Utah Judge Reverses MetLife’s Denial of Mental Disability Long Term Benefits

Factual Overview

Michelle Duncan worked for 22 years for Verizon. She started with the company upon her graduation from high school back when Verizon was known as U.S. West Paging. She worked her way up the ladder to the position of Global Enterprise Manager. It was a high-pressured job requiring travel and dealing with hundreds of email communications every day.

In 2010, she began having auditory hallucinations. She suffered from feelings of paranoia. On one out-of-town meeting, she became disoriented, not knowing where she was or why she was there. She exhibited other symptoms of a mental disorder and visual hallucinations developed along with the auditory ones.

Duncan was covered under an ERISA disability policy through Metropolitan Life Insurance Company (MetLife). The Plan provided:
1. Short term disability up to 26 weeks.
2. Long-term disability (LTD) benefits for up to 26 months if the disability remained.
3. LTD Benefits continuing to age 65 only if the mental disability is “attributable to schizophrenia, dementia, or organic brain disease.” If benefits are granted under this provision and the participant regains the ability to work in a gainful occupation for which she or he is qualified, the benefits may be terminated.

In December 2011, Mrs. Duncan was diagnosed with schizoaffective disorder and her request for short term disability benefits was granted. Her request for LTD benefits under provision three was denied. MetLife asserted that “schizoaffective disorder [is]a separate diagnosis from schizophrenia with its own diagnostic criteria.” It denied her claim for LTD benefits and she appealed. After exhausting her administrative remedies, she filed this ERISA lawsuit.

The Court disagreed with MetLife, finding that “MetLife’s literal reading is the type of overly restrictive interpretation that results in arbitrary claim denials and undermines public policy.” The Court attributed a number of errors to MetLife in its administration of the plan and its ultimate denial of benefits. The Court remanded to MetLife to reconsider the denial based on the recommendations by the court.

Met-Life Demonstrated at Least a Partial Conflict of Interest

The Department of Labor requires a claim denial to include the specific “reasons for the adverse determination.” On this record, MetLife provided Duncan a brief explanation of its denial “mere paragraphs before informing [her] that her remedies were exhausted.” This did not give her an adequate explanation of the reasons for the denial, and did not allow her to supplement the record. This left the Court with an administrative record that was not helpful. This indicated that MetLife had a conflict of interest and made its denial decision “in part to avoid a substantial payment of benefits.”

MetLife Made a Number of Errors in Its Decision that Duncan’s Diagnosis was not Schizophrenia

The Utah Federal District Court found MetLife made a number of errors in its determination that the schizoaffective disorder did not fit into the definition of schizophrenia.

· The schizophrenia exclusion is ambiguous.

· MetLife’s interpretation is unreasonable.

· Its interpretation is inconsistent with the DSM.

· Its interpretation is inconsistent with other Plan exclusions.

· Analogous case law does not support MetLife’s interpretation.

· Its interpretation undermines public policy.

With so many errors, it seems the court would award the plaintiff benefits. Instead, it remanded since MetLife had not made adequate factual findings. The court gave MetLife the opportunity “to do the factual investigation necessary to discover whether Mrs. Duncan’s specific condition could fall within the schizophrenia exclusion.”

This case was not handled by our office, but it may provide claimants guidance in their pursuit of compensation under a mental health definition of their disability policy. If you need assistance with a similar matter, please contact any of our lawyers for a free consultation.

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