Quiat on Claims : New York Disability Insurance Lawyer & Attorney : Michael Quiat : Uscher Quiat Uscher & Russo Law Firm : ERISA, Denied Claims

Where did courts ever come up with the wild idea that medical opinions about a patient from a treating doctor and those from a reviewing doctor, who just looks at reports and test results without seeing the patient, should be given the same weight?  

The responsibility of the physician in each case is worlds apart. Physicians know that seeing the patient (skin pallor, demeanor, eye condition, general appearance) is a major part of diagnosing disease or illness. How can such a personal examination by an experienced doctor be replaced by looking at words on paper?

The Social Security Administration has long ago concluded that it cannot, and has adopted the “Treating Physician” rule. This rule gives more credit to the opinion of a physician who actually treats a patient than it does to a doctor who is paid just to render a medical opinion on the patient. To most people, this would seem a sensible rule.

However, the U.S. Supreme Court in Nord v. Black & Decker, 538 U.S. 822 (2003),has refused to allow the “Treating Physician” rule to used by courts in ERISA cases. Why?

 Sometimes, when the doctor has known the patient for some time, a change in appearance will offer a major clue to whether or not the patient is really ill. And, most importantly, a treating doctor can be held accountable for malpractice while a doctor examining for an insurance company cannot, because the person being examined is not that doctor’s patient.

But the Supreme Court in Nord suggests that a treating doctor may have a friendship or feel sorry for a patient and therefore shade his or her medical opinion toward the patient. However, this ignores the fact that for years insurance companies have been nurturing stables of doctors who never seem to find any claimant disabled, no matter how compelling that claimant’s injury or illness.

Until lately, courts have seemed to be blind to the practice of insurance companies using the same physicians over and over again based on the doctor’s inability to find disability. Many of these “experts” make all or most of their handsome livelihoods from these insurance company exams. Who would you think would be more liable to fudge examination results, the doctor who might feel sorry for a patient or the doctor who derives a major portion or all of his or her income from insurance exams?

To those who think there are doctors who would honestly follow their findings no matter what, we agree. However, such physicians are unlikely to have a stall in the disability insurance barn for long. We live in a world where to understand how things actually work you have to follow the money. When you follow insurance company money and a lot of it is going out because of one doctor’s opinions, you know there are going to be some changes made.

Which brings us back to the original question: Where did courts ever come up with the idea that medical opinions about a patient from a treating doctor and a reviewing doctor, should be given the same weight? And, why is it taking the courts so long to recognize this idea is so out of balance when everyone else involved in the disability insurance industry knows it is flat out wrong?

The obvious answer is that the insurance companies pay millions each year to PR and advertising people to blow smoke in the eyes of legislators and courts to perpetuate what is good for insurance companies, while claimants have no organized campaign to present inequities to the powers that be.

What’s to be done? Not much. Claimants will just have to chip away at the stodgy body of law which has grown since Congress enacted ERISA in 1974.   Appellate courts seem to be starting to get the message of the unfairness of closing their eyes to reality. See MetLife v. Glenn, 128 S. Ct. 2343 (2008)  at Page 2352, where the U.S. Supreme Court finally recognized that there is a conflict of interest when an insurance company, which will have to pay a claim, is given deference by courts to decide whether the claim is going to be paid. It doesn’t take a genius to figure that one out, especially in these times when “More, More, More” is the theme song in business.

Glenn should be a beginning. Notwithstanding Nord, more courts should come to the realization that treating doctors have their medical license to lose if they lie about their findings. On the other hand,  many insurance company doctors lose their meal ticket if they don’t lie about theirs.

If courts do recognize the difference in responsibility, maybe, just maybe, they will generally afford the evidence of treating doctors an edge over insurance doctors, who never even see the claimant.

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Although group insurance coverage normally expires on the last day of employment, most group policies have provisions that allow the coverage to be converted to an individual policy.

Under the law, the burden of clear notice to the employee of this conversion option is placed upon the employer, while the employee, once properly notified, has the burden of arranging for the individual policy to be issued.

Although these statements of the law are well accepted, the facts of individual cases sometimes lead to the conclusion that a review is in order so that employer and employee are both aware of what is required of them.

Such a case is Hauth v. Prudential Insurance Company, 2010 WL 3168279, in which the notice purportedly given by the employer was scrutinized to see if it was adequate when the employee, although terminally ill, failed to convert to an individual life policy.

Although there was a note in the benefits administrator‘s file that notice of the conversion privilege had been given to the employee the day after employment termination, there was no indication in the record of how the purported notice had been given or the form in which it had been given.

Relying on Canada life Assurance Co. v. Estate of Lebowitz, 185 F. 3rd 231 (4th Cir. 1999),the court ruled that any notice of conversion required by an insurance policy must be in writing, and must include:

* The date when the group coverage would expire.

* The date when the right of conversion to individual coverage would expire.

* The procedure to be followed by the employee when converting from group to individual coverage.

* The amount of the premium required to convert the policy.

Without these four requirements being clearly met, the court ruled that there was not the written notice of conversion required by the group policy and that therefore, claimant is entitled to collect under the terms of the group policy even though no longer employed.

In an unusual move for a court, it used “common sense” to make the cheese more binding. The court noted that the claimant was gravely ill when terminated (in fact, he died 41 days after termination). In such circumstances, the court found that there was no logical reason to suppose that had he been given adequate written notice of his right to convert a group life policy to individual coverage, that he would not have done so.

There is a lesson to be learned here for everybody involved in group insurance, the employee, employer and even the insurance company:

When the group policy calls for written notice to the employee of the right to convert a group policy interest to an individual interest, the employer should make certain the notice is in writing, contains the expiration date of policy coverage and of the right to convert the policy, and the amount of the premium the employee will have to pay to convert the policy.

The insurance company also has a great interest in seeing that the employer complies or it may wind up having to pay the piper.

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In disability income insurance circles the word “malingering” is always used to paint the claimant black, but the word “malingerer” should be applied to insurance companies far more often than to claimants, for many insurance companies are open and blatant “malingerers” when it comes to paying benefits.
 

This was made very clear in a recent opinion in the 7th Circuit when the court raked MetLife over the coals for using an arsenal of shady denial tactics to thwart an ERISA claim based on subjective complaints, (Holmstrom v. Metropolitan Life, 2010 WL 3024870, 7th Cir., 2010).
 

In this case, the appellate court found a litany of reasons why the denial of benefits to Holmstrom was “arbitrary and capricious”, even though the Federal District Court from which the appeal was taken had found that MetLife’s denial of benefits was sound.
 

Why do courts (and, generally, the public) have no difficulty in believing a claimant is “malingering” when seeking benefits, but never seem to seriously consider whether an insurer is “malingering” when it comes to paying benefits?
 

One might reasonably ask if a corporation which stays alive on profits is any less likely to shave morality to obtain a larger income than is an individual who stays alive on work income and might shave morality to stop working and use benefits to keep the family going?
 

Some claimants do try to malinger by not working and collecting benefits when they are not actually disabled. Insurance companies are right to contest these claims vigorously. But, there also compelling evidence that some disability insurance carriers make it a policy to actively “malinger’ on paying benefits. One only has to go back to 2004 to the Unum settlement with 49 states to see the pattern of no-pay strategies employed by these insurers. Yet, insurance companies are still not labeled “malingerers”. Why not?
 

When individuals are suspected of malingering, there is a battery of tests used by insurers to try to detect the falsity of the claim for benefits. Insurers have used them for years and years and have had many a success in beating down a claimant, some deservedly so, some not.
 

Since it is abundantly clear that insurance companies malinger when it comes time to pay disability benefits, why isn’t there a test for insurance company “malingerers”? Why should claimants be any less entitled to challenge benefit denials in court in a manner supposedly as objective as the one they face when making a claim? More importantly, why shouldn’t there be a real consequence when insurance companies ?
 

As the Holmstrom court pointed out, such a test might include the following questions:
 

* Did the insurer require the claimant to make application for Social Security benefits? If so, did the insurer give appropriate weight to the result of the SSDI application?
* Did the insurer’s doctors actually physically examine the claimant? If not, what appropriate weight should the opinion of these doctors be given in view of the type of disability claimed?
* Did the insurer appropriately evaluate treating doctors’ reports?
* Did the insurer giver appropriate weight to objective test results?
* Was the claimant’s actual medical history appropriately considered by the insurance company?
* Did the insurer appropriately take into account the cognitive impairments which are likely to result from medication required by the claimant’s condition?
* Did the insurer inappropriately ignore overwhelming evidence of disability by treating doctors in favor of the opinions of its doctors who never examined the patient?
* Did the insurer continue to move the goal posts so the claimant could never kick a field goal, i.e., provide the proof necessary to convince the insurer?
 

“Appropriate” is a key word, because it should not be enough for an insurer to say “we deny” without giving reasons appropriate to the level of the claimant’s proof, to support “we deny”. If Congress, in writing ERISA, thought plan administrators, especially insurance companies, would be paragons of virtue when it came to protecting employees, (29 U.S.C. 1001, et seq.) they were horribly mistaken.
 

To even the playing field in light of Firestone v. Bruch, 489 U.S. 101 (1989), reviewing courts should require insurers to provide rebuttals to claimant’s proofs which are on a level with the quality of those proofs.
 

Case law is full of instances where the desire not to pay benefits was so outrageous, that courts, usually restrained in their language, take the defendant insurance companies to task severely.
 

Yet, when it comes to the word “malingering”, courts and the public seem to reserve the term for claimants only.
 

If it looks like a duck, acts like a duck and quacks like a duck, why not call it a duck?
 

Insurance company disability plan administrators are many times “malingerers” of the worst kind when it comes to paying benefits.

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Lawyers sometimes have a habit of using more words than necessary. Many times this just bores the audience. Sometimes, it really, really hurts.

A case in point is the rule banning the use of the discretionary clause in health insurance policies in New Jersey. Discretionary clauses have been used by courts since the 1980s to require ERISA claimants to show that disability income claim denials by employers and insurance companies are “arbitrary and capricious” before the merits of the claim can be considered. This sea change in ERISA jurisprudence was based upon the Supreme Court decision in Firestone v. Bruch, 489 U.S. 101 (1989).

In 2006, the New Jersey Department of Banking and Insurance responded to our request to do something about this unfair burden on plaintiffs in a relatively prompt manner for a state agency. (As an aside, it has taken the State of New York years longer to respond).

But, in drafting the regulation, the New Jersey Department of Banking and Insurance felt it necessary to insert the unnecessary word “sole” before the word “discretion”, and to add language about review which accomplishes nothing as the law now stands. So, now the regulation (N.J.A.C. 11:4-58.3) reads as follows:

“ No individual or group health insurance policy or contract, individual or group life insurance policy or contract, individual or group long-term care insurance policy or contract, or annuity contract, delivered or issued for delivery in this State may contain a provision purporting to reserve sole discretion to the carrier to interpret the terms of the policy or contract, or to provide standards of interpretation or review that are inconsistent with the laws of this State. A carrier may include a provision stating that the carrier has the discretion to make an initial interpretation as to the terms of the policy or contract, but that such interpretation can be reversed by an internal utilization review organization, a court of law, arbitrator or administrative agency having jurisdiction.”

Why is it worded this way? Who knows? The word “sole” adds nothing and opens wide the door to confusion.

When we first saw the proposed regulation, we thought that the word “sole” was unnecessary and was very likely to cause a problem in the courts. We wrote to the Department of Banking and Insurance and objected to this language – to no avail. So, the word “sole” remained in the regulation, lying in wait for some poor claimant to fall prey to its tendency to confuse.

Lo and behold – it happened.

In the case of Evans v. Employee Benefit Plan, et als, 2009 WL 418628 (3rd Cir. 2009), which was decided on other grounds, the Court posited that the New Jersey ban on giving deference in insurance policy language only applied to policies which gave “sole” discretion to the administrator. Since the policy language used only the word “discretion” and did not use the word “sole”, the Court reasoned that the regulation would not apply, even though the policy gave no discretion to make decisions to any other person or entity!

What is “discretion” but the authority to decide an issue? If you are the only one with authority to decide an issue, what can the word “sole” add to your power of discretion? If more than one person has discretion to decide an issue, then none of them, alone, has discretion without the other(s).

As we had previously pointed out to the NJ Banking and Insurance Commission when N.J.A.C. 11:4-58.3 was proposed, amendment to N.J.A.C. 11:4-58.3 is required forthwith. The NJ Department made it clear in 2006 that giving deference to the administrator is against public policy. N.J.A.C. 11:4-58.3 was undoubtedly intended to ban the discretionary language from disability income insurance policies in the State. Why let the unnecessary word “sole” cause any confusion so as to threaten the policy rights of New Jersey citizens when they become disabled?

We intend to pursue the issue of amendment with the State until it goes into effect. Otherwise, there will be cases in which New Jersey disability income claimants are deprived of what is due them, because of an unnecessary extra word in the regulation.

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