Mutual of Omaha Disability Denial Upheld by Appellate Court

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:

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:

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.

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Steve Dell has done an exceptional job with my disability application process. The firm is extremely well managed. They have acquired an incredible amount of experience over many years. I recommend them for disability insurance claims without reservation. 

Don (Florida)

I called this firm a few months ago completely disparaged due to a company cutting off disability benefits at a time that nearly caused me to lose everything.

Attorney Alex Palmera and Danielle worked hard to reach an amicable settlement and my case was settled a few months later. This is a good firm and the specific expertise in disability claims saved me countless hours of hassle at a time when an already fragile state existed.

Thank you Mr. Palamara and Danielle.

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I have nothing but good things to say about how my buyout was handled with my disability claim. The level of professionalism was amazing. All of my questions and concerns were answered either by Danielle L. or Alex P. in such a timely manner and with such care I would recommend them in a heartbeat to anyone needing to approach their provider with buyout options.

They did a fantastic job communicating between the provider and me, always keeping my best interest at heart and always answering my many many questions. They really did take most of the stress out of this whole situation. I would give them a 10 out of 10 for every step of this crazy journey. Thank you so much for helping me through this.

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Greg Dell and his assistant Anneli have been extremely responsive and helpful, not only our initial consultations, but in follow-ups 1 and 2 years later with the insurance company to ensure that they comply with their agreements (which they did), as well as a separate and only slightly-related inquiry about our health insurance. I always hear back from them very quickly, which is rare and greatly appreciated.

Jeff P. (Oklahoma)

After a very long and frustrating ordeal to keep my LTD payments coming I decided to seek assistance from and attorney. After much research and asking those in the legal profession Dell & Schaefer seemed to be the top choice. I reached out and Alex Palamara was the attorney assigned to my case. All I can say is the experience was outstanding. Both Alex and his Paralegal, Danielle Lauria were excellent to work with. They were very kind, concerned, understanding of my frustrations and treated me with the utmost respect. Communication was excellent with regular updates and telling me what I could expect in each stage of the process.

Alex was also very straight forward with what to expect and no pie in the sky promises or expectations were made. In the end we won our case and I believe it was solely due to their experience and knowledge of not only the laws but the insurance companies as a whole. I would highly recommend them and am very grateful for the help they afforded to me.

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I originally spoke with 3 other long term disability lawyers about my case before contacting Dell and Schaefer. None of those law firms would take it. They said the chances of me winning was not good. After finding Dell and Schaefer online I spoke with one of the attorneys that has since left. He did take my case but later it was picked up by Rachel Alters. Rachel is amazing and a very intelligent attorney. She not only won my case but also was able to get my back pay for 6 months.

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