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San Francisco Long-Term Disability Insurance Blog

Part 1: McCann v. Unum Provident and the ERISA issue

A preliminary issue in every federal court appeal in a denied or terminated claim for benefits under a short- or long-term disability insurance policy is whether ERISA governs. ERISA is the Employee Retirement Income Security Act, the federal law governing most benefit plans available through employers. 

ERISA imposes standards of fairness on disability insurers when they administer these policies, including deciding whether claimants are disabled and eligible for benefits. Whether ERISA governs impacts the standard of review the court applies when reviewing insurer actions as well as the kinds of damages available. Normally if ERISA does not apply, state laws governs.

Award-winning documentary “Unrest” about chronic fatigue syndrome

This summer, we published a post about important new research on chronic fatigue syndrome, a debilitating illness characterized by muscle pain, inflammation, cognitive impairment and overwhelming tiredness. As we described, the disease has been renamed as myalgic encephalomyelitis, or sometimes ME or ME/CFS, and the research shows promising progress toward an eventual laboratory test for CFS. 

In our law practice, we often represent people suffering from CFS who are fighting for long-term disability insurance benefits. LTD insurers are notorious for discounting complaints of impairment and pain based on CFS because of a lack of objective findings. As we reported in the earlier post, medical researchers are discovering objective markers of the impairment that are likely to contribute to developing a lab test to establish the existence of the illness. In the meantime, we advocate on behalf of our CFS clients to prove their reasonable and believable subjective complaints of pain, weakness and overwhelming fatigue that can prevent them from being able to work.

Cherry-picking evidence and how it hurts disability claimants

Disability insurers all too often engage in a behavior known in the industry and among claimants’ advocates as cherry-picking. Cherry-picking refers to a practice of insurance administrators or consulting doctors who selectively assign undue weight to particular records and ignore others when they analyze medical records to determine whether claimants are disabled and eligible for benefits. 

In cherry-picking, administrators or consulting doctors give undeserved weight to evidence that tends to minimize medical conditions and their symptoms. The other side of cherry-picking is to ignore or unreasonably discount medical evidence that supports claimants’ allegations of disabling illness, injury and symptoms.

The conflict of interest of a long-term disability insurer

We have talked here before about the inherent conflict of interest that a long-term disability insurance company has when it administers its LTD policies, especially when deciding whether a claimant is eligible for benefits. Today we will expand on this idea as federal courts have explained it. 

Federal courts across the country have written a rich tapestry of opinions in deciding appeals under ERISA of LTD insurance claim denials. (ERISA is the federal law that imposes standards and procedures based on fairness and transparency on insurers when they administer LTD claims.) These judicial opinions shed much light on how judges should consider the inherent conflict of interest in ERISA-governed LTD appeals.

Example of arbitrary and capricious LTD termination

An issue in every federal case that reviews a denied or terminated long-term disability insurance claim is what standard of review the court should apply. Normally, ERISA governs an LTD policy obtained through an employer. ERISA is a complicated federal law that sets standards and procedures for insurers and their administrators when they process LTD claims.

 

Court finds short-term disability denial arbitrary and capricious

On September 26, a U.S. magistrate judge in Ohio found that a plan administrator had engaged in an arbitrary and capricious decision-making process when it denied a Honda account representative’s short-term disability claim. 

Miller’s circumstances 

Judge finds LTD claimant with fibromyalgia disabled

Courts across the country grapple with the challenge of reviewing denied or terminated long-term disability claims based on fibromyalgia. On September 21, 2018, a federal judge in Massachusetts found that Unum and a supplemental insurer had wrongly terminated Judith Kamerer’s LTD benefits after almost a decade of payments. Kamerer suffers chiefly from fibromyalgia and depression. 

Background on fibromyalgia 

Noneconomic damages and long-term disability insurance denials

It is not unusual for an insurance company to deny a claim for long-term disability insurance benefits on flimsy grounds. It may continue to deny the claim on review even if the claimant has submitted clear and persuasive evidence of disability. When this happens, it comes as no surprise that the claimant, who may be suffering from a significant physical or mental impairment that is preventing her from working, will also experience serious anxiety and stress because of the LTD insurer’s egregious denial. 

After all, the claimant is not only facing the loss of her job, but is also dealing with a serious, disabling condition. When the insurer wrongfully denies income replacement benefits under the LTD policy, it usually does not take long for bills to become seriously overdue, thereby creating a financial crisis.

LTD insurer use of social media is a regular business practice

We have written in this space before about long-term disability insurance companies’ use of a variety of surveillance methods, including social-media monitoring, in the quest for evidence they can use to deny or terminate claims. The more serious and permanent the disability or the higher the salary of the claimant, the more expensive it will be for the company to pay out claims over time. Unfortunately, despite the contractual obligation to pay valid claims, LTD insurers are not often motivated to step up and pay claims without first making efforts to discredit claimants’ disabling impairments — and surveillance is a major part of those efforts. 

LTD insurers use actual, physical surveillance methods like hiring private investigators who tail and document claimant activity at home and in the community as well as using drones to take videos and pictures.

Federal judge says insurer applied wrong standard in LTD denial

On September 19, Judge William Orrick of the U.S. District Court in the Northern District of California reversed a disability insurer’s denial of long-term disability insurance benefits. The court interpreted a provision of the insurance policy that said a claimant is not disabled for benefits purposes if he or she could perform his or her job with “reasonable continuity.” 

Lyttle v. United of Omaha Life Insurance Company concerned Matthew Lyttle’s battle with liver cancer that caused him to leave his job as a vice president of chemistry at a biotech company. He later succumbed to his illness. His surviving wife maintained the case, seeking to recover the LTD benefits she claimed United wrongly denied during his life.

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