MetLife denies benefits to stockbroker disabled by depression, yet Pennsylvania Federal Judge awards disability benefits

When the Court sends a claim back to the long-term disability insurance company for another review, it is no guarantee that the insurance company will grant long-term disability benefits, as the case of Cheryl Schwarzwaelder demonstrates. In a recent case against Metropolitan Life Insurance Company (MetLife), the court remanded the case back to Metlife for further review, which resulted in another claim denial and years of further delay. Unfortunately, there are numerous cases against Metlife in which the company has repeatedly ignored the recommendations of a disability claimant’s treating physician. Let’s take a closer look at the long term disability insurance claim of this previously successful Pennsylvania stock broker.

Ms. Schwarzwaelder had been an employee of Merrill Lynch & Co., Inc. and a participant in the company’s long-term disability benefit plan which was administered by MetLife. She’d been an employee for approximately one year as a high-end broker and financial consultant. She managed approximately $400 – 500 Million in assets.

The job was extremely stressful, and Schwarzwaelder began seeing a psychiatrist in the beginning of November 2003. Schwarzwaelder reported that her treating psychiatrist advised her to stop working as a result of her increasing mental health difficulties. She followed this recommendation and applied to MetLife for disability benefits.

Her medical records showed that she had been seeing a psychiatrist every two weeks. The record also included a Beck Depression Inventory, initial psychiatric evaluations, her psychiatrist’s treatment observations and notes, patient health questionnaires and an attending physician statement from March 8, 2004. Schwarzwaelder was diagnosed with severe depression which demonstrated itself in decreased concentration, organizational ability, and memory. Her doctor also noted that her depression affected her ability to “engage in stress situations or engage in interpersonal relationships.” He explored an extensive variety of pharmaceutical mental health treatment plans which included Zoloft, Lexapro, Remeron, Wellbutrin, Xanax, and Ambien.

Schwarzwaelder did receive short-term disability benefits from Merrill Lynch for almost 3 months. Then her claim was referred to a long-term disability claims administrator on February 20, 2004. Six weeks later her claim was denied because she had failed to supply adequate documentation to support that her mental health would prevent her from performing all of the regular duties of her job.

Schwarzwaelder hired a long-term disability attorney, who promptly notified MetLife that she was going to appeal the denial of benefits. As part of the ERISA appeal, her psychiatrist provided a letter. She also underwent a neuropsychological evaluation and testing from another physician. This physician corroborated the opinion of her treating physician, diagnosing her with a severe adjustment disorder. This physician noted that she was “markedly limited in her ability to perform complex cognitive operations.” He correlated her emotional state and identified it as a significant contributor to her inability to function at the high level she had previously been accustomed to.

MetLife sent Schwarzwaelder’s file to a psychiatrist for review. This psychiatrist concluded, in September 2004, that Schwarzwaelder’s records failed to substantiate her inability to work at her own occupation. This physician requested a psychologist perform a paper review of one specific evaluation in her file. The psychologist concluded that the symptoms reported in the evaluation weren’t sufficient to suggest a major depressive disorder and that the reported declining IQ was excessive. The psychologist also concluded that because the testing did not outline specific restrictions/limitations on employment nor preclusion from all work capacity Schwarzwaelder was not disabled.

Based upon these evaluations MetLife upheld its denial of benefits on September 23, 2004. Schwarzwaelder was informed that the “available records submitted for review” did not “substantiate psychiatric functional impairments that would” preclude her from performing her regular job at Merrill Lynch. Schwarzwaelder’s disability attorney filed an ERISA disability lawsuit in the United States District Court for the Western District of Pennsylvania on December 15, 2004.

Court’s First Look at MetLife Claim

When the Court first looked at Schwarzwaelder’s claim, it became apparent that MetLife had been inconsistent in answering the question of just what the plan language meant when it said that Schwarzwaelder be “unable to perform all the regular duties” of her job at Merrill Lynch. On the one hand, it appeared that MetLife interpreted the plan to say “one or more” regular duties. At other times, it appeared MetLife interpreted the plan to mean “each and every” regular duty. For this reason the Court sent Schwarzwaelder’s claim back to MetLife on remand. When a court sends a case back for remand, this means that the court is giving the insurance company another chance to review the claim. If the insurance company denies the claim again, then the claimant is usually required to submit another ERISA Appeal and then either re-open or file another lawsuit.

MetLife was given clear instructions to clearly define the plan interpretation that it was applying. MetLife was also instructed to articulate the basis for its denial, with direct reference to Schwarzwaelder’s individual job requirements, if it chose to uphold its denial upon remand.

MetLife Denies Disability Benefits on Remand

MetLife made it clear in its response to the remand it was only requiring Schwarzwaelder to be disabled for any one regular job duty. Accordingly, the disability insurance plan obtained a copy of her job description from Merrill Lynch. It also obtained a file review by another psychologist on May 16, 2007. The psychologist reported that the neurocognitive testing in Schwarzwaelder’s records failed to assess whether or not she was malingering. This physician also concluded that her test scores demonstrated that she retained the cognitive abilities to continue working in her own occupation. Both of her treating physicians disagreed with this physician’s report.

Once again in June 2007, MetLife denied Schwarzwaelder’s long-term disability benefit application. She appealed and submitted further documentation from both of her treating physicians. She also went to see a specialist at George Washington University School of Medicine. This physician also reported that her symptoms were typical of a patient suffering from major depression. He supported the diagnosis of both of her regular treating physicians, and on October 17, 2007 he listed the specific job duties he believed she would be unable to perform.

These additional records were sent for paper review by yet another psychiatrist/neurologist. This physician reported on November 7, 2007, yet once again, there was insufficient objective evidence that Schwarzwaelder suffered from sufficient cognitive dysfunction to not be able to perform her occupational duties. He pointed to the fact that she had never reported suicidal or homicidal intent, delusional thoughts, or hallucinations. He noted that she had never been hospitalized, nor were there any reports that she had been impaired from the activities of daily living. She was not homebound, thus she should be able to perform her job at Merrill Lynch.

Schwarzwaelder’s physicians objected to the conclusions of this report. One of her treating physicians corresponded with MetLife in November and December 2007, and in January 2008.

Ultimately the reports provided by her treating physicians failed to convince MetLife that the paper reviews conducted by their psychiatrists and neurologists were inadequate. She was informed on January 18, 2008 that her medical information still did not support her inability to work in “her own occupation as a financial consultant.”

Disability Attorney Re-Opens Suit Against MetLife and Merrill Lynch

MetLife had the right to interpret the plan language and determine whether or not the claimant had the right to benefits or not. Because of this, ERISA mandated that the Court must evaluate Schwarzwaelder’s claim using the “abuse of discretion” or “arbitrary and capricious” standard of review.

This meant that the Court would have to affirm MetLife’s decision as long as it was reasonable, rational, and in harmony with the language of the plan. Using this measure, The Court could not determine whether or not MetLife’s decision was the correct one. It could only evaluate whether it was reasonable.

MetLife Considers Medical Evidence Selectively

The first thing the Court recognized was the right that MetLife had as the plan administrator to give equal weight to the opinions of physicians it hired to review the medical record. At the same time in Michaels v. Equitable Life Assur. Soc., the Court ruled that plan administrators are not free to arbitrarily refuse information provided by a claimant that is reliable. This includes the opinions of a claimant’s treating physicians.

The Court has expressed concern that a plan administrator can deny a claim based on paper review of medical records, especially when the reviewing physician is selective in what information is used in reaching an opinion. The Court has great concern that reviewing physicians can be selective and self-serving in how they use the medical information found in a claimants file. It also is a concern to the Court when paper-review consultants, who have never seen a patient, draw conclusions that are in opposition to those expressed by physicians who have examined a patient and have presented consistent and concurring opinions.

Of great concern to the Court was the fact that MetLife failed to discuss how the job specific disability determinations presented by three physicians who had personal experience with Schwarzwaelder’s condition were negated by the conclusions drawn by its physicians who performed paper reviews, and had never met Schwarzwaelder. There was no conflicting medical evidence to demonstrate that Schwarzwaelder was able to perform at the high stress level of the position she held at Merrill Lynch.

It was also apparent that Merrill Lynch had not applied the “own occupation” standard to the review process. The physicians reviewing her file had often referred to her ability to work in any position, when her claim fell under classification as her “own occupation”, a very stressful job which required keen mental ability. MetLife had an obligation to identify its specific objections to any information within her file that it felt contradicted her claim of disability for mental health issues. It had failed to do so.

MetLife had also rejected information in her file that was self-reported. This wasn’t a new issue with MetLife. The Court had seen it before in Adams. Consistently the physicians who conducted paper reviews of her file ignored any evidence in her doctor’s office notes that could be considered subjective and/or self-reported. And yet the Plan document recognized that Schwarzwaelder would be eligible for long-term disability benefits if she was unable to perform all the regular duties of her job at Merrill Lynch and was under the continuous care of a physician who was treating her within the scope of his/her specialty.

To reject Schwarzwaelder’s treating physician’s notes as self reporting and subjective was an issue addressed in Glenn, as well. The Court found it inconsistent for the plan to state that Schwarzwaelder needed to be under the care of a treating physician, yet when the treating physicians presented their office notes, MetLife treated these physicians as not having a valid opinion because their notes reflected “subjective” information.

MetLife Provides Incomplete Information to Consultants

MetLife failed to provide accurate information to the physicians it hired to review Schwarzwaelder’s claim. The physicians were not provided with an accurate and complete profile of the scope and requirements of her job. None of the opinions presented by those physicians who conducted paper reviews reflected the fact that they had received a complete occupational description. In fact, many of the opinions demonstrated serious misconceptions as to what Schwarzwaelder’s job entailed. This failure violated MetLife’s fiduciary duties under ERISA.

MetLife Continues to Rely on Opinions Already Found Unreasonable by the Court

The Court found that MetLife’s decision continued to rest upon reports that had already caused the Court to send Schwarzwaelder’s claim back to MetLife on remand. Yet MetLife continued to rely on the same reports in determining that Schwarzwaelder had not proven her disability. Accordingly, the Court found that this was arbitrary and capricious.

Court Considers Impact of MetLife’s Failure to Recognize Subjective Evidence

“It is a basic tenet of insurance law that an insured is disabled when the activity in question would aggravate a serious condition affecting the insured’s health.” Lasser v. Reliance Standard Life Ins. Co. When MetLife concluded that Schwarzwaelder’s benefit claim failed because it lacked “supportive documentation”, the insurance company was unjustifiably implying that her treating physicians’ “observations and notations” regarding the impact of work-related stress on her mental condition did not constitute “supportive medical documentation.”

The Court found this arbitrary and capricious. It was clear that MetLife had failed to consider “all the essential duties” of Schwarzwaelder’s position at Merrill Lynch. It’d failed to consider that her position was a high-pressure, fast-paced, volatile position that required long hours. It was also a position which has been generally recognized as one that is mentally and emotionally demanding. More than one treating physician had reached the conclusion that the stressful nature of her position was causal to her mental health issues.

The Court Considers Attorney’s Fees

The Court determined that Schwarzwaelder’s ERISA attorney had the right to apply for attorneys fees. MetLife

1. had acted in bad faith,
2. had the ability to pay, and
3. would be deterred from processing claims in the future carelessly.

Also the merits of Schwarzwaelder’s position were strong as compared against MetLife, who had elected to disregard part of the Court specific pre-remand instructions. MetLife also had a record of similar conduct. For these reasons, the Court determined that attorney’s fees should be awarded Schwarzwaelder to compensate her for disability attorney expenses.

MetLife Ordered to Pay Long-term Disability Benefits

The motion for summary judgment filed by Schwarzwaelder’s Pennsylvania disability attorney was granted. Not only would Schwarzwaelder receive the two years of disability benefits that would have begun on May 3, 2004, she would also receive prejudgment interest.