In Russell v. Catholic
Partners Employee LTD Plan, No. 13-4804
(6th Cir. 8-14-14), the nurse claimant submitted a claim for LTD benefits
based on a knee and mental impairment which prevented her on May 12, 2007 from
continuing the RN job she had held for 30 years. Her
LTD benefits were granted on November 15, 2007 since she was unable to continue
her regular occupation. However, she was
also informed at that time that the standard of eligibility changed after two
years and she would then be required to show that she was unable to work in any
gainful occupation in order to continue receiving LTD benefits. After the two years passed, her claim for
LTD was denied since the insurance carrier determined that she could perform
work as a case manager or triage nurse despite her physical and mental
impairments. The claimant appealed
internally and the final denial was issued on July 20, 2010. When the claimant initiated a federal court
lawsuit on March 20, 2011, the carrier moved to dismiss on the grounds that the
statute of limitations had run.
The LTD Plan
required written proof of a claim to be submitted within 90 days of the 180-day
elimination period. It also provided
that a federal lawsuit could be initiated 60 days after proof of the claim had
been submitted and within 3 years after the proof of claim was required. The Court determined that the proof of claim
was required to be submitted by February 8, 2008 and, therefore, the
limitations period expired on February 8, 2011 – fifty days before the claimant
initiated the lawsuit. The Court
rejected the claimant’s argument that the limitations period was re-set by the
application of a different eligibility standard on November 12, 2009. “The
Supreme Court recently held “a participant and a plan may agree by contract to
a particular limitations period, even one that starts to run before the cause of
action accrues, as long as the period is reasonable.” In this case, the claimant had six months
after the final denial of her LTD claim on July 20, 2010 to file suit before
the three-year limitations period expired. “The plan’s use of the “any gainful
occupation” standard did not reset the contractual limitations period.” The Court also refused to re-set the
limitations period each time the carrier requested new evidence supporting proof
of continuing disability.
In Hayden v.
Martin Marietta Materials Inc. Flexible Benefits Program, No. 13-6319 (6th Cir. 8-18-14), the claimant
left work in January 2010 because of a variety of physical ailments and mental
impairments (depression and anxiety).
She sought and was awarded SSI benefits.
However, she was denied LTD by
her employer’s claims administrator on the grounds that her physical ailments
were objectively insufficient to render her unable to work in her profession
(as an office manager) and her mental impairments were not sufficiently severe
to prevent her from working. The Court
agreed that the claimant failed to show that she was physically unable to work
during the entire 180-day elimination period. For instance, her physician’s
notes did not mention her arthritic hands until eleven months after she stopped
working and similarly did not discover other conditions until after the elimination
period. Her “minor” heart condition from 2008 similarly did not prevent her
from working. Therefore, the plan’s decision to deny
benefits on this basis was not arbitrary or capricious.
The Court
reversed the claims administrator, however, on the mental disability claim
because the reviewer imposed a higher standard than the criteria outlined in
the plan documents. The reviewer denied
benefits on the grounds that the claimant could perform some work, instead of
evaluating whether she was mentally capable of continuing to perform her own
profession. Indeed, the reviewer’s
decision “suggests that Hayden would have had to be suffering from “severe
psychiatric symptoms, suicidal ideation, homicidal ideation, hallucinations” to
be considered disabled.” This decision would effectively preclude any claimant
from showing that depression or anxiety as a “disability— [and] is inconsistent
with the terms of the Plan, which focus on whether a claimant can perform the
material and substantial duties of her own occupation.” The reviewer also denied benefits in part
because he was influenced by the fact that the claimant’s employer was going
through bankruptcy. The treating
physicians and psychiatrist had explained that her anxiety was related to her
own health problems and those of her husband.
It is true, as a general matter, that when a plan
administrator relies on the opinion of one doctor over that of another, “the
plan administrator’s decision cannot be said to have been arbitrary and
capricious because it would be possible to offer a reasoned explanation, based
upon the evidence, for the plan administrator’s decision.” . . . . But ERISA does not grant to
a plan administrator carte blanche to adopt the opinions of its reviewing
physicians. When a reviewing physician’s report is “inadequate,” a plan
administrator cannot be said to engage in a deliberate, principled reasoning
process when it adopts the position of that report. . . . In particular, where a reviewing physician’s
opinion applies standards that conflict with the terms of the plan, that
opinion is not evidence supporting a conclusion that the claimant is not
disabled within the meaning of the plan.
Instead of remanding the case for another review, the Court
awarded benefits to the Claimant based on her mental disability in light of the
uncontroverted evidence.
In Butler v.
United Healthcare of Tennessee, Inc, No. 14-6446 (6th Cir.
8-22-14), the claimant was a long-time alcoholic, who attempted a variety of
outpatient treatment programs before finally admitting herself into an
inpatient facility in 2005. Her husband’s
insurance company denied coverage, although she seemed to meet the insurance carrier’s
internal criteria (as they belatedly discovered only after initiating the
litigation), of having a “[h]istory of continued and severe
substance abuse despite appropriate motivation and recent treatment in an
intensive outpatient or partial hospitalization program.” Her husband paid for her inpatient treatment
and pursued two internal appeals of the denial of coverage. The external reviewer hired for the third internal
appeal was given an incorrect standard by the insurance company and failed to
explain why he disagreed with the recommendations of the claimant’s two
treating physicians or mention the claimant’s history of failed outpatient
rehabilitation. After litigation
commenced in 2008, the carrier realized it had given the wrong standard to the
external reviewer and attempted to correct that mistake, but the reviewer
affirmed his prior decision and still failed to explain why he disagreed with
the recommendations of the claimant’s two treating physicians or mention the
claimant’s history of failed outpatient rehabilitation.
The Court agreed that the insurance carrier had not
completed a complete or fair review of the case and remanded it for the carrier
to explain why it disagreed with the recommendations of the claimant’s two
treating physicians and why the claimant’s history of failed outpatient
rehabilitation was irrelevant. Instead,
the carrier obtained another letter from the same external physician claiming
that he believed he had previously reviewed the letters from the treating
physicians and, in any event, after reviewing the file again he still believed
coverage should be denied, but still did not explain why he disagreed with the
treating physicians. The Court remanded
the case again for the insurance carrier to retain a different external
reviewer, explain why it disagreed with the treating physicians and permit the
submission of new medical information. The claimant submitted new medical information
that specifically addressed the carrier’s internal criteria for inpatient
treatment (which was not disclosed until after litigation commenced). While the carrier retained a new external
reviewer, it suggested that the reviewer should not give much weight to the new
medical information. The reviewer, in
turn, made the same mistakes as the first reviewer: He denied coverage without explaining why he
disagreed with the treating physicians or why the claimant’s unsuccessful
outpatient treatment did not qualify under the carrier’s own criteria. Accordingly, the Court granted judgment for
the claimant and the Sixth Circuit affirmed.
United’s refusal to give Janie’s benefits claim a fair review
not once, not twice, but three
times—in spite of clear instructions from the district court—casts a
pall over United’s handling of the claim from the start. Through it all,
through three chances to get it right (indeed through three chances just to
engage in a nonarbitrary decision-making process), United failed the Butlers in
multiple ways. United never explained its disagreement with the opinions of
Janie’s treating physicians, which all contained detailed accounts of her prior
attempts to get sober using increasingly intensive outpatient programs and
which unequivocally deemed residential treatment necessary. . . .United ignored key pieces of
evidence and the key guideline applicable to Janie’s claim, making factually
incorrect assertions (e.g., Janie had no history of trying unsuccessfully to
treat her addiction with outpatient treatment), . . .,
or remaining silent about the matter, . . . or (worst of all) mentioning
the prior failures but nonetheless concluding without explanation that she did
not meet the guideline requirements, . . .. And United stacked the deck
against the claim, instructing reviewers to “disregard” the evidence that John
submitted in favor of the “contemporaneous physician-authored documents” that
it had entered in the record.
. . .
United adds that the decision to deny benefits cannot be
arbitrary and capricious because five reviewing physicians agreed with it. That
reviewing physicians paid by or contracted with the insurer agree with its
decision, though, does not prove that the insurer reached a reasoned decision
supported by substantial evidence. The physicians’ opinions carry weight only
to the extent they provide a fair opinion applying the standard for granting
benefits to the facts of the case. Elliott,
473 F.3d at 619. The reviewing physicians did not do that. They misstated or omitted
the key fact of Janie’s prior failed outpatient treatment and ignored United’s
guideline that allowed residential rehabilitation where outpatient treatment
had not worked in the past. This argument, too, proves too much. If a decision
to deny benefits could never be arbitrary and capricious when backed by the
insurer’s reviewing physicians, court review would be for naught. The insurer
would invariably prevail so long as the insurer had physicians on its staff
willing to confirm its coverage rulings. That also does not make sense.
The District Court had also penalized the carrier for
failing to earlier provide a copy of its internal criteria. However, the statute only imposes liability
on the Plan Administrator (the
employer), not the claims
administrator (i.e., the insurance company).
NOTICE: This summary is designed merely to inform and
alert you of recent legal developments. It does not constitute legal advice and
does not apply to any particular situation because different facts could lead
to different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
