When Donna Cusson took her long-term disability case to the U.S. Court of Appeals, First Circuit on September 15, 2009, she hoped for a reversal of the U.S. District Court of Massachusetts’ decision in favor of Liberty Life Assurance Company of Boston (Liberty Mutual). We have already shared the background to this case in Liberty Mutual wins long-term disability case because of video surveillance – backdrop for an unsuccessful LTD claim (Part 1). Now, we will look at both the District Court and Appeals Court decisions because the District Court’s decision is what the Appeals Court would be considering.
ERISA guidelines applied by District Court
Cusson’s long-term disability claim fell under the jurisdiction of the Employee Retirement Income Security Act (ERISA). The laws that govern the review of ERISA cases provide clear guidelines for the court to follow. First, the court must determine which standard of review applies.
The District Court chose to use the abuse of discretion standard because Liberty had the power to determine who was eligible for benefits. Under this standard as long as the decision was reached by a reasoned process and supported by substantial evidence, Liberty’s decision had to be upheld.
Cusson presented two primary arguments. First she claimed that Liberty’s video surveillance had been used and interpreted improperly. Secondly, she claimed that the review process was flawed. These would be the two areas that the court considered.
The District court upholds Liberty’s termination of disability benefits
After reviewing the surveillance results, the court drew the conclusion that the tapes supported Cusson’s claim that she could not sustain activities for a long period of time. However, they also concluded the tapes also supported the claim that both Cusson and Dr. Figueroa had exaggerated her functional limitations. The court saw no evidence of procedural unfairness in Liberty Mutual’s review process, and based upon the standard required by law, the District Court validated Liberty Mutual’s termination of her long-term disability and the company’s request for reimbursement for overpayment.
Case is presented to Appellate Court
Cusson appealed the District Court’s decision. In Appeals Court, the first standard to apply is that of de novo review. This means that the court looks at all the facts from a fresh perspective, reviewing all the information present in the Administrative Record, the insurance company’s file for a claimant. The next step is to determine whether a decision was arbitrary or capricious, or an abuse of discretion exists. Unless these things can be proven, the decision of the insurance company stands.
The Court of Appeals used the same process as the District Court to determine which standard of review should prevail in the case. They agreed with the District Court’s decision to review Liberty’s denial under the abuse of discretion standard. This meant if a conflict of interest affected Liberty’s decision to deny Cusson benefits, she had to prove it. The Court found it telling that Cusson had not raised the issue of whether Liberty’s internal procedures insulated the company during the review process from any potential conflicts of interest. Because of this omission by Cusson, neither party had prepared a brief regarding this issue. And without the brief, there was no documentation to demonstrate any alleged flaws in the process.
Courts finds Liberty’s expert report valid
In her appeal, Cusson expanded her arguments to contest the basis of Liberty’s decision. (See LIBERTY WINS CASE BECAUSE OF VIDEO SURVEILLANCE - Backdrop for an Unsuccessful LTD Claim for the background on Liberty’s decision.) She accused Liberty of depending entirely upon Dr. Millstein’s report which included inaccuracies about the surveillance tapes. The court found that despite the inaccuracies, Liberty’s reliance on Millstein’s report could not be faulted. The court felt that Millstein’s main point, that the videos showed Cusson doing more than she had reported being able to do, was a valid one which Liberty had the right to consider. When they read Liberty’s decision, the court found that Liberty had based its conclusion not only on the amount of activity they had observed, but the decision also centered on the nature of the activity itself.
Cusson argued that Liberty Mutual should not have relied on Dr. Liebermann’s testimony, that Dr. Figueroa no longer wanted to be contacted about her disability claim. She pointed to the fact that her doctor had never responded, so Liebermann’s statements were only hearsay. The court found that Cusson, who was aware of Dr. Liebermann’s reported conversation, should have presented Liberty Mutual with the evidence needed to challenge Lieberman’s account of the conversation. Because she had not done so, and because plan administrators don’t have to observe the rules of evidence that apply in a court of law, the court found that that Liberty Mutual’s assumption that Lieberman’s statements were true was appropriate.
The court finds no bias on Liberty’s part
Cusson then argued that Liberty chose physicians to review her file who were biased against patients with fibromyalgia. She pointed to statements in the files that she felt demonstrated preconceived ideas held by the physicians about the abilities of a person with fibromyalgia. Unfortunately for Cusson, the court disagreed that the statements indicated bias. None of the four doctors stated that fibromyalgia never disabled its victims. Instead, it appeared that each physician based his decision upon what they saw in the surveillance footage.
Cusson also argued that Liberty relied on paper file reviews instead of direct medical examinations. She claimed that for fibromyalgia, a non-examining physician’s review cannot be accurate, as only through actual clinical diagnosis can a doctor evaluate the level of pain a patient experiences. She cited several circuit courts who have supported giving deferential preference to examining physician reports. She also pointed to the fact that all four of the doctors involved in the paper review were employed by Liberty. All of the physicians she had seen were paid for by her health insurance provider and were neutral. This she claimed presented a conflict of interest.
Claimant fails to provide court with evidence
The Court was not swayed by this argument. Because all four of the Liberty’s reviewers did not question her diagnosis of fibromyalgia, the court saw no reason to discredit the reviews. They found that each reviewer had only one question, why would fibromyalgia affect Cusson’s ability to work? The court upheld that it was impermissible to require objective evidence that Cusson was unable to work, but the video surveillance tapes which contradicted Cusson’s purported limitations were admissible evidence. The court would have been willing to consider whether the doctors were influenced by their paychecks, if Cusson had provided evidence that Liberty had chosen these reviewers specifically because they had a record of denying claims.
Cusson went on to claim that Liberty had not provided her complete medical record to the doctors who reviewed her file. The court found no evidence to support this claim, as medical reports do not have to list every item that the examiner reviewed.
The court finds SSDI is not a factor
Cusson’s final argument involved Liberty’s failure to consider the Social Security Administration’s award of disability benefits to her. She noted that Liberty had insisted that she apply for the benefits, but after she was awarded them, they refused to consider them as evidence of her disability. Cusson also claimed that they were seeking to benefit financially by seeking reimbursement for benefits they had paid her before she received SSDI.
This argument also failed before the court. First the court considered the fact that Liberty had terminated Cusson’s long-term disability benefits before she received her SSDI settlement. This means that they had not considered the SSDI decision, and they did not need to consider it after the fact. As long as Liberty made a reasonable decision based on the facts in her file on the day of their decision, the court would uphold it. Liberty Mutual would have been required to consider the SSDI decision if it was made prior to Liberty Mutual’s final denial.
Cusson’s final argument to support an abuse of discretion hinged on her interpretation of the surveillance videos. She claims that she had never stated she was entirely incapable of performing normal activities. She had claimed that she was unable to function normally most of the time. She pointed to the infrequency with which she was seen outside of her home during each of the surveillance sessions. She pointed to the fact that the entire surveillance material gathered reflected a mere two-hour snapshot extracted from 20 days out of four months of her life. She cited three cases where courts had held that it was an abuse of discretion to rely on such limited surveillance data.
The Appeals Court Upholds Liberty’s termination of disability benefits
The appeals court disregarded the three cases cited, referring to other cases where ERISA plan administrators had been permitted to use this type of sporadic evidence. When the court compared the activities that Cusson had claimed she could not do against the video, the court ruled that Liberty was entitled to notice this fact. The court determined that the video evidence undermined the evidence in Cusson’s favor. Because Liberty’s decision could be considered reasonable and supported by sufficient evidence, the court had no conclusion, but to affirm Liberty’s decision to terminate Cusson’s benefits.
The next thing the court had to determine was whether Liberty had a valid counterclaim to recover SSDI benefits. The long-term disability insurance contract between Cusson and Liberty stated that Cusson would be required to reimburse Liberty for an amount equal to the actual payments she received from Social Security. Cusson argued that Liberty was trying to take away her SSDI benefits. The court saw it differently. Liberty was in fact seeking reimbursement of funds that Liberty had already paid while she was under the long-term disability plan. Cusson was ordered to pay back the SSDI benefit overpayment to Liberty Mutual.
This case did not go well for Donna Cusson. We cannot say that her attorneys did not have a case, but there were a few areas where they could have strengthened their arguments and improved their case. It is also important to consider the climate of the region where a District Court and Appeals Court resides. Some variations in decisions exist, as seen in this case. It is extremely important to hire an attorney who understands these variations and has nationwide experience short-term and long-term disability representation.