California ERISA Disability Attorney Law Blog

Win in Smith v. Hartford

2013-03-06T22:55:50Z

In Lori Smith v. Hartford Life & Accident, 2013 U.S. Dist. LEXIS 13868 (N.D. Cal., January 30, 2013) we successfully represented Ms. Smith in a claim for life insurance waiver of premium benefits. Smith was a bank executive who became disabled by co-morbid conditions as a result of several surgeries on her hands and depression because she could no longer work. Initially, Hartford approved disability benefits and life insurance waiver of premium ("WOP") benefits, but then it terminated both LTD and WOP benefits. After the termination of benefits Smith was awarded Social Security disability benefits. We appealed both denials simultaneously. The LTD appeal asked whether Smith could perform her "own occupation"; the WOP appeal asked whether she could perform "any occupation." Hartford granted the LTD appeal, but denied the WOP appeal. We successfully sued to reinstate Smith's waiver of premium benefit.

The Court ruled that Hartford abused its discretion by terminating Smith's WOP benefit and by failing to grant her appeal of that termination, reasoning that Hartford had a conflict of interest, that Hartford failed to personally examine Smith, a failure particularly significant because part of her claim was psychological in nature. The Court also held that Hartford either did not provide its reviewing doctors with all the relevant evidence or its doctors failed to consider all of it, explaining that in the course of Smith's workers' compensation claim she was examined by a doctor yet that doctor's report was not commented upon by Hartford's doctors and that Hartford's doctors also did not comment upon the findings of the Social Security judge or the vocational evaluation Smith submitted as part of her appeal. The Court also reasoned that Hartford failed to address in a meaningful way Smith's award of Social Security disability benefits.

Although we won, two significant arguments which we presented in support of Smith's claim were rejected. We argued that because Hartford derived significant economic benefit from Ms. Smith's award of Social Security disability - - because its payment of LTD benefits were significantly reduced by that award - - Hartford should be judicially estopped to argue that Smith was not disabled. We argued that, in effect, Hartford argued in the Social Security Administration that Smith could not do "any occupation" and therefore should not be allowed to argue in the ERISA litigation that Smith could perform "any occupation." We also argued that the Policy's definition of "any occupation" is superseded by saved-from-preemption California law which imposes a different standard which Hartford failed to follow. Although the District Court rejected these arguments, we believe they are meritorious and we will continue to present them to other courts. District court decisions, while binding on the parties to the decision, are not binding on other district courts, any appellate court, or even the same district court judge in a different case; they are only persuasive. No federal circuit court of appeals has ruled on either of these arguments and until and unless such courts rule negatively on these arguments, these are viable arguments. In fact, even when federal circuit courts of appeal rule on the issue, that does not end the matter: federal circuit court of appeals decisions are only binding within their own circuit. Therefore, on the identical legal issue one circuit court may disagree with other circuits, as often occurs.

Smith v. Hartford Life

A Texas-sized victory

2012-11-02T16:09:32Z

Kathleen Bernardo was employed at American Airline as Manager of Airport services. She was diagnosed with aplastic amenia (low blood cell counts) and treated with cyclosporine, an immunosuppressant drug. She applied for long term disability from the plan which was administered by MetLife. The plan paid benefits for about one year and a half and then terminated benefits. Ms. Bernardo filed two administrative appeals herself. The appeals were denied. At that point she hired the ERISA Law Group to represent her in litigation.

We filed suit in district court in Texas. The trial court ruled against Ms.. We appealed to the Fifth Circuit Court of Appeals.

The Fifth Circuit agreed with our argument that the conclusions of MetLife's reviewing doctor did not reflect rational connections between the known facts about Ms. Bernardo's condition and the decision to deny benefits. Therefore, the Fifth Circuit held that the record demonstrated that the Plan abused its discretion in terminating Ms. Bernardo's long term disability benefits. The Fifth Circuit reversed the prior decision and remanded the case back to the district court with instructions to enter judgment in favor of Ms. Bernardo. Read the Court's Opinion.

Improper delegation leads preferential review and settlement

2012-11-02T16:07:07Z

Melissa Garner was an employee of an AT&T subsidiary, working as a Marketing Support Specialist. Her job consisted primarily of communicating with customers via telephone and coordinating the provision of various user- related services. She began experiencing aching-type back pain, sought medical treatment, and was diagnosed with degenerative disc disease at L3-L4, L4-L5, L5-S1 and central and annual tears at L3-L4, L5-S1 discs. Ultimately, her doctors recommend surgery, but her medical carrier would not approve it, claiming that the surgery was experimental. In the meantime, Ms. Gardner's claim for disability benefits was denied by AT&T's third party administrator, Sedgwick Claims Management Services.

The ERISA Law Group appealed the denial of Ms. Gardner's short term and long term disability claims. Sedgwick CMS denied both appeals. We then filed suit.

The only issue litigated in the lawsuit (which ultimately settled) was the standard of review. In ERISA litigation, there are two possible standards of review: de novo or abuse of discretion. When review is for abuse of discretion, the court defers to the plan's decision as long as it is reasonable. It is common for the court to sustain the plan's decision, whether it is right or wrong, so long as it is reasonably based on substantial evidence. When review is de novo, the court disregards the plan's decision, evaluates the claim on its own, and decides whether or not the claimant is entitled to benefits.

Although de novo review does not guarantee that the claimant will prevail and abuse of discretion review does not guarantee that the plan will prevail, it is certainly easier for the claimant to prevail if review is de novo.

In Ms. Gardner's case, AT&T's plan granted discretion to an internal benefits committee. The Plan claimed the benefits committee delegated discretion to Sedgwick CMS. We argued that since the delegation was not properly documented, review should be de novo. The Court agreed. Since review was de novo, the Court also authorized us to take depositions of the four doctors who evaluated Ms. Gardner's records. Once we took those depositions we demonstrated that the doctors' opinions were not well founded or consistent with established medical standards. The case ended in a settlement. Read the Court's Opinion.

Bogus surveillance doesn't defeat nurse's claim

2012-11-02T16:03:53Z

The ERISA Law Group represented Deborah Maher in her long term disability claim against her employer, Massachusetts General Hospital. Ms. Maher worked in the Boston area as a Registered Nurse. She developed chronic abdominal pain and related symptoms which her physicians contributed to chronic pancreatitis, pain syndrome, and fibromyalgia. She was prescribed substantial amounts of narcotic pain medications to control the pain. After receiving long term disability benefits for several years the plan administrator, Liberty Life Insurance Company of Boston, terminated her benefits. After Ms. Maher's first appeal was denied by Liberty, she hired us to submit a second appeal on her behalf.

We filed the second appeal, which was also denied. We then filed suit in district court in Boston. We lost at trial.

We then appealed to the First Circuit Court of Appeal, also in Boston. The First Circuit ruled in Ms. Maher's favor, remanded the case back to the district court with instructions that it will be reconsidered, and on remand the case settled.

The decision in Maher addressed two important issues. One of the key issues was the Plan and its doctor's use of portions of surveillance of Ms. Maher.

At every stage of Ms. Maher's administrative appeal Liberty and the Plan's reviewing doctors emphasized the alleged inconsistency between Ms. Maher's self-reported limitations and her conduct depicted in the surveillance video. Instead, the First Circuit reasoned, "it is not apparent to us that any such inconsistency exists." Ms. Maher reported that her activities varied based on the extent of her pain, nausea, and opportunity to pre-medicate for activities, but she generally spent most of her days in bed. The Court explained that in over 90 hours of surveillance, "the most damming evidence" the Plan identified was 15 minutes in which Ms. Maher carried a bucket or flowerpot and 30 minutes in which she played with her 3-year-old son in the park. On 10 of the 19 days of the surveillance videos available, Ms. Maher engaged in no activities. On other days she would sit or stand outside of her house with her husband for about 20 minutes. The Court reasoned: "Thus, most of the surveillance, far from contradicting Maher's disability, seems to confirm her lifestyle is generally housebound with occasional limited activities." The Court distinguished these facts from other cases in which videos showed activities that specifically contradicted claims made by the claimants on how they spent their time and what actions they could tolerate.

The second important factor relied upon by the plan was that Ms. Maher failed to provide supporting evidence of disability from her pain clinics. But the Court noted that in her appeal, Ms. Maher explained her attempts to obtain documentation from those clinics and offer releases to allow the Plan access to the information. She also agreed to be examined by the doctor of the Plan's choosing. Since two of the three pain clinics were Massachusetts General-affiliated, the information was readily available.

It is noteworthy that the dissenting opinion in the appeals court decision reasoned that the Court should not merely remand the case to the district court for reconsideration, but ordered it to enter judgment in favor of Ms. Maher. That judge reasoned that the records of Ms. Maher's chronic pain, nausea, vomiting and food intolerance was persuasive evidence that she was disabled from performing the duties of the jobs identified by the Plan and therefore Ms. Maher was entitled to her benefits. Read the Court's Opinion.

New discovery rules established in the 10th Circuit

2012-09-28T21:02:02Z

The ERISA Law Group represented Aileen Murphy in her long term disability claim against MetLife. Ms. Murphy worked as a Tax Firm Director for Deloitte & Touche, a position which entailed travel, significant interaction and coordination with others, negotiations with the IRS, and advising clients in complex tax matters. She became disabled by co-morbid conditions: a psychiatric condition and a pain condition as a result of severe back problem. The combination of her conditions together with her medications caused fatigue, balance and vision problems, memory and cognitive problems, as well as chronic pain. Her claim for long term disability benefits was denied. She submitted her own appeal, which was also denied. We filed suit on her behalf in district court and propounded discovery regarding MetLife relationship with the doctors who provided reports for MetLife and Ms. Murphy's claim.

The district court denied the discovery and then ruled against Ms. Murphy.

We appealed. The Tenth Circuit Court of Appeal held that the district court incorrectly denied our right to discovery regarding MetLife's conflict of interest and ordered that we be allowed to be conduct limited discovery, appropriately circumscribed, to allow us to present evidence on the seriousness of MetLife's conflict of interest and the likelihood it jeopardized MetLife's decision-making process in Ms. Murphy's case.

On remand from the Tenth Circuit the case settled. As a result of the Tenth Circuit's opinion in Murphy v. Deloitte & Touche, other jurisdictions have developed similar rules regarding discovery, enabling claimants throughout the United States to exercise an important right in ERISA litigation: the right to discovery the basis of the Plan's or Insurance Company's bias against granted legitimate claims.

Insurance companies which both administer the plan and pay claims have an inherent conflict of interest. They are supposed to be the fiduciary acting in the best interests of the claimant but, in fact, they protect their own bottom line. It's important that claimants have the opportunity to conduct discovery to explore the nature, extent and implication of the conflict of interest. Read the Court's Opinion.