Sedgwick And AT&T Disability Denial Scheme Exposed In ERISA Lawsuit

On May 14, 2012, the U.S. District Court for the Northern District of California issued an order on a very hot topic for ERISA Disability Lawsuits. The issue concerns how much “Discovery” a denied person is able to obtain from the Disability Insurance Company while litigating a case.

Frequently, the lawyers for the disability insurance companies claim that the Plaintiffs should be allowed no discovery other than access to the administrative claim file. This old argument was turned on its head in 2008 when the U.S. Supreme Court ruled in Metropolitan Life Ins. Co. v. Glenn that limited discovery was allowed in ERISA cases. The recent ruling from the Northern District of California in John Doe v. AT&T Western Disability Benefits Program illustrates how courts are beginning to allow such discovery in today’s ERISA disability denial cases.

To first understand how this ruling and other recent rulings will affect our clients and others similarly situated it is important to understand what exactly discovery is. Very simply, “Discovery” is a pre-trial tool in which each party can obtain evidence from the opposing party using devices such as requests for the production of documents, requests for admissions, and requests that the opposing side answers interrogatories (written questions). The documents and answers provided to the questions posed in discovery can lead to evidence that can favor the plaintiff when the case goes before the Judge for trial.

In most ERISA disability cases, the Plaintiff / Claimant’s discovery request is restricted only to “unearth the existence of possible conflicts of interests under which the defendant may operate or of procedural errors that may have undermined the fairness of the plaintiff’s hearing.” What exactly the Plaintiff is allowed to ask for under these restrictions was the question that was answered in this recent California disability claim.

The Case involved a former employee of AT&T, Inc. who brought suit challenging his Short Term Disability Benefits denial under the AT&T Western Disability Benefits Program. The Disability Attorney representing the plaintiff desired answers and documents to determine if the defendant had a “conflict of interest.” For instance, the Plaintiff requested the number of claims and appeals in 2009 and 2010 that NMR (the “independent” company who provided the physicians who conducted the medical review of the medical documentation) had provided medical reviews for, as well as the total numbers that resulted with NMR approving and denying disability claims/appeals. The Plaintiff also requested the total amount of money that had been paid to the 3rd party administrator Sedgwick Claims Management as well as NMR in 2009 and 2010 for services related to the Disability Plan’s Administration. Finally, the Plaintiff sought any documents relating to the Plaintiff’s claim or appeal that was received or created by the Defendant, Sedgwick or NMR. Sedgwick has been hired by AT&T to administer all of the short term and long term disability insurance claims. Unfortunately the policy language in the AT&T policy is terrible and Sedgwick is notorious for denying numerous claims.

The Court found that each of these requests were relevant because it could show a stingy claims granting history as well as an economic interest in denying claims by AT&T, Sedgwick and NMR. The Court also found that the interrogatories posed must be answered as the Federal Rules of Civil Procedure “mandates that a party responds to interrogatories with ‘the information available to it.'” Likewise, the Court also found that the Federal Rules also requires that “a party produce relevant, non-privileged documents in its ‘possession, custody, or control.'” AT&T attempted to argue that some of these documents were not available to it or were not in its possession, custody or control. The Court, however, disagreed and pointed to the Agreement/Contract between AT&T and Sedgwick (and Sedgwick’s subcontractors) that granted “control” and “ownership rights over such information and documents” to AT&T.

While the outcome of this ruling is specific to the facts of this case, this ruling, like many others that have recently been issued by other courts, show that the Courts are slowly promoting the idea that discovery is reasonable in ERISA Disability Denial Cases.

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There are 7 comments

  • Martha,

    Please feel free to contact our office to discuss your claim to see what we might be able to do to assist. You may also want to consider speaking to a labor/employment attorney. We can assist you in finding one if needs be.

    Stephen JessupJun 10, 2015  #7

  • I need to add.. I have been on disability several times in the last 4 years for this same condition and have NEVER had to fax this much documentation.. and about 2 years ago my district manager called in into his office and questioned why I was still sick and what was I doing to get better. Depression is a lifelong disease and I can’t get rid of it unfortunately but I just told him I was under doctors care. He told me he had rights too and can make things hard for me.. I believe this is why IDSC is lying and denying my claim and giving me such a hard time with documentation.

    marthaJun 9, 2015  #6

  • I am a veteran and employed by AT&T. Have been suffering from depression/anxiety. Initially went out on disability in Feb.. I faxed my doctors notes and was denied continuously for not having supporting documentation. I was going to the VA hospital 3-4 times a week and faxing notes.. after 2 months of this and no pay at all, my doctor requested a form to fill out. I also got my union office involved and she was aware they faxed my doctor a form to fill out. So my doctor said she got it, tested me and faxed 8 pages to IDSC the next day. 2 days later my union rep called me and questioned me as to why my doctor only send a letter. Why she didn’t fill out form because she talked to my case manager and was told I was denied again because she only sent a letter. I then told my union rep not true! My doctor faxed 8 pages.. a form And a letter. So my union rep conferenced me with IDSC and when they answered she asked the rep how many pages was the last fax my doctor sent. The rep answered 8. So she immediately asked for my case manager. Not available, then asked for her supervisor, not available. Then asked for HER supervisor and he was in a meeting and then asked for his supervisor and we got connected to him. She asked him why MY case manager lied to her about what my doctor sent and why was I denied. So he immediately looked up the fax and confirmed my doctor sent a letter AND a form that was filled out fairly well. He said my union rep misunderstood because it wasn’t denied yet.. it was pending review.. my union rep got upset and said She lied to me then I know what she said.. sure enough my 1st claim was approved from Feb 10 – May 7. At that time I still was having weekly appointments at VA hospital.. not ready to go back so at end of April I started calling them asking them to fax form to my doctor.. they kept telling me they were faxing it but my doctor never got it. I called weekly. Till I’m again in the same boat.. they faxed her form last week.. she filled it out.. said not supporting.. my doctor called them and asked what else they needed.. she filled out form they sent.. they? Why I was going to VA hospital instead of private doctor and said I was out 114 days and needed to know why I’m not able to work.. so my doctor sent addl info and they’re still denying me. They are sabotaging my job. I’m about to be fired. Please help me!! They lie!! They are making me crazy. My doctor said she sent exactly what the case manager asked. So why deny me??

    marthaJun 9, 2015  #5

  • GC,

    It will depend on how the policy defines sources of Other Income. That being said typically when there is a rollover it does not result in an offset under the policy. Please review your policy, if you have any questions please feel free to contact our office to discuss.

    Stephen JessupJun 6, 2015  #4

  • I worked for AT&T for 12 yrs , am now on long term disability . I rolled over my 401k and pension from fidelity to franklin templeton. att was notified by fidelity and att reduced my monthly payments.
    This was a rollover , the check has receiver as franklin templeton and my tax statement has it coded as a rollover . not a cash out or payment to me. Can att offset your monthly amount when no financial benefit was incurred by myself?
    also the relationship between Fidelity and AT&t is odd. Doe fidelity work for me or aT&T?
    same is true for Sedgewick and AT&T. Doesn’t AT&T make the bottomline decision an offsetting long term disability amount?

    GCJun 5, 2015  #3

  • Thomas,

    ERISA statues only provide that the Plan Administrator must have a doctor with the appropriate medical specialty for your condition review your claim. So an orthopedic doctor would be correct for a knee condition.

    Gregory DellJul 3, 2012  #2

  • Mr. Dell,

    I originally posted a comment about being placed in Administrative Denial by AT&T / Sedgwick only 30 days after total knee replacement. I’d like to follow up on this. I had two IME exams scheduled and each “orthopedic surgeon” had ceased his specialty for years, had no hospital affiliations and no teaching credentials. They only performed exams for the likes of Sedgwick, so clearly their income was dependent upon favorable conclusions for Sedgwick. My first appeal has been recently denied and I just discovered the third “surgeon” that reviewed everything is 68 years old, retired, has no hospital affiliations and no teaching credentials. The State of Florida does have some statutes that would seem to preclude use of these doctors. What is in ERISA that deals with this matter? They now want to recover disability money paid to me. A second appeal is being filed, but the denial seems inevitable. Your help is greatly appreciated.

    ThomasJul 2, 2012  #1