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Court opinions create permanent records of LTD insurer behavior

On June 28, 2018, a federal court in Mississippi issued a scathing decision ordering payment of past and future long-term disability benefits as well as attorney’s fees to LTD claimant, Juanita Nichols. One interesting aspect of this opinion is that the court described its own research into previous lawsuits against Reliance Standard Life Insurance Co., Nichols’ LTD insurer. 

Here at Roboostoff & Kalkin, Reliance is one of the large national insurers we have opposed on behalf of our clients.

Nichol’s claim 

Nichols v. Reliance Standard Life Insurance Co. is an ERISA lawsuit for LTD benefits that was filed after Reliance denied the claim initially and again on reconsideration. The court found Reliance’s denial was not based on substantial evidence and was an abuse of discretion. 

Nichols, in her 60s, worked in the chicken-processing industry her entire life. In 2016, she received several diagnoses relating to circulatory problems, including Raynaud’s disease. Her physicians said that exposure to cold temperatures put her at risk for gangrene and other symptoms, so she stopped working. 

At the time, she worked as a Hazard Analysis and Critical Control Points Coordinator in a chicken-processing plant, where her duties included training, chicken inspection and chicken processing in a factory kept at 40 degrees Fahrenheit. 

Problem with vocational evidence 

The policy said that Nichols would be eligible for benefits if her disability prevented her from performing the “material duties” of her “regular occupation” as “normally performed in the national economy.” Reliance denied benefits based on the opinion of its vocational specialist who said that claimant’s occupation was a “sanitarian,” a job that does not require exposure to cold. 

The court said this job classification only encompassed the training aspect of her job, while ignoring the chicken inspection and packaging aspects that required a cold environment. As such, no evidence supported the denial. 

Court review of lawsuits against Reliance 

The judge found an inherent conflict of interest in Reliance’s role as the decisionmaker on Nichols’ claim and its financial liability if it decided in her favor. 

The court found more than 100 opinions in 21 years that were critical of Reliance’s “disability decisions,” revealing that Reliance “takes a range of extraordinary steps to deny claims …” including: 

  • Unreasonable interpretation of plan language
  • Selective consideration of evidence
  • Discounting overwhelming evidence of disability
  • Incentivizing experts to decide claims in Reliance’s favor
  • Crediting biased expert reports
  • And more 

Among other things, the judge noted that Reliance’s particular behavior in Nichols’ case had been similarly problematic in other cases. The court noted that Reliance had engaged a long-standing pattern of arbitrarily assigning an occupational definition to a claimant that did not account for the actual duties of the claimant’s job, and then finding that the claimant could do the job, even though it did not match what the claimant did. 

The judge also noted that courts have repeatedly singled out the vocational expert Reliance used in Nichols’ claim for utilizing improper methodology. 

The judge concluded that the broad “judicial record establishes an unmitigated pattern of arbitrary and wrongful behavior by Reliance … [that] indisputably has a history of biased claims administration.” 

The opinion is available on Westlaw at 2018 WL 3213618. According to Westlaw, at the time of this writing on July 17, 2018, Reliance has appealed the decision to the U.S. Court of Appeals for the Fifth Circuit. 

Advocates for the disabled will watch for the outcome of this appeal with anticipation.