New York Life wrongfully relies upon surveillance video to deny long term disability insurance benefits

New York Life has relied on video surveillance to deny thousands of claims for disability insurance benefits. This case is another classic example of New York Life wrongfully relying upon video surveillance to justify its disregard of the claimant’s medical evidence. A Federal Court in California found that New York Life abused its discretion when it denied Todd Nash’s claim. Let’s take a closer look at the Court’s reasoning.

Todd Nash worked as the Vice President of Business Development at Morpho Technologies. His position was mainly a sedentary occupation requiring primarily sitting all day, including transcontinental airplane flights as long as 12 hours for business meetings. As an employee of Morpho, Nash was covered by a Long Term Disability Plan that was administered by New York Life and governed by ERISA.

Nash’s policy contained the common language of most group disability insurance policies sold by New York Life. His policy stated a person is first considered disabled if due to injury or sickness they are unable to perform all the material duties of his “regular occupation.” After the disability has lasted 30 months, the person is then considered disabled if they are unable to perform all the material duties of “any occupation” for which they are qualified based on education, training or experience.

In 2003, Nash complained of a “pain deep inside the left hip,” which was constantly present. He mentioned that it was particularly painful during long periods of sitting. Nash met with orthopedic surgeon Dr. Behrooz Tohidi who, after taking x-rays, concluded that Nash suffered from “severe degenerative arthritis with complete loss of the articular space and bone-on-bone contact.” Dr. Tohidi injected Xylocaine and Depo-Medrol into Nash’s hip, prescribed him Vicodin (Nash was allergic to aspirin), and informed him that hip replacement was in his future, but advised to delay it as long as possible because a hip replacement only last 20 years and each additional replacement is more difficult and risky (Nash was only 43 years old at the time).

Dr. Tohidi completed and submitted Physical Abilities Assessment Form where he informed New York Life that Nash’s upright sitting was limited to less than 2.5 hours per 8-hour work day.

On March 16, 2004, New York Life advised Nash that he had been approved for long-term disability benefits.

Nash met his new primary care physician, Dr. Stacey Lin, on November 8, 2004. She noted his physical impairments. On March 31, 2005, Dr. Tohidi sent New York Life Supplementary Disability claim form indicating Nash’s severe physical impairments due to the degenerative arthritis of the hip and cognitive impairment due to the prescribed narcotic pain medication.

From October 25, 2005 through October 29, 2005, New York Life conducted video surveillance on Nash. On the first four days the claimant performed yard work around his residence and assisted laborers who were installing a retaining wall. On the fifth day Nash was observed at the San Diego Zoo.

On December 13, 2005, New York Life discontinued Nash’s benefits beyond November 30, 2005. The main reason behind its denial was the surveillance footage that New York Life felt was completely contradictory to Nash’s and Dr. Tohidi’s reports.

On December 19, 2005, Nash met with Dr. Lin who again noted Nash’s pain and his severe osteoarthritis. Nash then met with Dr. Patrick Padilla on January 4, 2006 who recommended surface replacing hip arthroplasty. Then on February 9, 2006, Nash met with orthopedic specialist Dr. James Helgager who diagnosed Nash with advanced osteoarthritis of the left hip and recommended a hip replacement in the future.

On February 13, 2006, Nash met with Dr. Lin again who reported that there had been no significant change since January 2005. Dr. Lin then completed a Physical Abilities Assessment form on March 16, 2006 and mentioned that Nash’s activities be limited to less than 2.5 hours a day of sitting, standing, walking, etc. On March 22, 2006, Dr. Helgager also completed a Physical Abilities Assessment form which was nearly identical to Dr. Lin’s.

Nash then met with a physical therapist who conducted a Functional Capacity Examination who concluded that Nash did not appear capable of resuming his usual and customary role in the workforce.

Finally, on April 6, 2006, Dr. Helgager reported that he would recommend hip surgery, but not for at least ten years do to Nash’s young age.

On May 15, 2006, Nash submitted his ERISA appeal. His appeal contained the above described medical records and a commentary on the surveillance footage. However, on July 10, 2006, New York Life again denied Nash’s claim. In the denial letter, New York Life mentioned that the information he provided in his appeal was several weeks to several months after his disability benefits ended and did not provide evidence of continuous disability as of November 30, 2005, the date his benefits ended.

Dr. Tohidi examined Nash again on October 23, 2006 where he came to the same conclusion as he had over the previous years: that Nash was suffering form severe osteoarthritis, was functionally disabled and was a future candidate for hip replacement surgery. Further, Dr. Tohidi pointed out that New York Life’s reasoning that because Nash was not seen during a specific period of time between March and November 30, 2005, that he somehow what not disabled or limited and restricted at that time was medically preposterous. Dr. Tohidi then gave his opinion of the surveillance video. Dr. Tohidi pointed out that the video did not show the patient sitting but for a few seconds. Also, Nash is seen leaning against a tree or wall when he is shown standing for a few minutes. Dr. Tohidi found New York Life’s description of the video to be inaccurate and misleading at best.

On January 4, 2007, Plaintiff again appealed, submitting the above information. New York Life at first refused to consider the appeal because it did not provide additional material as to Nash’s abilities on November 30, 2005. After Nash’s California disability insurance attorney involved the California Department of Insurance, New York Life reviewed the appeal. New York Life had Dr. Harvey Popovich, a board certified Family Practice and Occupational Medicine doctor who was associated with the “Physicians’ Review Network,” prepare a report following a review of Nash’s medical records and the video surveillance. Dr. Popovich concluded that the restrictions and limitations reported by the other physicians are not supported by any objective evidence for the period of November 30, 2005 through the present. The last appeal was denied on July 18, 2007.

The ERISA Lawsuit

Following this final denial of his appeal for long-term disability benefits, Nash filed an ERISA lawsuit in the Federal District Court of California. At issue in the lawsuit is whether New York Life abused its discretion when it determined that Nash was not disabled under the “regular occupation” definition of disability.

Standard of Review

Since the disability insurance policy and plan documents granted discretionary authority to New York Life, the Court reviewed New York Life’s decision under the abuse of discretion standard.

The Court’s Analysis

Let’s take a look at seven of the California Federal Court’s reasons for reversing New York Life’s denial of long-term disability benefits.

A. Surveillance Video:

With regard to the surveillance video conducted by New York Life, the Court found that New York Life overstated and over-relied upon the 240 minutes of surveillance footage of Nash taken over a five-day period. The Court noted that the video does not show Nash sitting other than in a car for less than 45 minutes and briefly at the zoo. This was not inconsistent with Nash’s self reporting that he could sit in a car for up to 45 minutes. The Court felt that just because Nash could perform sedentary activities in bursts spread out over 5 days did not indicate he was capable of sustaining continuous activity in a full time occupation. The Court found that New York Life’s treatment of the video surveillance evidence was a factor that it would consider in determining whether New York Life abused its discretion.

B. New York Life completes a paper review and does not conduct an IME:

The Court noted that while New York Life did not exercise its contractual right to hire a physician to examine Nash, it instead conducted a paper review of Nash’s medical records. The Court found that none of New York Life’s medical reviewers addressed the Social Security Administration’s determination that Nash was disabled. The Court held that this would be a factor that it would consider in determining whether New York Life abused its discretion.

Further, the court found no evidence that any of New York Life’s medical reviewers were an orthopedic specialist or had experience with patients who had osteoarthritis of the hip. The Court also held that this would be a factor that it would consider in determining whether New York Life abused its discretion.

Finally, the Court noted that New York Life’s peer reviewer, Dr. Popovich, offered no further explanation as to why his opinion contradicted the opinions of each of the orthopedic specialists who examined Nash and viewed Nash’s X-rays. The Court also found that this would be a factor that it would consider in determining whether New York Life abused its discretion.

C. Evidence of Continuous Disability as of November 20, 2005:

The Court then remembered that on December 13, 2005 New York Life told Nash that it had denied his claim for benefits beyond November 30, 2005. The Court noted that prior to December 13, New York Life had not informed Nash that the date of November 30 held any special significance as the date New York Life would require Nash to prove disability. Further, the Court noted that New York Life ignored Nash’s first appeal b/c the medical evidence was “several weeks to several months after your disability benefits ended and does not provide evidence of continuous disability as of November 30, 2005.” The Court then noted that during the 2nd appeal, Dr. Tohidi pointed out that New York Life‘s basis for the first appeal denial was “medically preposterous” b/c the severity of the hip illness has not and could not have improved in the continuous period from Sept 2003 to Jan 2006 and beyond. Additionally, the resulting limitation and restrictions associated have not been and could not have been lifted during that time or on the date of 11/30/05. New York Life only responded to this by saying Nash’s newly submitted “information”¦did not add any further explanation of Nash’s functionality as of 11/30/05.” The Court held that the failure to address Dr. Tohidi’s direct rejection of New York Life’s rationale is a factor the Court considers in determining whether New York Life abused its discretion.

D. Social Security Disability Determination:

While the Plan required Nash to apply for Social Security disability benefits which the Plan could and did deduct from his payments when granted, neither New York Life nor its medical reviewers addressed the Social Security Administration’s determination that Nash was disabled. This also was a factor the Court considered in determining whether New York Life abused its discretion.

E. Pain Medication:

Neither New York Life nor its medical reviewers articulated a rationale for rejecting Nash’s evidence that (1) narcotic pain medication was necessary for Nash’s pain symptoms, (2) the side effects of the medication included sedation and impaired cognitive abilities, and (3) Nash was not able to perform duties of his regular occupation with impaired cognitive abilities. This was also a factor the Court considered in determining whether New York Life abused its discretion.

F. Failure to Credit Plaintiff’s Reliable Evidence:

The Court stated that plan administrators may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician. The court said that’s exactly what New York Life did here when it disregarded with minimal or no explanation the reports submitted by Nash on administrative appeal of three examining orthopedic specialists, Nash’s primary care physician and an examining physical therapist. The Court viewed New York Life’s decision with some skepticism due to New York Life’s conflict of interest.

G. Quality and Quantity of Medical Evidence

In viewing the medical evidence in the administrative record, the Court found that the quality and quantity of the medical evidence supported Nash’s claim that, during the “regular occupation” period, he was unable to perform the material duties of his regular occupation due to severe osteoarthritis of the left hip.

Summary

The Court concluded that New York Life abused its discretion in denying Nash’s claim for disability insurance benefits. The Court stated that even if they ignored New York Life’s conflict of interest, the Court would nonetheless have concluded that New York Life abused its discretion in denying P’s claim for benefits.

Remedy

Because New York Life’s decision to terminate Nash’s “regular occupation” benefits was an abuse of discretion, the Court ordered retroactive reinstatement of Nash’s “regular occupation” benefits from the time they were terminated to the time that the “regular occupation” benefits would have expired.”

Because New York Life had not decided Nash’s case under the “any occupation” standard, and the administrative record had not been adequately developed regarding the “any occupation” standard, the Court remanded the case back to New York Life and ordered New York Life to evaluate the claim for benefits pursuant to the “any occupation” definition of disability.