When an insurance company uses a deliberate, principled reasoning process, supported by enough evidence, the United States court system will stand behind them. This fact is highlighted by a case that was argued before the United States Court of Appeals, Sixth Circuit, which covers the states of Kentucky, Michigan, Ohio and Tennessee. Arguments were heard by the judges on December 1, 2009 and a decision was filed on February 5, 2010.
First we should begin by looking at the claim history in Balmert’s case
Maribea Balmert, an employee at Big Lots, participated in a long-term disability insurance plan through their employer. Reliance Standard Life Insurance Company (Reliance Standard) administered the plan. Her position as an accountant/tax analyst required long hours at a computer. Balmert, who suffered from rheumatoid arthritis, complained in August 2004 that her symptoms had intensified to the point she could no longer work.
When her rheumatologist, Dr. Kevin Hackshaw examined her on August 26, he felt that she was complaining of pain that was disproportionate relative to the synovitis that he could see. He suggested that her symptoms of pain could be connected with another etiology, such as stress. He referred her to a neurologist and a psychologist and placed her on temporary medical leave.
During an August 30 visit, Balmert told her psychologist, Dr. Wanda McIntyre, that she had been experiencing pain for a number of years, but that her pain level had intensified. Dr. McIntyre noted that Balmert indicated her desire to return to work, but not under the hours, pressure and stress that she had been handling. Balmert continued to see Dr. McIntyre every two weeks until she discontinued counseling in December 2004. The primary focus of each session was stress management in an effort to prepare Balmert for her return to work.
On October 21, Dr. Hackshaw evaluated Balmert’s condition. At this point, he noted that her rheumatoid arthritis appeared to be under good control. He cleared Balmert’s return to work with some limitations. He recommended she explore some type of flex plan that would allow her to take some of her computer work home or that she seek a less stressful position. Balmert reported this news to Dr. McIntyre, voicing her concerns that she would be unable to return to work.
Dr. Hackshaw again evaluated Balmert’s condition on February 10, 2005. During this visit he noted that she had no tender points and no detectable synovitis. He noted that she had told him that Big Lots would not accommodate her limitations. A May 19 visit resulted in the same evaluation, as did her subsequent visits on August 18 and November 21.
Now let’s examine the evidence that led to Reliance Standard’s denial of long-term disability benefits to Balmert
Balmert filed a long-term disability benefits claim with Reliance Standard on February 15, 2005. She received a letter on June 2, 2005 denying her claim for long-term disability. The letter stated that her documentation did not demonstrate that she had a physical condition that would preclude her from performing the material duties of her own occupation. She appealed, providing additional medical and supplemental information pertaining to her claim.
The most important evidence submitted by Balmert in support of her appeal was a modified functional capacity evaluation conducted on March 15, 2006 by physical therapist Matthew Crill. This report stated she was experiencing a lack of sitting tolerance and standing tolerance, a severe deficiency in upper extremity strength, a severe deficit in her fine motor skills and a chronic and intractable subjective pain rating. This report was forwarded to Dr. Hackshaw. He responded, in a letter dated July 25, 2006, that he had been following Balmert since 2004 and agreed that her condition had not changed since that time.
Reliance Standard responded by requesting that Balmert be seen an independent medical examiner, Dr. Marvin Thomas. The results of the independent review paralleled that of Dr. Hackshaw. He confirmed that she did have rheumatoid arthritis, but there was little evidence that the disease was active. He found that her rheumatoid arthritis appeared to be controlled, and he could see no reason why she would be unable to continue her present position. He could not find a rheumatological basis for her disability. He also reviewed the administrative record, and stated on November 2, 2006 that while her initial records indicated that she would have had difficulty keyboarding, he saw no evidence that this should still be a problem.
After reviewing the record, Reliance Standard determined that between August 26, 2004 and September 29, 2006, Balmert would have had trouble performing her own occupation. They determined to grant her benefits during this time period only. They notified Balmert by letter on December 14, 2006 of their decision, noting that she was not qualified for benefits beyond September 29, 2006. She was advised that her case was now closed, and that their claim decision was final.
Balmert filed an ERISA claim against Reliance Standard on February 8, 2007. Her claim challenged the limited grant of long-term disability benefits. The District Court granted judgment on the administrative record to Reliance Standard on September 22, 2008 and Balmert appealed.
The Appeals Court reviewed the District Court’s ruling based on a standard known as the arbitrary-and-capricious standard of review because Reliance Standard as the plan administrator had discretionary authority to interpret the terms of the plan and to determine who is eligible for benefits. Under this standard, the court upholds the plan administrator’s decision as long as it was reached by a deliberate, principled reasoning process, and the decision was supported by substantial evidence.
Balmert claimed that she had not received a full and fair review because the final reason for denying her benefits was different from the initial reason Reliance Standard provided. The court found that this contention meritless. They found that the original denial letter of June 2, 2005 stated that Reliance Standard was denying long-term disability benefits because there was no documentation that supported her claim. In their December 14, 2006 letter, Reliance Standard once again pointed to a lack of evidence for her disability.
Balmert also argued that she was not given an opportunity to respond to the independent medical examiner’s report, denying her a fair hearing. Reliance Standard argued that there was no legal precedent requiring them to do so. The court chose not to consider the matter, because Balmert had made no attempt to rebut Dr. Thomas’ medical opinion, which was attached to the December 14, 2006 denial letter. The administrative record provided no evidence that she had requested a copy of his report or that she had made any effort to rebut it.
Balmert next tried to argue that a willingness to provide benefits during the closed time period but to then deny continuing long-term disability was arbitrary and capricious. The court disagreed. The court found that her own treating physician’s reports backed up the independent medical review. The court would have found a complete denial of long-term disability benefits reasonable. With the administrative record based entirely on supporting her disability on the basis of rheumatoid arthritis, the court found the evidence of the disability was insufficient. The court found Reliance Standard’s decision was not arbitrary or capricious.
So why did Balmert lose? She lost because she had not provided compelling evidence of her disability and she never challenged the IME report prior to filing a lawsuit.