Will Life Insurance Company of America have to pay long-term disability benefits?

As of the time of this writing, Beverly Barker doesn’t know the answer to that question. Court proceedings are complicated and seeking compensation for long-term disability benefits is no exception. A case heard in December 2009 in U. S. District Court for the Southern District of Indiana, Indianapolis Division demonstrates this yet again.

CIGNA can run but they can’t hide

When Barker’s case came before Magistrate Judge Debra Lynch, her right to compel Life Insurance Company of North America (LINA, also known as CIGNA) to provide requested information hung in the balance. LINA filed a motion to quash the subpoena for responses to Barker’s’s questions and evidence requests.

Barker’s claim arose from the fact that she believed she qualified for long-term disability benefits in July of 2007. Documentation provided by her treating physicians supported her claim and demonstrated total disability. Parker claimed that LINA favored an evaluation of her medical condition provided by a doctor in the pay of Intracorp, a company she claimed LINA’s parent company owns.

As a result, Barker contended that a conflict existed between LINA’s roles as the evaluator of claims and as the payer of those claims. In order to prove the conflict, Barker served LINA with interrogatories (a series of questions) and a list of information Barker wanted LINA to produce. The request, made on May 28, 2009, received a response from LINA on August 3, 2009. The response stated that case law prohibited discovery on the benefits denial decision unless there were specific reasons to suspect misconduct. The insurance company also claimed that the discovery requests weren’t relevant.

The Court had to determine whether the Supreme Court ruling that involved Glenn vs. MetLife superseded a District Court ruling involving Semien v. LINA. LINA claimed that Semien, which would require Barker to identify a specific conflict of interest plus provide enough evidence to demonstrate that LINA’s procedures were defective, prevailed.

At first glance, it would have appeared that LINA had the advantage, as several other District Courts had ruled that Glenn did not overrule Semien. However, Barker’s case appeared in the right District Court. At least four cases tried in the Southern District of Indiana upheld Glenn’s rejection of special procedural rules. Glenn determined that the only way to determine if a conflict of interest has been involved in a claims denial is to allow discovery.

This made it necessary for the Court to address each of Barker’s individual discovery requests. Barker sought to compel responses to 15 questions and 17 requests for evidence.

CIGNA’s attempt to hide information is defeated

Let’s take a look at the information Barker was seeking.

Barker wanted a list of all the people who reviewed her claim file and participated in the denial decision. She also asked for information about the total payments LINA had made to medical or vocational experts between 2004 and 2009. Lina objected saying that the identities of the individuals were in the administrative record, and that their employees were paid fixed salaries.

LINA also objected to providing compensation information that proceeded Barker’s claim review period of 2008 and 2009. The Court decided to allow the longer review period, so any trends relating to claims practices and compensation could be identified, as this could uncover bias in close denial decisions.

Barker asked to see the personnel files and performance of all the LINA employees who reviewed her claim. LINA objected, claiming that some information is particularly sensitive and other information was not connected to the conflict analysis. The judges reached the conclusion, after reviewing the cases that LINA presented, that disclosure of performance evaluations and compensation was appropriate, but other information in the files need not be released.

In addition to this information, Barker also wanted information about the number of claims reviewed for the past five years by the same people who reviewed Barker’s claim and the number of denials or terminations relative to those claims. Barker also sought information about plan members whose benefits have been denied. LINA objected to this request, claiming the information was irrelevant. The court disagreed with LINA. Instead, the Court felt the information would provide statistical information regarding LINA’s approval/denial/termination of benefit practices.

The Court also supported Barker’s request that LINA produce documents describing the company’s process for reducing bias and improving claim accuracy. The request for any contracts that existed between Intracorp and LINA during the past five years, and an accounting of the number of claims that were denied by LINA after review by Intracorp were also met with Court approval.

Almost all of the information Barker sought to compel received confirmation from the Court. But the Court stopped short of allowing Barker to secure actual financial information from the long-term disability insurance company regarding claim settlements. The Court found that this information was not relevant or connected to the conflict analysis. The Court also refused to order LINA to provide other claimant’s files for review, citing the invasion of privacy exceeded the relevance to Barker’s claim.

The Court granted LINA’s request for a protective order, which will likely keep all of the information confidential to Barker’s case only. If Barker’s council and LINA could not reach an agreement on the terms of the order, the Court agreed that LINA could file a motion for protective order consistent with the Court’s ruling.

Barker fared quite well in this exchange. LINA and Intracorp were ordered to produce the Court-approved information within 14 days of the Court’s entry of a protective order. The results might have been different in another District Court. This highlights the importance of an attorney having a thorough understanding of the decision making process within the region where he or she offers short-term and long-term disability representation.

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