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Claims administrator’s action ruled “arbitrary and capricious”

On Behalf of | Aug 14, 2023 | Erisa

Long-term disability claims are a critical safety net for individuals facing medical conditions that hinder their ability to work and lead a normal life. However, a recent court ruling, Murch v. Sun Life Assurance Co. of Canada, sheds light on the importance of fair and thorough investigation procedures by claims administrators.

Looking at the key takeaways from this case and exploring the implications for both claimants and claims administrators can provide some valuable insights:

What’s the significance of this case?

The claimant in this case alleged multiple physical, cognitive and psychiatric conditions that combined to make him unable to work. Throughout the case, there were contrasting medical reports and opinions filed about the claimant’s veracity when it came to his cognitive and psychiatric difficulties.

At some point during a written exchange with the claims administrator, the claimant’s counsel wrote something that seemed to imply that the claimant’s alleged cognitive and psychological conditions weren’t disabling. At that point, the claims administrator essentially stopped looking any further into those conditions and did not consider them at all when making their decision to deny the claim.

When the denial was appealed the court said that it was:

  • Unreasonable, arbitrary and capricious for the administrator to base their decision to stop investigating and evaluating the claimant’s allegations based on that one line given that there was a pile of evidence that the claimant was suffering from at least some kind of cognitive disorder and psychiatric problems.
  • Improper for the administrator to not inform the claimant of their decision to take that approach, thereby depriving the claimant of a chance to reassert their claim and clear up any confusion.

The ruling underscores the significance of providing proper notice to claimants and considering the entirety of their medical conditions during the evaluation process. Prematurely ending investigations based on one thin statement or piece of evidence can deprive claimants of a fair and impartial evaluation of their claim.

For those seeking long-term disability benefits, this ruling reinforces the need to be proactive about understanding their legal rights – especially when a claim is unfairly denied. Seeking legal guidance can help someone to “be safe, not sorry” as their situation evolves.