In Leo Noga v. Reliance Standard Life Insurance Company (Reliance), Plaintiff, a financial advisor with Fulton Financial, stopped working on February 27, 2015. At the time, he was covered under a disability insurance policy issued by Reliance. The terms of the policy granted Reliance the discretion to determine benefit eligibility. Those covered must submit satisfactory proof of total disability in order to qualify for long term disability (LTD) benefits.
Total disability as defined by the policy means that as a result of an injury or sickness, the insured “cannot perform the material duties of his/her Regular Occupation.” The Regular Occupation is defined as the occupation the insured “is routinely performing when Total Disability begins.”
Although Plaintiff’s job as a financial advisor with Fulton was sedentary, it also required him to stand or walk for brief periods and required him to drive to client meetings. He applied for total disability benefits based on the diagnoses of neurogenic muscular atrophy, diabetes, hypothyroidism, and hypertension. He had “leg weakness” and he reported to Reliance that “I cannot drive to work, can’t stand, walking limited.”
On August 25, 2015, Reliance approved Plaintiff’s claim for total disability benefits. The approval was based on Plaintiff’s medical records that were reviewed by its in-house medical reviewer, Nurse Finnegan. In addition, Reliance management reviewed “this matter” and agreed that Plaintiff was entitled to total disability benefits.
On August 15, 2017, Plaintiffs file was referred for review to another member of Reliance’s medical staff, Nurse Moore. She recommended that Reliance obtain pharmacy records and “medical records from all actively treating providers.”
The additional records were reviewed by Nurse Vicho, who noted Plaintiff suffered from “persistent diabetic neuropathy on lower legs along with contained painful left shoulder following rotator cuff repair. Co-morbid with chronic fatigue, poor endurance and obesity.”
Nurse Moore requested an independent medical examination (IME) which was conducted by Dr. Kline who concluded that Plaintiff exaggerated his symptoms and would be capable of gainful employment with some restrictions.
Based on Dr. Kline’s report, on December 27, 2017, Reliance notified Plaintiff that his total disability benefits were terminated. On January 2, 2018, Plaintiff appealed the termination and submitted additional medical records. In January and February 2018, he was evaluated by three treating physicians. All opined that Plaintiff could not work.
Reliance had another member of its medical staff, Nurse Toth, review the new medical records. She concluded that Plaintiff could not work due to his “multiple symptoms related to his neuropathy.” Based on this opinion, on March 22, 2018, the claims manager, Jamil Jackson, informed Plaintiff the decision to terminate benefits was overturned and benefits were reinstated effective December 27, 2017.
One day later, On March 23, 2018, Jackson requested two peer reviews of Plaintiff’s medical records. Dr. Brathwaite, Board Certified in Internal Medicine, issued an opinion on April 4, 2018, that Plaintiff’s diabetes was well-controlled, but she deferred giving an opinion on whether his diabetic peripheral neuropathy affected his ability to work.
Dr. Ayyar, Board Certified in Occupational Medicine, reviewed the medical file and concluded that although Plaintiff suffered from peripheral neuropathy and lower extremity neuromuscular dystrophy, the conditions were not severe enough to keep him from working.
Based on the peer review report by Dr. Ayyay, on May 18, 2018, Reliance informed Plaintiff that its prior decision to terminate benefits was appropriate. Plaintiff then filed an ERISA lawsuit.
The United States District Court for the Eastern District of Pennsylvania held that “After a thorough examination of the administrative record, I find that Reliance acted in an arbitrary and capricious manner when it denied [Plaintiff’s] disability benefits.”
Standard of Review: Arbitrary and Capricious
Relying on precedent, the Court noted that the deferential standard of review applied to this case which means the Court “is not free to substitute its own judgment for that of the defendants in determining eligibility for plan benefits.” But, “irregularities in the review process cast doubt on the administrator’s impartiality.” A few procedural “anomalies that suggest arbitrariness include:”
- Reversing a decision to award benefits without new medical evidence to support the change.
- Relying on opinions of non-treating over treating physicians without providing reasons.
- Conducting self-serving paper reviews of medical files.
The Court stated that “In determining whether a benefits determination is arbitrary and capricious, the court must evaluate whether the determination was reasonable. After a review of the administrative record, I find Reliance’s benefits determination was not reasonable and therefore, was arbitrary and capricious.”
Evidence Supporting Court’s Decision that Reliance’s Denial was Arbitrary and Capricious
Reliance rejected, without reasons, “the opinions of its own nurses and claims manager regarding [Plaintiff’s] disability and rejected the opinion of [Plaintiff’s] treating physician and its nurses without explaining the justification.”
The Court was particularly concerned that just one day after Reliance relied on the conclusion of its employee, Nurse Toth, that Plaintiff could not function on any work level and reinstated his benefits, the claims manager sought another peer review. The Court inferred that “reliance was seeking an opinion that would allow them to overturn the decision to reinstate [Plaintiff’s] benefits.”
The Court concluded that the appropriate remedy for the arbitrary and capricious actions of Reliance was to retroactively award benefits and stated, “I find as of December 27, 2017, the date his benefits were terminated [Plaintiff] was totally disabled.”
The Court also ordered Reliance to pay prejudgment interest as part of Plaintiff’s benefit award.
This case was not handled by our office, but we think it can be helpful for those who have had their benefits terminated shortly after they were reinstated. If you have questions about this case, or any questions about your own disability claim, contact one of our disability attorneys at Dell & Schaefer for a free consultation.