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Oregon Judge orders Standard Insurance Company to pay disability insurance benefits beyond the 24 month mental disorder limitation

In James F. Kitterman Vs Standard Insurance Company and Standard Select Trust Insurance Plans, the plaintiff, through his disability attorney, brought an ERISA action against the Standard Insurance Company (Standard) seeking to recover long term disability insurance benefits wrongfully denied under the terms of a group insurance plan (the Plan) issued by The Standard Insurance Company.

This case is a victory for disability claimants and addresses an issue that is very common among thousands of claimants seeking disability benefits.

The Facts of the Case against Standard Insurance Company

The plaintiff Dr. Kitterman suffered from a long history of migraines and depression. He applied for disability insurance benefits with Standard and listed the causes for his inability to work as depression, migraines and anxiety. Standard approved the plaintiff’s claim and provided the plaintiff with monthly disability payments from March 2005 until March 2007.

On March of 2007, Standard terminated the plaintiff’s disability benefits claiming that the 24 month “Mental Disorder” limitation in the plaintiff’s policy applied to his claim. The limitation provided:

Mental Disorder: Payment of LTD Benefits is limited to 24 months for each period of Disability caused or contributed to by a Mental Disorder.

“Mental Disorder means a mental, emotional or behavioral disorder.”

Judicial Review by the District Court

The plaintiff argued that that mental disorder limitation provision is ambiguous. Standard argued that there are two fatal flaws in the plaintiff’s argument because:

  1. To find an ambiguity would require the Court to ignore the fact that the plaintiff’s major depression is disabling without regard to his migraines and mistakenly treat it as a mixed condition matter.
  2. Even if the limitation is ambiguous, it does not relieve the Court of its obligation to review the record and determine if the plaintiff is in fact disabled under the Plan.

District Court’s Ruling

The court disagreed with Standard’s contention mentioned above. The Court ruled that the Mental Disorder limitation provision of the Plan is ambiguous. Second, the Court argued that the matter at hand is a mixed-condition matter as the Administrative Record indicated that the plaintiff’s migraines are a cause of his depression. The court also ruled that the plaintiff is indeed disabled under the Plan and is entitled to more benefits. In addition, the Court concluded that the migraines are disabling in and of themselves.

Mental Disorder Limitation Is Ambiguous

The Court held that ambiguities in insurance contracts are construed against the insurance company under the rule known as the “doctrine of contra proferentum.” The doctrine require the Court to take a reasonable interpretation of the ambiguity, in this case the phrase ‘mental disorder’, as not to include ‘mental’ conditions resulting from ‘physical’ disorders.

As such, if the plaintiff’s migraines caused his depression, the limitation does not apply and plaintiff is entitled to additional benefits.

Plaintiff’s Migraines, a Cause of Plaintiff’s Depression

The court noted that three (3) of the plaintiff’s attending physicians provided Standard with their medical opinion after Standard sent the plaintiff a notice stating that it intended to terminate the plaintiff’s disability benefits after two years based on the Mental Disorder limitation.

On February 22nd 2007, plaintiff’s treating neurologist, wrote:

Mr. Kitterman has not one but two disabling conditions his chronic refractory depression and his frequent recurrent migraine headaches which wreaked havoc with his dermatology practice in past years. Despite our best therapeutic attempts, we have not been able to reign in the headaches. He currently carries a diagnosis of chronic daily migraine, greater than 15 days of migraine per month. Under almost any criteria that I know, this is disabling itself.

On March 5th 2007, the plaintiff’s treating psychiatrist wrote:

As noted by Hubert Leonard, MD, in his letter of February 22, 2007, Dr. Kitterman’s migraines are severe enough to justify his inability to continue his practice as a physician”¦.Let me be clear. The severity of Dr. Kitterman’s depression is related to his inability to be a physician. The current severity of his depression is the result of his inability to continue with his chosen career. Despite aggressive treatment of his migraines, he continues to be impaired. This would be problematic even if he was not experiencing depression in response to the dramatic changes in his life.

The court observed that Standard largely relied on their medical consultants who reviewed plaintiff’s medical records. The court also noted that Standard’s consulting neurologist stated that the plaintiff’s headache quantifications are “not necessarily” correlated with the amounts previously reported.” The Court noted that the consulting neurologist did not come close to saying that the plaintiff’s disability was caused solely by a psychiatric dysfunction and that his migraines played no role in his depression.

Plaintiff’s Migraines Are Disabling In and Of Themselves

The Court observed from the letters sent by the plaintiff’s attending physicians adequately established that the migraines are disabling by themselves. Standard have conceded that such a finding would have entitled the plaintiff to the requested additional benefits under the Plan.

District Court’s Conclusion

The Court, upon consideration, ruled that none of Standard’s legal arguments in the action are found to be persuasive. As such, the Court denied Standard’s motion for summary judgment. The Court however, regarded the plaintiff’s motion for summary judgment as a motion for trial and judgment on the Administrative Record and ruled that the plaintiff is entitled to additional benefits under beyond the 24 month limitation.

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Comments (4)

  • Lonnie,

    I do understand your question, and with the limited information I have, all I can say is to review the language of the policy and make sure what is being held out in any correspondence from Standard is in accordance with the policy language.

    Stephen Jessup Oct 31, 2013  #4

  • Not sure you understand my situation. STD paid for 90 days. At the end of 90 days Std ended then my son began receiving LTD benefits. There were no overlapping STD and LTD payments. Standard is now offsetting the full amount of his STD benefits against his ongoing LTD benefits. My interpretation is that the minute LTD benefits became payable, we were automatically in an overpayment status, due to prior STD benefits?

    By the way we were just notified that his LTD benefits are being suspended. May need to call you.

    Lonnie Oct 30, 2013  #3

  • Lonnie,

    ERISA governed group disability policies are written to only allow the insured to collect a certain percentage of their pre-disability income. Usually the amount is 60%. Any money received above and beyond that will trigger an offset, the most common being Social Security disability. However, if STD benefits were still being paid when the LTD benefit became payable, then the STD benefit would most likely be an offset under the policy. Review of the LTD policy language for Other Income Benefits will confirm.

    Stephen Jessup Oct 29, 2013  #2

  • My son had 2 Group insurance policies. STD and LTD. STD paid for 90 days. Then LTD benefits began. His crippling injury occured in 2007. He is still receiving his LTD benefit. He is classified as disabled from any occupation by the ALJ. We recently discovered that Standard did an offset of the STD benefits against his LTD benefit. My understanding is that offsets / deductible income only were triggered when you were receiving simultaneous benefits. According to Standard’s explanation, the minute LTD benefits became payable, the STD benefits became an offset. Any ideas?

    Lonnie Oct 28, 2013  #1

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