Note-Picking Not Nitpicking

We have all heard of nitpicking arguments to try to deny a proposition, but have you ever heard of note-picking arguments used to try to do the same?

In Chambers v. Reliance Standard, 2013 WL 3712415 (S.D.Ohio) the insurance company did just that in an attempt to cut a claimant off from LTD benefits. While the claimant’s doctors found him to be unable to work because of HIV, peripheral neuropathy and the effects of the medication he was required to take, Reliance found themselves a doctor who read the medical reports and based his opinion on side notes the claimant’s doctors wrote, while ignoring the important main notes they wrote about his condition.

Mr. Chambers’s treating doctor had written in his notes that he was “…doing OK with methadone…still has some trouble feeling sleepy.” And another, “pain control is good, but tired and some constipation. Has painful area on right foot. Otherwise no complaints.”

In coming to a decision in favor of Mr. Chambers, the Court agreed with him that Reliance and its doctor “cherry-picked” the medical records to come up with the few notes that seemed to back denial while completely ignoring the meat of his doctor’s reports which substantially supported Mr. Chambers’s claim for benefits.

Reliance also totally ignored the finding by SSA that claimant was totally disabled in coming to its decision to halt claimant’s benefits.

On appeal to the insurance company, claimant submitted a letter from his treating doctor, a specialist in HIV/AIDS, stating that his patient might be able to do a sedentary job for 10-20 hours a week, but that he was not able to work full time in any occupation because chronic fatigue prevented him from performing adequately in any physical capacity for more than 4 hours a day. The doctor further noted that persistent pain would impair his ability to concentrate and that the medications he was taking caused fatigue and lethargy.

Although giving deference to the denial decision of the plan administrator, the Court found that the decision to terminate benefits was arbitrary and capricious and reinstated the plaintiff’s benefits.

In this case, Reliance proved something we have said many times before. Insurance companies have no shame in their quest to keep as much money in their pockets as they can. We were flabbergasted by Reliance accusing claimant’s treating doctor as acting “more as an advocate then a doctor rendering objective opinions”, indicating the physician changed positions to help the patient obtain benefits.

This in the face of insurance company conduct in case after case where they make it a practice to hire only doctors who make their living by being blind to claimant disabilities.

Talk about the pot...



Last October we warned disability claimants about a favorite ploy of insurance companies – taking surveillance videos of claimants on the day they are scheduled for an IME. Insurers love videos because they find that if they can catch a claimant doing anything he or she says they are unable to do, some courts are impressed enough by such evidence as to uphold an otherwise shaky benefit denial.

This is especially true if the court feels constrained to give discretion to the plan administrator which is very often the same insurance company which would have to pay the claim if it is upheld. For more on this see.

We like to call this the “Gotcha!” ploy. If insurance companies see you make what they think is a wrong move on video tape, your benefits come to a screeching halt.

Don’t misunderstand us. We don’t have any argument with insurance companies gathering evidence against a faker who tries to collect disability claim benefits fraudulently. Insurers should fight these claims tooth and nail.

On the other hand, insurance companies should not, as they seem to, consider everyone who makes a claim a faker.

A recent case illustrates how far insurance companies will go to use a video in an attempt to put the lie to a claim of disability, In Maher v. Massachusetts General Hospital Long Term Disability Plan, 2011 WL 6061347 (C.A.1 (Mass.))) , a registered nurse claimed she had to stop working because of chronic, disabling stomach pain and the side effects caused by the strong amounts of narcotics she had to use to control the pain. Although her doctors were unable to pin down the exact cause of her pain, they all were certain that she actually was suffering the pain.

Nurse Maher said she could perform some activity from time to time, but said she spent most of her time in bed. After paying benefits for 5 years during which the company videotaped her for 6 days in 2002, 3 days in 2005 and 10 days in 2006, the plan administrator, Liberty Life Assurance of Boston, yelled “Gotcha” and stopped her benefits.

On 10 of the 19 days during which she was photographed, she engaged in no activity. On the other 9 days, she was photographed sitting or standing outside of her home. Out of the entire 90 hours she was before the camera, there were about 15 minutes when she was seen carrying a bucket or pot and 30 minutes when she was seen playing with her children.

Surprise, surprise! The insurer’s doctors (who had never examined Nurse Maher although she offered to submit to an exam) all jumped on the video as proof that the claimant wasn’t disabled and that she could reliably perform a full-time sedentary job.

After careful analysis the 3-judge court found for the claimant, but split on the remedy. Two judges ordered the matter sent back to the District Court, which had found for the insurance company, for further consideration of the claim, while the dissenting judge felt the denial of benefits was so wrong that the court should immediately reinstate them.

In supporting the claim, the court approved language in a case involving a Social Security appeal, Carradine v. Barnhart, 360 F. 3d 751(7th Cir. 2004), where the court found there is a sharp difference between a person being able to perform sporadic household and family duties and being able to work 8 hours a day for 5 consecutive days of the week).

Although insurance companies benefit big time when they can cut off a disability income claim midstream, they should realize it is not a game of “Gotcha”. Real people are hurting and their families are suffering.

It is not any kind of game at all.






Texas Boots Deference

When a ‘kick-in-the-slats” state like Texas gives the heave-ho to the discretionary clause in disability income insurance policies, it’s time for the rest of the states (and maybe the courts) to take another look at a discretionary clause ban.

In early December, in a strong, well-reasoned ruling, the Texas Commissioner of Insurance booted the discretionary clause out of the State of Texas starting in 2011. 

Any one reading this blog should know that the discretionary clause in a disability policy gives an insurance company an inordinate advantage when challenged by an ERISA policyholder over a disability denial.

This advantage was not mandated by Congress when it first enacted ERISA in 1974. This downer for the disabled was a “gift” of the Gods of the U.S. Supreme Court in Firestone v. Bruch, 489 U.S. 101 (1989), when the majority engaged in a pedantic discussion of trust versus contract law and decided to give administrators of disability insurance policies a more or less free hand by putting disabled workers through the almost insurmountable task of proving that the denial decision of an administrator was “arbitrary and capricious”.

The Firestone court opted for a trust-style review of how to weigh plan administrator denials rather than a contract-style review. Courts were ordered to give deference to the plan administrator denial (usually an insurance company which has to pay the claim, if approved) which automatically erects a steep hill which a disability claimant has to climb. (Apparently the Court overlooked the fact that no person in their right mind would set up a trust in which the trustee and the beneficiary had such obviously conflicting interests).

What a holiday present for insurance companies which have had a long history of taking maximum advantage in any situation. And, the insurers certainly have maxed out on the “deference” gift given them by the Supreme Court!

Down through the years, Federal District judges, bridling at not being able to judge ERISA cases as they see them because of Firestone, have tried to devise ways within the restrictions of Firestone to still do justice to the many wrongly denied disabled claimants whose cases they hear.

ERISA contains a preemption clause which generally keeps states from interfering with the Federal ERISA legislation. Many states were quick to recognize the advantage Firestone gave insurance companies and the unconscionable burden it placed upon the backs of those already so disabled that they could not work.

Led by the National Association of Insurance Commissioners, some states have already found an exception to the preemption clause – the language used in a policy is not preempted and, therefore states can ban the use of deference clauses in policies issued in their state, without violating ERISA.

At this time, some 22 states have tried to level the playing field for their citizens in ERISA disability income claims. Deference to insurers has been a topic of discussion in the ERISA disability insurance field for many years and slowly states have seen the wisdom and justice of giving claimants a chance to prove their case just as a plaintiff does in every other type of litigation – by a preponderance of the evidence with no head start for either side.

To have Texas, a state not known for being partial to wimpy notions, jump on the bandwagon so strongly, indicates that the advantage given to insurance companies in these types of cases is so one-sided, that even a state where sissy stuff is sneered at, says, “Enough”.


Are Courts Finally Getting It?

A ”hot-off-the-presses” decision from the Illinois Federal District Court finally lays out, without all of the obfuscating folderol, the true basis for getting to the truth of the ERISA-SSDI tug of war:   See Raybourne v. Cigna, No. 07C3205, (N.D. Ill., September 23. 2010).

Did an LTD insurance administrator, in denying a policy claim, meet the burden of establishing a credible basis for rejecting an SSDI finding of disability?


Long-standing LTD insurance company strategy has been to insist that claimants must pursue SSDI claims to be eligible for their LTD disability benefits. There is nothing wrong with this, as LTD insurance policies usually provide that third party payments to a claimant (including SSDI) have to be used to offset payment of benefits by the insurer.

The problem is that after forcing the claimant to make a disability claim to SSDI so as to receive benefits which go straight into the pocket of the LTD insurance carrier, the carrier then completely ignores the SSDI decision in its own determination of its own liability under its disability policy.

LTD insurance companies were getting away with this ploy for years, until MetLife v. Glenn, 554 U.S. 105 (2008), when the U.S. Supreme Court woke up to the fact that there is an inherent conflict of interest in a situation where an insurance company which has to pay the claim is the entity which makes the initial decision as to whether the claim is actually covered. Add to this already conflicted siutation the added insult that in ERISA cases, the LTD insurance company’s decision must be given deference, Firestone v. Bruch, 489 U.S. 101 (1989) , and you have a stew which smells bad right from the start.

Why the courts seemed to be blind for so long to the unfairness of putting such extreme power in the hands of one party to a controversy, is hard to fathom, particularly when that party is an insurance company, a class of entities not known for being overgenerous. Firestone was decided in 1989 and Glenn in 2008.

Those who represent disability claimants have been afflicted by the free ride the Firestone decision has given insurance companies for almost 25 years. No court so clearly took them to task on the SSDI issue as did the District Court in the Raybourne decision. Hopefully, now the shoe is on the other foot, where it actually belongs.

Why should an LTD insurer be able to force a claimant to obtain an SSDI ruling that finds the claimant disabled so that the SSDI benefits go into the insurer’s pocket, and then ignore the SSDI decision in the claimant’s claim against the insurer?

Hopefully, the inherent conflict so clearly defined in Raybourne, as a result of Glenn, will give otherFederal courts the gumption to reexamine the unfair body of ERISA law which has grown in the wake of Firestone. They should examine closely evidence of the LTD insurance company system of hiring and maintaining stables of supposedly “independent” medical examiners and financially rewarding employees on the basis of their record of denial of claims.

LTD insurance companies should, as do all other litigants, have to meet the burden of proof once it has shifted to them. If a party shows a court that an expert witness might have a prejudice for or against a party, the court must scrutinize that evidence closely. It should not give that evidence “deference” as otherwise suggested by Firestone.

Glenn gives attorneys the tools to show the conflict of interest and how it might affect the insurer’s decision. We only hope that having this tool, judges are as straightforward and skeptical as Judge Gettleman was in deciding Raybourne.

Claimants have the duty of proving they are disabled. Once they do, LTD insurance companies should have the duty of proving that they are not.



More States Dump "Deference"

Texas has now joined New York in trying to level the playing field for their ERISA disability income insurance claimants. Both states have proposed new regulations designed to negate the deference courts give to insurance companies in deciding disability income cases under ERISA.

If the regulations are finalized and become law, New York and Texas will join more than 20 other states in giving their citizens an even chance to prove their right to disability benefits.

These problems started with the case of Firestone v Bruch, 489 U.S, 101, when the U.S. Supreme Court found that, under the court’s interpretation of trust law, ERISA plans could be written so that discretion is given to claims administrator’s in deciding claims, and courts would then be obliged to give deference to the administrator’s findings.

This led to the concept of “arbitrary and capricious” review in ERISA disability cases. Under Bruch, the administrator’s denial of a claim would be upheld unless the claimant could show that the denial was “arbitrary and capricious”, a term of art in the law. This rule raised a mountain in the path of the claimant. If there was any reasonable basis for the denial, it would be upheld, no matter how compelling the claimant’s contrary evidence might be.

The major problem with giving deference is that the administrator is many times the insurer who pays the claim. So, if the administrator approves the claim, it also has to pay the claim out of its own funds. This deference power in a conflict of interest situation would try the moral fiber of an angel. So, you can imagine what it does to insurance companies which are far from angels!

There have been many examples of how this conflict works against disabled employees, including the most infamous one – the Unum 49-state investigation of its claims handling practices, which led to a large settlement with Unum and the reopening for review of more than 220,000 Unum case disability income denials.

What makes this deference requirement of Bruch even more problematic for claimants is the principle of preemption which makes federal law completely controlling over state law in ERISA matters. Courts have held that states have very little to say in these cases, with one big exception – states have the right to determine the language of insurance policies in their jurisdiction. In policy language, state word is law.

As a result, many states which object to insurance companies getting the upper hand over their citizens because of Bruch, have banned the use of discretionary language which favors insurers, in approving the policy forms used in their state.

One would think that every state would look out for its people in this way, especially when it takes so little effort.

What is surprising is that about half of the states haven’t done it yet, leaving the insurers with the upper hand against their own people.