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.”

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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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Ken A.


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Most likely… if you are reading this now… you are searching for ‘The Right Disability Attorney’! Realizing that no professional, including Greg Dell, can make everyone happy, the attorneys at Dell attempt to. They are still representing my best interests and have literally collected every dime I am entitled to under policy. Insurance companies know that Greg Dell’s firm is large enough to have assets sufficient to fight if necessary. They won’t ‘roll over’ because they don’t have the money to stay in the ring. Your insurance company, I assure you, know who ‘Greg Dell’ is. After they receive that 1st letter from Mr. Dell, putting them on notice that they are no longer to contact you, (that ALL correspondence goes through him)… I assure you their ‘method of operation’ changes gears. Please listen to me.

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Your decision is whether to hire a “disability claims consultant” or an “attorney” which specializes in professional disability claims. You’d be wise to decide upon the later. The reason being an attorney has “power” and “authority” and actually “represents you”. He/she has authority (power of attorney) to actually communicate with your insurance company and do “Whatever It Takes”. A disability claims consultant does exactly that… they “consult” with “you” (not the insurance company) and make recommendations… they tell you what to say and do.

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