ERISA Insurer’s Hiding Doctor’s Opinions Results in Appellate Win for Claimant

On December 11, 2019, the Ninth Circuit Court of Appeals (the federal appeals court with jurisdiction over Washington and other coastal and western states) decided Wagenstein v. Cigna Life Insurance Company. The decision is unpublished, meaning it is not binding on lower courts but may still be used as persuasive authority.

Lea Wagenstein sued to challenge Cigna’s termination of her long-term disability benefits under an ERISA-governed insurance policy. The district court dismissed Wagenstein’s case, agreeing with Cigna’s decision to terminate benefits.

The Ninth Circuit reversed the district court. The court emphasized that even Cigna’s own consultant, hired to examine Wagenstein at Cigna’s behest, determined Wagenstein’s disability precluded her from sitting more than 2.5 hours per day. As such, the Ninth Circuit noted that report showed Wagenstein could not perform sedentary work requiring sitting for most of an 8 hour workday.

The Ninth Circuit noted Cigna possessed a report from another consultant, hired by Cigna, who determined Wagenstein could actually sit for a full workday and thus could perform two sedentary jobs. Cigna relied on this report in concluding Wagenstein was not disabled. But Cigna hid the report from Wagenstein until Cigna’s final denial of her appeal of the termination of her benefits. That deprived Wagenstein of the opportunity to provide a response from her treating physicians, who agreed Wagenstein was disabled. Failing to provide Wagenstein the report violated ERISA’s rules requiring full and fair review of claims.

Because Cigna violated ERISA by withholding its physician’s report, the Ninth Circuit remanded the case back to the lower court with instructions to allow Wagenstein to submit statements from her doctors rebutting Cigna’s consultant in determining whether Wagenstein remained entitled to disability insurance benefits.

The Wagenstein decision, while not binding precedent, remains an important reminder that, where the insurer relies on consultants’ opinions in denying claims or terminating benefits, ERISA protects the claimant’s right to rebut the insurer’s evidence.


Court Rejects ERISA Insurer’s Effort to Discredit Treating Physicians in Awarding Disability Benefits

A recent decision from federal court in Oregon is an interesting example of how ERISA disability benefit disputes can arise where the claimant suffers from complex and hard-to-diagnose conditions such as fibromyalgia. Since conditions like fibromyalgia defy easy identification, these cases often turn on the claimant’s treating doctor’s documentation of the claimant’s symptoms.

Jane Medefesser sued her LTD carrier, MetLife, after MetLife denied her disability insurance claim. Medefesser suffered from a host of medical conditions including fibromyalgia and migraines. Medefesser’s doctors opined her medical conditions impacted her ability to function even in a sedentary job.

MetLife initially approved Medefesser’s disability claim. But MetLife subsequently changed its position and terminated Medefesser’s benefits after an “independent” doctor hired by MetLife determined Medefesser could perform sedentary work. MetLife also relied on opinions from its physicians that Medefesser’s doctors were, supposedly, exaggerating Medefesser’s symptoms.

The court disagreed with MetLife that Medefesser’s doctors were exaggerating her symptoms. To the contrary, the court noted that, given the complexity of Medefesser’s condition, the treating doctors who personally examined Medefesser were in the best position to reliably assess her disability.

This ruling is notable because it addresses a common issue in ERISA disability cases involving conditions like migraines or fibromyalgia. Where the claimant’s disability arises from complex conditions that defy easy diagnosis, disability insurers have an incentive to rely on the supposed lack of “objective” findings or review by “independent” consultants. These consultants’ opinions typically boil down to: “if it doesn’t show up on an x-ray, it’s not real.” The Medefesser decision is a great example of a judge rejecting such an argument.


Ninth Circuit Emphasizes Importance of ERISA Claims-Handling Regulation in Reversing LTD Benefit Denial

ERISA-governed disability benefit claims are subject to the Department of Labor’s regulation requiring full and fair investigation of claims. The regulation includes rules requiring claims administrators apply plan provisions correctly and thoroughly investigate claims. A claims administrator’s failure to adhere to the rules expressed in the regulation can be the difference-maker if the benefit dispute proceeds to litigation. A recent unpublished Ninth Circuit Court of Appeals decision, Alves v. Hewlett-Packard Comprehensive Welfare Benefits Plan, emphasizes this.

Alves applied for short-term disability and long-term disability under his employee benefit plan. The plan’s claims administrator, Sedgwick, determined Alves’ condition did not render him disabled, i.e., that Alves could still perform his job duties. On that basis, Sedgwick denied both the short- and long-term disability claims. The federal district court agreed with Sedgwick.

The Ninth Circuit Court of Appeals reversed the district court. The Ninth Circuit agreed that Sedgwick’s decision Alves didn’t qualify for short-term disability benefits was adequately supported by Alves’ medical information. But the court found Sedgwick incorrectly evaluated Alves’ long-term disability claim. Sedgwick denied Alves’ long-term disability claim because Sedgwick concluded Alves failed to meet the plan’s one-week waiting period. The court concluded Alves’ clearly met this requirement. Accordingly, the court remanded Alves’ long-term disability claim to Sedgwick for further investigation. The Ninth Circuit admonished Sedgwick to follow ERISA’s rules requiring full and fair investigation of claims in reviewing Alves’ long-term disability clam on remand.

The Ninth Circuit’s opinion is unpublished, meaning it is only persuasive precedent. Lower courts may follow this decision if they find it persuasive, but they are not required to.

The Alves decision is an important reminder that ERISA claims administrators can be held accountable for failing to correctly apply plan provisions and failing to investigate claims in compliance with ERISA’s implementing regulation.

Court Emphasizes Importance of Making Insurance Claims Promptly in ERISA Disability Dispute

A recent decision from our neighbors in the Portland, Oregon federal courts emphasizes that insurance policyholders should always strive to submit claims as soon as possible – especially where the insurance policy is covered by ERISA.

Often, it’s not practical to submit insurance claims as soon as the loss occurs.  When your house burns down, you’re critically injured, or have to stop working due to a disability, you’re often overwhelmed as it is without worrying about submitting insurance claims.  For this reason, many legal rules apply that can entitle an insured to benefits under an insurance policy even if the insured delays in submitting their claim.  These rules protect insureds from the otherwise-draconian result of losing insurance benefits they paid for due to a technicality.

However, the Oregon federal court’s recent decision in Gary v. Unum Life Insurance Company of America emphasizes that, sometimes, a delay in submitting insurance claims can completely eliminate the policyholder’s right to benefits, especially under ERISA.

Ms. Gary applied for Long-Term Disability benefits under an ERISA-governed disability insurance policy issued by Unum.  Plaintiff, an attorney, had become disabled and been ordered by her doctor to stop practicing law as of December 1, 2013.  But Ms. Gary waited until September 1, 2016 to make a claim for disability insurance benefits from Unum.

Unum ultimately determined Ms. Gary was disabled, but only from November 27, 2013 through April 6, 2015.  Ms. Gary filed a lawsuit under ERISA, seeking disability benefits post-April 6, 2015.  The dispute focused on Unum’s conclusion that Ms. Gary was essentially recovered from her disability following surgery in 2014.

The court upheld Unum’s denial of benefits after April 6, 2015.  The court focused on the absence of medical information regarding Ms. Gary’s condition as of April 6, 2015.  Critically, the court noted that it was impossible for a doctor to examine Ms. Gary in person and give an opinion about her medical condition that would be retroactive to April 6, 2015.  The court emphasized:

because Plaintiff’s claim was not filed until September 1, 2016, there was no opportunity for an [examination] or other evaluation of [Ms. Gary] by [Unum] in the nearly three years from the date of alleged disability. And while the Supplemental Record submitted by [Ms. Gary] provided some new medical evidence, it did not clarify [Ms Gary]’s limitations in the months following her surgery and around April 6, 2015.

Of course, there’s no way to tell if the court would have reached a different result had Ms. Gary applied for benefits immediately after becoming disabled.  But allowing a prompt medical evaluation following her surgery that could have armed her with additional medical information supporting her disability.

The Gary decision is an important reminder that it is always in the insured’s best interest to claim benefits promptly following a loss.

Court Hands Long-Term Disability Claimant A Win Based on Insurer’s Failure to Give Proper Notice of Claim Denial

ERISA’s rules for making claims for benefits and for appealing benefit denials can prejudice claimants.  The rules are complicated, not obvious, and rarely fully disclosed.  And if you don’t follow the rules, you can lose your right to file suit after a claim is denied.

To protect claimants’ rights during this process, the U.S. Department of Labor, the agency responsible for enforcing ERISA, has promulgated a regulation establishing minimum claims-handling standards requiring that persons claiming benefits under ERISA receive full and fair review of their claims.  Among these rules is a requirement that ERISA plan administrators give claimants fair notice when their claims for benefits are denied.  Denial notices must be given within 90 days of the claim and must contain enough information for the claimant to decipher what is needed to obtain benefits.

A recent decision by the Ninth Circuit Court of Appeals in Gordon v. MetLife confirms that ERISA plan administrators such as MetLife must follow the rules for giving claimants full and fair review.  Gordon sued MetLife under ERISA after MetLife failed for years to decide his claim for Long-Term Disability benefits.  After the fact, MetLife sought to justify its de facto denial of benefits by relying on language in the ERISA plan giving MetLife discretion to determine benefits.

The court ruled that MetLife’s failure to respond to Gordon’s claim until years after the fact violated the Department of Labor’s “full and fair review” regulation.  Accordingly, the court determined MetLife could not rely on its discretionary authority to deny Gordon’s claim for Long-Term Disability benefits.  Although the Gordon ruling is unpublished, meaning it is not binding precedent, the case is nevertheless an important reminder that ERISA plan administrators must follow the rules mandating full and fair review of benefit claims.