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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.

His job required a high level of mental acuity as well as physical work such as moving heavy containers of chemicals. 

Insurer applied wrong standard 

The judge decided that United had applied the wrong standard under the LTD policy when it denied Lyttle’s claim because he did not have a change of circumstance in his “medical conditions” before he stopped working, claiming disability. 

Instead, the court said that the policy language required an analysis of whether despite his medical impairments, the claimant could still perform the important and material tasks of his job with reasonable continuity. The judge found that “significant evidence” in the administrative record showed Lyttle could not have continued to work with reasonable continuity. 

Evidence in the record 

The medical evidence showed that he developed hand-foot syndrome as a side effect of chemotherapy. This caused hand and foot pain, blistering and lesions that limited his ability to stand and move around on his feet. Opioid pain medication impacted his intellectual clarity. The judge felt that United had not given adequate weight to the subjective symptoms of pain and cognitive impairment that the medical records supported. 

The judge said that it should not be held against Lyttle that he tried to continue to work through severe pain and cognitive challenges, noting that the insurer failed to note that he partly maintained employment by taking significant vacation and sick time. Finally, the opinion pointed out that the employer had said that the claimant could neither do his job nor could they accommodate his medical issues at work. 

The court found that the insurance company had wrongly denied LTD benefits for these reasons. 

The opinion is available on Westlaw at 2018 WL 19949.