Court in ERISA appeal finds classic LTD disability insurer cherry-picking
Disability insurers have an arsenal of tactics to deny or terminate disability benefit claims. One common tactic is “cherry-picking” in which the insurer or its claims administrator picks through the medical and vocational evidence and uses only those parts that support a claim denial or benefits termination.
Cherry-picking often results in claim denials despite credible evidence of serious medical issues. The insurance company usually ignores evidence that solidly supports the claim without adequate explanation.
ERISA LTD Litigation is a federal case
The federal Employee Retirement Income Security Act (ERISA) governs many short- and long-term disability (STD and LTD) policies obtained through employers. ERISA policies require the claimant to file an administrative appeal with the insurance company within 180 days of a claim denial. If the insurer uphold its decision and issues a final denial then the insured can file a lawsuit. ERISA lawsuits are filed in federal court. There is no discovery or jury. Rather, the judge reviews only the administrative record to see if the insurer complied with ERISA’s standards and procedural safeguards and in many cases (depending on whether the ERISA plan provides for discretionary review) also to determine if the insurance company’s denial of benefits was “arbitrary and capricious”. If the judge determines that the insured may be disabled under the policy terms but given what was in the administrative record, that the insurance company’s denial did not rise to the level of being arbitrary and capricious the denial is upheld and the claimant loses.
Making sure that the appeal has ample proof and that the administrative record is complete is often the difference between winning and losing an Appeal or a lawsuit. An experienced attorney can be invaluable in an appeal.
Judge orders benefits in LTD appeal where insurer had selectively reviewed evidence of disability
In an Oct. 2020 decision, Groch v. Dearborn National Life Insurance Company, the U.S. District Court of the Central District of California in an ERISA appeal reversed Dearborn’s termination of LTD benefits being paid to Joel Groch under his group disability policy through his employer, 20th Century Fox.
Groch was a long-time graphic artist, a job requiring high-level thinking and sustained concentration. Repetitive movements at work caused right shoulder impingement and cervical radiculopathy, requiring surgery. Pain prevented sitting at the computer for long time periods, while medication side effects impaired thinking and concentration. He stopped working in March 2015 and Dearborn approved his disability claim.
His condition deteriorated, developing a foot drop from nerve root damage, lumbar radiculopathy, degenerative disc disease, peripheral neuropathy, myofascial pain syndrome and prostate cancer. His physicians tried many medications to control ongoing pain, but they caused “drowsiness, tremors, brain fog, inability to concentrate and memory loss.”
Evaluations arranged by Dearborn tended to minimize impairments and symptoms otherwise well documented. For example, an independent doctor conducted a 26-minute exam and failed to diagnose most of Groch’s established problems. This physician wrote that mental limitations from Neurontin were “subclinical and irrelevant in an occupational setting.”
Dearborn terminated Groch’s benefits in 2017, saying that he could perform the material duties of his job. The court observed that seven months later Dearborn ironically wrote in a life insurance matter that Groch could NOT work.
The claimant appealed this termination to the insurer, submitting more supporting evidence. Dearborn arranged its own medical and vocational reviews that – not surprisingly – gave cursory, questionable or no responses to Groch’s evidence, concluding Groch could have worked as early as 2015, a time when Dearborn had already approved his claim.
Next, Groch appealed to federal court.
Cherry-picking called out
The judge explained that an insurer acts arbitrarily if it uses “selective review” of evidence – i.e., cherry-picking. ERISA requires that insurance companies as fiduciaries must act “solely in the interest of participants and beneficiaries,” requiring a “full and fair review of the claim” and consideration of the administrative record “as a whole.” The insurer may not ignore “credible evidence offered by claimant.”
The court said Dearborn chose to selectively review only evidence that supported termination of benefits, “manufactur[ing] reasons for rejecting” supporting evidence.
Evidence created by the insurer through professionals it hired to review the record or evaluate the claimant was also called out as suspect because these professionals also did “selective review.” For example, one reviewing doctor well known to work for insurers noted “normal” findings in medical records from Kaiser while ignoring multiple, ongoing adverse and abnormal findings.
The judge granted summary judgment for Groch, ordering Dearborn to pay benefits because he proved “continued disability with credible, persuasive evidence.” Further, Dearborn had no reason to discount Groch’s credibility when “symptoms and treatment” were consistent with pain reporting and the cognitive impact of his medications.
How can Disability Insurance Law Group help?
A delay or denial of a disability claim can be financially devastating. Disability Insurance Law Group represents long term care and all disability insurance claimants at every stage of the insurance process. If you have any questions regarding your insurance claim, our team of attorneys would be happy to provide you with a free consultation. Please contact us at 954-633-8811 or send us an email.
(Groch v. Dearborn National Life Insurance Company is available on Westlaw at 497 F.Supp.3d 826.)