New York Life denies disability claim and gets sued by neurologist

A complaint recently filed in Pennsylvania Federal Court by a disability attorney against New York Life petitions the Court to provide denied long term disability benefits.

The Claimant also requests:

• Disability benefits from the insurers;
• A declaration that the insurers wrongfully breached their contract with the physician in failing to provide his short term and long term disability benefits per the terms of his policy;
• Reimbursement of reasonable attorney’s fees;
• Reimbursement of Court costs; and
• “Such further relief as the Court deems appropriate.”

History of Doctor’s Disabling Condition

A board certified neurologist since 1999, the physician is “under a lifetime contract with the Oregon Professionals Health program (PHP). The physician was employed by Samaritan on September 25, 2003 and shortly became eligible for Samaritan’s New York Life Short Term and Group Long Term Disability Insurance Policies. Governed by ERISA (the Employee Retirement Insurance Security Act of 1974), the physician’s policy states that the policy will provide claimants limited benefits for the conditions of alcoholism, anxiety disorders delusional (paranoid) disorders, depressive disorders, drug addiction or abuse, eating disorders or mental illness. After testing positive in a “random urinalysis test,” the physician tested positive for barbiturates (Fiorinal) and was referred to the Profession Renewal Center for treatment. At the Center, the physician was diagnosed with:

1. alcohol abuse;
2. narcissistic and obsessive personality traits;
3. pending Lasik surgery;
4. problems with his primary support group; and
5. GAF 73.

After being discharged from the facility on June 9, 2006, the physician’s treatment team recommended the physician participate in ongoing individual psychotherapy weekly, “continue participation in the Oregon PHP, attend regular Caduceus meetings, initiate one-week medication trial of naltrexone, gradually transition back to work and that his work schedule not exceed 20 hours per week,” return to the facility once or twice before October 2006, “engage in marital counseling with his wife and sign appropriate release of information so that treatment staff can coordinate his care.”

After smoking methamphetamine and testing positive for the drug during a random urinalysis, the physician was admitted to intensive residential treatment at yet another facility and was diagnosed with alcohol abuse, opioid dependence, methamphetamine abuse, Fiorinal abuse, adjustment disorder with anxiety, narcissistic personality disorder, stress, and GAF 57. The facility recommended that the physician not consider returning to work until he could show documentation that he been in recovery from his conditions for six (6) months.

In January 2007, having kept his relapse secret from his workplace, the physician returned to work and on March 25, 2007, and shortly after he was arrested for being intoxicated at work. Three days later, the physician was admitted to a detoxification center. On September 6, 2008, the physician filed his disability claim with New York Life alleging that he had been disabled since March 26, 2007 due to chemical dependency. Admitting that he had been treated for chemical dependency in 2006, the physician was awarded short term disability benefits through July 2007, but not beyond. New York Life informed the physician that his file was closed and no further benefits would be paid. Subsequently, the physician was informed by New York Life that he would not be approved for long term disability benefits as his discharge in July 2007 stated that the physician could work concurrently with his treatment. However, since the physician was not working due to a suspended license (as a result of his drug abuse problems), he did not qualify for disability benefits.

Allegations Made in the Complaint

According to the physician and his attorney’s calculation, New York Life would have been obligated to pay disability benefits from 2006 had they obtained his medical records for that timeframe. They allege that New York Life avoided paying the physician’s deserved disability benefits because the insurer failed to ask if the physician “could safely” practice neurosurgery, but instead only wanted to know if “participants in the IOP are permitted to work” when making its determination to deny the physician disability benefits of any kind.

The physician and his disability lawyer point out in their complaint, that the physician was unable “to file an ERISA appeal within the required 180 days because of his condition and New York Life graciously extended the deadline.” However, the extension proved not to help the physician as New York Life upheld its previous decision to terminate the doctor’s Short term disability benefits and deny his long term disability benefits in a letter dated March 11, 2011. Pointing out that the physician’s medical records used by New York Life to evaluate his case were incomplete, the physician and his attorney point to the insurers’ report that state that the internal review report for the physician’s evaluation was “ambiguous.” Consequently, they allege that the insurers have an “inherent conflict of interest by administering the Plan and paying benefits from its own funds and New York Life’s selective and self-serving use of medical records and other documents a de novo review of this matter is not appropriate, a substantially more stringent arbitrary and capricious standard of review must be applied.”

The Plaintiff and his attorney continue in the complaint to allege that the insurers had no legal basis for denying or terminating the physician’s disability benefits and that those disability benefits have been “wrongfully withheld.” His disability attorney contends that the insurers did not perform a “full and fair” evaluation of the physician’s claim, breached their contract with the physician, disregarded substantial evidence of his disability, and breached their fiduciary duty toward the physician.