISA disability lawsuit is filed, the role of the Court is to review the decision made by the plan administrator. As the administrator of the plan, as well as the party with ability to determine whether Cox qualified for benefits, the Court began looking for evidence in the administrative record that LINA had made a reasonable decision.
In its claims review process and explanations to Cox, LINA neither cited any physician reports that failed to support Cox’s claims, nor did LINA suggest any occupation or job which it believed Cox could undertake with his physical limitations. The disability insurance company could not give a reason for what would restrain the company from giving total and permanent disability benefits to Cox. In this LINA demonstrated arbitrary and capricious action.
The Court also emphasized the fact that the opinions of Cox’s two doctors who treated and examined him for many years was ignored, something which ERISA does not allow. The Court found that LINA’s decision to find the opinion of Dr. Hall, its in-house Medical Director more convincing (when he had failed to provide a secure basis for discounting the evidence presented by Cox’s physicians) demonstrated arbitrary and capricious behavior. The disability insurance company’s failure to address why it disagreed with Cox’s attending physicians, worked against them.
After considering the evidence revealed by the records in Cox’s administrative file, the Court found that LINA had not reached a reasonable decision when it denied him long-term disability benefits. It granted Cox’s motion in part, finding that LINA had failed to give Cox a full and fair review. LINA’s motion for judgment in its favor was denied.
Because the Court ruled that Cox had not received a full and fair review, his request for summary judgment in his favor was denied. The Court sent Cox’s claim back to LINA as plan administer to conduct a full and fair inquiry.
The Court has consistently made it clear in other rulings that disability insurance companies must give a reasoned explanation for why they have found a claimant does not qualify for coverage under their policy.