Gordon & Rees partner Sarah N. Turner and associate Brittany F. Stevens of Seattle won a judgment for the defendant insurer after filing trial briefs with the U.S. District Court for the Western District of Oklahoma arguing that under the Employee Retirement Income Security Act of 1974 (“ERISA”) the insurer’s denial of disability benefits should be upheld under the abuse of discretion standard.
The lawsuit arose out of the denial of the plaintiff’s claim for long-term disability benefits under a fully insured disability benefit plan. The plaintiff had a long history of back pain exacerbated by two car accidents. The plaintiff received short-term disability benefits and two years of long-term disability benefits under the “own occupation” terms of the plan from the insurer.
After two years, the insurer re-evaluated the long-term disability benefits to determine whether the plaintiff was disabled from “any occupation.” As part of the review, the insurer requested that independent medical physicians evaluate the plaintiff’s medical records and perform a functional capacity evaluation (FCE), and that a registered nurse conduct a home assessment. During the independent physician evaluations, the plaintiff had a series of subjective complaints regarding her condition but the FCE did not support her claims. It was also noted by the physical therapist at the FCE that although the plaintiff said she could not bend over she was observed crouching and picking up a drink from the floor without any difficulties.
The plaintiff’s inconsistencies continued one month later during a home assessment where she told the nurse she had difficulties walking and reported having a walker and wheelchair although there were no assisted devices in her home and she had never reported using assisted devices. The home assessment also took place one month after the FCE where the plaintiff was not observed having difficulties walking.
Due to inconsistencies with the plaintiff’s subjective complaints and the opinions of the independent medical examiners that she was not disabled, the insurer took an extra precautionary measure of hiring an independent physician to conduct an independent medical examination (IME). The physician reached the same conclusion as the other medical providers that the plaintiff could perform sedentary work.
Based on the medical records and the extensive examinations reaching the same conclusion that the plaintiff was not disabled from sedentary work, the insurer denied the plaintiff’s claim to continue her disability benefits.
On December 14, 2012, the plaintiff filed a civil complaint against the firm’s client in the U.S. District Court for the Western District of Oklahoma alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA), as amended 29 U.S.C. § 1132(a)(f), as a result of the denial of her benefits. In July 2013, the parties filed trial briefs and Gordon & Rees argued that there was not an abuse of discretion in denying the benefits and that although there was an inherent conflict because the insurer had a dual role of evaluating and paying the claim, the conflict should not be weighed against the insurer’s decision.
In a well-developed January 31, 2014 Memorandum and Order, the court agreed with Gordon & Rees’s argument and provided beneficial language that insurers can rely upon in other dual-conflict cases. Specifically, the district court relied upon prior 10th U.S. Circuit Court of Appeals decisions that held that when an insurer takes active steps to reduce potential bias and promote accuracy, the conflict vanishes. The district court pointed out the steps the insurer took to review and evaluate the plaintiff’s claims, concluding that because of the insurer’s “efforts to reduce potential bias – such as hiring [multiple] independent physicians . . . [rather than] relying solely on the evaluations and medical opinions of its own on-site physicians and nurses, diligently endeavoring to discover the nature of Plaintiff’s ailments, and continuing to pay benefits to Plaintiff during the course of its investigation, even though the twenty-four month period had expired – the Court gives little weight to the dual-role conflict of interest factor.”
By finding no evidence of the inherent conflict influencing the insurer’s review of the disability claim, the court agreed with the insurer and upheld the denial of disability benefits under the “any occupation” standard. Based on this ruling, the plaintiff is no longer entitled to disability benefits from the insurer.
To read the opinion, click here.