Liberty Life Has a Conflict of Interest and Court Orders Reinstatement of Long-Term Disability Benefits
Author: Attorney Gregory Dell
In Aberg v. Charter Communications, Inc., et. al, plaintiff fell off her horse on two separate occasions. She was seriously injured in the first fall, suffering a compression fracture of her vertebrae among other injuries. Barely a year after the first fall, she was “thrown off” of her horse again. Her treating physician and physical therapist both recorded in their records that the second fall significantly exacerbated her previous injuries. Although she was able to return to work for a short period of time, she had to give up her sedentary job as a customer care billing advisor due to her inability to sit for any length of time. She was awarded short term disability benefits due to her inability to work in her own occupation. When those benefits were exhausted, she was granted long-term disability benefits.
After awarding plaintiff long term disability benefits in November 2014, Liberty informed plaintiff that it did not guarantee payment through the maximum benefit duration. Subsequently, Liberty terminated her benefits. After she exhausted her administrative remedies, Aberg filed this ERISA lawsuit. The federal district Court, after evaluating all the evidence, held that Liberty’s termination of benefits was arbitrary and capricious and ordered it to reinstate plaintiff’s benefits.
Liberty’s Termination of Benefits was Arbitrary and Capricious
The Court found two main reasons that showed the decision terminating benefits was arbitrary and capricious:
1. Liberty had a conflict of interest. In its review, the court kept in mind that Liberty was both the entity charged with determining whether the plaintiff qualified for benefits and the one that would pay out the benefits. “Courts should ‘remain cognizant of the conflict of interest that exists when the administrator has both the discretionary authority to determine eligibility for benefits and the obligation to pay benefits when due.’”
2. Liberty conducted a selective review of the evidence. Liberty had its specialist review Aberg’s medical records. There was no change in the records from the time Liberty granted Aberg benefits until the time it terminated them. The specialist Liberty hired to review the records ignored the parts of the medical record that supported Liberty’s initial grant of plaintiff’s application for benefits and overlooked medical evidence that supported her claim for benefits. The reviewer did not give any reason for discounting the treating physician’s opinion that plaintiff was disabled. When employee benefits plan administrator’s terminate benefits, they have to set forth the reasons in language understandable to the plan participant.
The Remedy is to Order Benefits Reinstated
Relying on precedent, the Court reinstated benefits for the plaintiff, finding that, “Where the plaintiff was actually receiving benefits and those benefits were improperly terminated, the appropriate means to restore the status quo is reinstatement of benefits that were being paid before the improper denial.”
This case was not handled by our office, but we feel it can be instructive to those who had their long term disability benefits terminated when there had been no change in their condition since the benefits were awarded. If you have a question about this, or any other issue concerning disability benefits, contact one of our disability attorneys for a free consultation.