Win In Smith V. Hartford

ERISA Law Center

Win In Smith V. Hartford

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.