In Giovanna Reichard v. United of Omaha Life Insurance Company (Mutual of Omaha or Omaha), Plaintiff, a nurse employed by a hospital, suffered from headaches, arthritis, Crohn’s disease, and fibromyalgia. She eventually had to quit work because of her illnesses and applied for long-term disability (LTD) benefits through her employer’s group-disability plan administered by Mutual of Omaha.
Omaha granted her request for LTDs for two years during which time the plan considered a person disabled if they were unable to work in their own occupation. Omaha informed Plaintiff that in two years, the definition of disability would change, and she would have to prove she was unable to work in any occupation for which she was “‘reasonably fitted by training, education, or experience’ that would pay at least 60% of her pre-disability earnings within a year of going back to work.”
After two years, Omaha re-evaluated Plaintiff’s claim under the narrow definition of the policy. The company had her medical records reviewed by four professionals: a nurse, a vocational rehabilitation consultant, a physician, and a board-certified rheumatologist, who conducted an independent medical exam (IME). He also reviewed the reports of Omaha’s other medical record reviewers.
After reviewing the four reports, Omaha denied Plaintiff’s claim, and she appealed. On the administrative appeal, Plaintiff objected on the grounds that Omaha:
- Failed to consider the side effects of the medications she was taking.
- Failed to consider some of her medical records.
- Used outdated records and incorrect information.
Omaha responded by having Plaintiff’s medical records reviewed by Dr. Thomas Reeder, its in-house appeal reviewer who also happens to be board-certified in internal medicine. Dr. Reeder is also a senior vice-president for Omaha and its medical director.
Dr. Reeder concluded that there was only one of Plaintiff’s four treating physicians who believed Reeder could not work in any occupation. Dr. Reeder noted that the doctor’s opinion conflicted with notes the doctor had made in the medical file.
Dr. Reeder sent letters to Plaintiff’s four treating physicians informing them of his opinion and inviting them to contact him if they had any objections. Only a neurologist contacted Dr. Reeder and that doctor said he had no objections.
Based on Dr. Reeder’s report, Omaha denied Plaintiff’s appeal, and she filed an ERISA lawsuit in the U.S. District Court for the Eastern District of Pennsylvania. When the District Court ruled in favor of Omaha, Plaintiff appealed to the U.S. Court of Appeals for the Third Circuit.
The Court of Appeals upheld the ruling of the District Court, which held there was substantial evidence to support the Plan Administrator’s decision, so “the insurer’s denial of benefits was not arbitrary and capricious.”
There Was Substantial Evidence to Support Omaha’s Decision to Deny Benefits
The Appellate Court found Omaha’s decision to deny LTD benefits was based on substantial evidence and therefore not arbitrary and capricious when:
- Multiple doctors, including some of Plaintiff’s own physicians, found that Plaintiff could do sedentary or light work.
- Only one of Plaintiff’s doctors said she could not work, and his statement was inconsistent with some of his own notes in the medical file.
- The Vocational Counselor found several jobs he believed Plaintiff could work in, and she provided no evidence to explain why she could not work in those occupations. She simply said she could not work.
- Plaintiff also failed to present any evidence that those identified jobs would not pay 60% of her former salary.
Procedural Irregularities do not Make the Denial of LTD Benefits Arbitrary and Capricious
Plaintiff argued that procedural errors occurred, so she was denied a fair hearing. The appellate court disagreed pointing out the flaws in Plaintiff’s argument. The Court listed Plaintiff’s arguments and why it ruled against them.
She argued Omaha did not tell her what they needed from her to support her claim. The court said there really was little doubt about what was required. She corresponded “at length” with Omaha and submitted extra documentation. In her appeal, she did not state what she would have provided Omaha if she had been asked.
One doctor had several typos in his report which, the Court agreed looked sloppy and did not “inspire confidence,” but the mistakes were not substantive, but only typographical. The Court concluded that the typos “are immaterial.”
She alleged that Dr. Reeder’s employment with Omaha created a conflict of interest. The Court agreed that factor weighed against Omaha but was not enough to overcome the finding that the denial of benefits was based on substantial evidence.
Cumulative effect of the errors was insignificant and did not render Omaha’s decision arbitrary and capricious.
In finding in favor of Omaha, the Appellate Court held that:
“We do not doubt that [Plaintiff] suffers serious illnesses and side effects. But the issue here is whether she can work at any job that pays 60% of her previous salary. United of Omaha found that she could, and our review of its decision must be deferential. It assessed her functional limitations and listed five specific sedentary jobs she could do. Its decision to deny continued benefits rested on evidence from many doctors, and it reasonably disagreed with the one outlier. So, while its procedures might have been imperfect, its ultimate decision was not unreasonable.”
Contact Dell & Schaefer
This case was not handled by our office, but we feel it may be instructive to those who are having similar problems with their insurance company. If you have any questions about this case, or about any issue concerning your disability claim, feel free to contact one of our disability attorneys at Dell & Schaefer for a free consultation.