Postal worker loses long-term disability claim against Hartford Insurance

Shirley Graham, an employee with the U.S. Postal Service (USPS) who participated in a long-term disability plan administered by Hartford Life and Accident Insurance Co. (Hartford), brought her case recently before the United States Court of Appeals, Tenth Circuit. Her appeal raised three issues: 1) Did the District Court rule correctly that her disability benefits plan did not qualify as a governmental plan? 2) Was the District Court’s determination that her claim did not qualify for a jury trial correct? 3) Did the District Court made the right determination when it failed to find Hartford’s denial of benefits arbitrary and capricious.

To understand Graham’s claim we will look at the background of her claim.

As a USPS employee, Graham had begun work in November 1976 as a rural letter carrier. She had remained in this position until June 7, 1996 when physical health problems lead to the USPS modifying her job duties to a desk job as a “Modified Rural Carrier.” When her knee and ankle pain increased, Graham took a leave of absence on July 17, 2000 under the Family and Medical Leave Act. On December 1st she was granted disability retirement by the U.S. Office of Personnel Management (OPM).

While Graham had been employed at the USPS, she participated in the National Rural Letter Carriers Association (NRLCA) bargaining unit. One of the membership benefits she signed up for, on January 28, 1997, was a long-term disability policy underwritten by Hartford but arranged for and administered by NRLCA. In order to participate in the plan, she had to authorize USPS to make deductions from her wages and to release information so she could be enrolled in the plan.

The policy language

The plan terms stated that benefit became payable if she became totally disabled while insured under the plan, remained totally disabled throughout the elimination period, then remained totally disabled beyond the elimination period. She also had to have remained under the regular care of a physician during the elimination period and be able to submit proof of her loss satisfactory to Hartford.

The plan described “Totally Disabled” during the first 24 months and the elimination period as being unable to perform the essential duties of her occupation which resulted in her earning less than 20% of her predisability earnings. In the Plan, total disability could be caused by accidental bodily injury, sickness, mental illness, substance abuse or pregnancy during this time span. Graham claimed bodily injury as the basis for her claim.

Medical history

On February 7, 1994 Graham twisted her knee while delivering mail. She went to Dr. Jeffrey Emel of the Eastern Oklahoma Orthopedic Center. The following month she injured her knee again which resulted in the need for surgery in July.

Graham underwent another procedure in March 1997. At this time, a member of the orthopedic center submitted a letter to the U.S. Dept. of Labor’s Office of Worker’s Compensation Programs (OWCP) advising them of Graham’s need to be moved into a sedentary position that would keep her off of her feet a majority of the time. The letter recommended that she be permanently removed from mail carrying duties. The USPS responded by moving her into the Modified Rural Carrier position.

Graham then injured her left foot and ankle at home on October 25, 1998. She went to Dr. Emel a month later and found that she was healing well, but Graham continued to report pain in her knee and ankle throughout 1999 and early 2000. She started receiving corticosteroid and Synvisc injections to her kneed in November and December of 1999, which the records suggest removed the swelling in her knee and decreased her pain significantly.

Her injured ankle began flaring up again in August 1999. If she failed to take her Vioxx subscription, the ankle became even more symptomatic. Finally when the pain had not resolved itself by January 11, 2000, her doctor ordered an MRI. The MRI revealed a ganglion cyst. The cyst was removed in late February. Her surgeon found her progress was excellent in his March 21 follow-up evaluation and noted that she should be able to return to work within weeks.

Graham applied for a leave of absence on July 17, 2000. The paperwork for her leave indicated that she was suffering from “ankle osteophytes, bone cyst, osteoarthritis knees and ankles.”

Hartford’s administrative record included Graham’s March 21, 2000 post-surgery exam. Hartford also collected additional records from her physicians during the elimination period and shortly thereafter.

On July 25, 2000 Graham applied for disability retirement with the USPS. Dr. Emel supported her application. His July 26, 2000 report to OWCP noted that osteoarthritis involved both knees and ankles. He also noted that Graham was experiencing irritation in her knee because her ankle surgery had “caused her to have to bear more weight” on her knee. Graham received an injection to the knee that was most effected.

Within two days of the initial injection, her ankle was swelling, and another injection was given. At this point, Graham applied for disability benefits under her HRLCA plan. Hartford asked USPS to provide a Physical Demands Assessment for Graham’s position as a modified rural carrier. The human resource specialist returned the form stating that sitting for eight hours with intermittent standing for two hours, with rest, and walking for two hours, with rest, was normative for the position.

The August 10 follow-up exam showed some improvement in Graham’s ankle and knee. Continued injections of Synvisc were recommended, which were administered on August 30, September 7, and September 15. On October 13, Emel reported to OWCP that the injections were only helping minimally and voiced concern because the last injection had sparked a reaction. On November 10, Emel still didn’t recommend returning to work, though a November 15 x-ray “looked pretty good.”

Hartford asked Emel to complete a physical capacities evaluation form.

Emel’s December 5 notes suggested that Graham was receiving “good relief” with her left knee pain, but that her ankle was not responding as well. On the 12th, Emel reported that her right knee was still giving her problems, but that it had calmed down. He felt she was “still temporarily totally disabled.” After this visit, Emel sent his evaluation to Hartford. The December 15 document states that Graham could only sit for two hours a day, and drive for one hour a day. He felt she could only be expected to work three hours per day in her present condition.

Hartford denies the claim

Dr. Emel completed another form on December 28, 2000 indicating that Graham could work up to four hours daily. On January 8, 2001, Emel concluded that Graham had degenerative joint disease in her right knee. In response to Hartford’s request for his opinion on how Graham’s knee and ankle problems could prevent her from sitting, he responded that they wouldn’t. It was based on this reply that Hartford denied Graham’s claim for benefits on February 28, 2001.

Graham appealed on April 9. She included a March 9 letter from Emel that reported the findings of her most recent MRI. The letter explained that the results explained why prolonged sitting caused her so much pain and discomfort, and why her ability to drive to work was now affected. Hartford denied the appeal because her sedentary position was flexible enough to allow her to stand or walk around when she needed relief.

She appealed again on September 26, 2001. She asked Hartford to review all of the information she had provided. She also claimed that her injuries were causing problems with her sleep. Hartford denied again, because she had not provided medical evidence to support the sleep disorder and the prior records did not substantiate her claims of severe pain. She appealed again on February 21, 2003. This time Hartford denied her appeal because she had exhausted the plan’s administrative remedies.

She brought suit against Hartford. On April 22, 2005, the U.S. District Court for the Northern District of Oklahoma ruled that Hartford’s decision had been arbitrary and capricious and sent her case back to Hartford for a full and fair determination of her claim. Hartford then retained a board certified orthopedic surgeon, Dr. Stephen A. Sliver, to examine Graham’s medical records so the insurance company could determine what her functional limitations were during the elimination period between July 16 and October 14, 2000.

After speaking with Emel, Silver understood that Graham could sit for unlimited periods of time, but could only stand or walk for 15 minutes. In his opinion, Graham had been capable of sedentary work during the elimination period and continued to have this capacity. Hartford asked is this information applied to the elimination period, now almost eight years past. Silver couldn’t be sure, so he contacted Emel again. Silver says that Emel responded that even though Graham was 50 pounds heavier at that time, that he felt her “restrictions would probably be the same.” But Silver stated that Emel didn’t elaborate.

Then Hartford asked Silver if Emel agreed that during the elimination period, Graham would have been able to sit for most of an eight hour day? Silver said yes. And finally Hartford asked Silver to clarify his conclusion that Graham could walk up to 15-20 minutes a day. He cited Emel as saying that Graham could work up to eight hours a day and could stand/walk for 15-30 minutes three to four times daily. Silver agreed with Emel.

Based on this information, Hartford denied Graham’s long-term disability benefits claim on July 24, 2008. In their denial the made it clear that they had considered two additional letters received from Emel in August 2002 and January 2004 which explained why Graham was not capable of doing sedentary work.

Graham brought suit a second time, seeking to recover the benefits due her a participant in NRLCA’s plan. She also wanted her rights enforced and her rights to future benefits clarified. She also brought action under a state law covering breach of an insurance contract and bad faith. The court determined that these rights were preempted by the Employee Retirement Income Security Act (ERISA). It also determined that Graham did not have a Seventh Amendment right to a jury trial. District Court affirmed Hartford’s denial of long-term disability benefits.

This is the background behind Graham’s appeal

First, the court considered Graham’s claim that her NRLCA plan was a government plan and exempt from ERISA jurisdiction. In order to be exempt, the NRLCA plan had to be established for maintained by a governmental entity. The facts were clear in this case. NRLCA entered its contract with Hartford without connection to the USPS. The fact that the USPS did not contribute to the plan confirmed the lack of government jurisdiction over the plan.

Second, the court considered Graham’s claim that she was wrongfully denied a jury trial on her claim. The basis upon which a Seventh Amendment right to jury trial is based on whether a case would have been tried before a jury in 18th century England or would have been heard in a court of equity or admiralty. In the 18th century, this type of case would have required an equitable/restitutionary remedy, not a legal/compensatory one. They held firm to their opinion that ERISA is based on common trust law principles, thus meaning that jury trials are not a right.

Third the court looked at the accusation that Hartford’s denial of benefits was arbitrary and capricious. The Court found that Hartford had used a reasoned basis for their denial. Dr. Emel’s reports were at times in agreement with Silver’s conclusions. They did not provide definitive proof that Graham was unable to perform her sedentary job during the elimination period. On this basis, the Court found Silver’s independent review of the administrative record reliable.

The Court did consider whether Hartford should have given more weight to the documents surrounding her disability retirement. In reviewing these documents, they found the information failed to show what evidence the Civil Service Retirement System used or standards applied to reach the conclusion that Graham was unable to perform the duties of her sedentary job. As a result, the Court found that Hartford had a reasonable basis for not considering Graham’s qualification for disability retirement in its decision.

The U.S. District Court of Appeals upheld the Northern District of Oklahoma decision to affirm Hartford’s denial of Graham’s disability benefits.

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There are 3 comments

  • Beth,

    Thank you very much for sharing your story. Yours is a testament as to the lengths an insurance company will go to turn a blind eye to its obligation to its insured, as well as a testament to your tenacity – as I assure you Hartford figured you would just walk away.

    Stephen JessupOct 16, 2013  #3

  • The insurance industry looks out for only one “person” – themselves. After falling while on the job, I filed for disability in 1993, along with worker’s comp. My back was a mess with a number of herniated discs, my pelvis had not healed properly, and I was in pain. After 6 months, the ins. co. insisted I apply for Social Security Disability, and even paid for a speciality firm to assist with that. I did get the SSDI, and things were quiet for about a year. Then the ins. co. suddenly stopped sending my checks, and told me I must submit more medical evidence of disability. It took several months to put that together, and another 8 months for the ins. co. to make a decision – far past the time the law allows of 120 days. In the meantime, my kids and I starved. Creditors do not care. They did this to me about every 2 years – no checks, more medical info, and months of waiting. Finally after 11 years of this, they decided to stop my benefits as I was no longer “disabled.” Apparently a miracle had happened in their eyes. I sued under federal ERISA, and 7 years later, was finally awarded my benefits. Here’s what helped my case:

    I had over a dozen different specialists exam me, and had each one write a cover letter discussing my health issues along with each file they submitted. The letters clearly explained my medical problem, the diagnosis, and the prognosis for the coming months and years. I paid for a Functional Capabilities Exam, and then had the examiner write a detailed report, comparing me to the “normal” functional person.

    To add injury to insult, my attorney died during the lawsuit, and I had to finish it myself, as no other attorney would take a case someone else had started!! In my motions, I made sure to keep comparing my ability to the functionality of a healthy person: “50% less here, 35% less there.” The combination of many specialists and that comparison apparently did the trick, as I won in a summary judgment before trial. I also kept a medical diary and would make entries almost daily – detailing my pain levels, abilities, how I’d slept, what I did. A great deal of boring but vital details.

    Don’t be afraid to tell your doctors what is happening with your claim, and explain that the more specific and detailed he is, the better your chances for benefits. Most doctors will gladly help – but you must ask, beg even, as most are not used to keeping lengthy and detailed records for others to read. Your family doctor plays a vital role – he should make sure you see specialists, be willing to write letters on your behalf (and, yes, they will ask for $$ for this), and keep detailed notes on your general and emotional well-being. These notes should differentiate between the stresses caused by illness, and those caused by the insurance company’s obnoxious behaviour. S/He should also note what assistance your family may providing, activities that you can and cannot do anymore, your overall health, and other general observations.

    Sadly, I suspect that poor Ms. Graham did not overwhelm the insurers with documentation of her problems. By the end of my case, I had submitted over 400 pages of medical information plus my diaries for over 5 years, statements from my children, my husband, my neighbours, even my cleaning lady – anyone who had info about my disabilities. It’s a numbers game, and the more numbers you have to support your claim, the better your chances.

    Beth S.Oct 15, 2013  #2

  • I am also a rural letter carrier with shoulder and arm trouble similar to what this woman has experienced. I have a union steward in my office that had a hip replacement and after what he experienced and what this woman has endured I can say these disability policies are a total scam. The companies have outs all through the process and it is evident that unless you are in a coma on life support they will never have to pay! And now the post office will not make a job for you with limitations. I am currently in need of limited duty and there is none offered and no pay in 8 weeks. Department of labor is as bad as the insurance company. Pray for us all.

    Brent HouseJan 25, 2012  #1

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