Since May is Disability Insurance Awareness Month (as organized by the Life Insurance Foundation for Education), it seems appropriate to look at some recent decisions from the disability benefits arena and explore what seems to be a common thread among those decisions.
First, in Schexnayder v. Hartford Life and Acc. Ins. Co., 600 F.3d 465 (5th Cir. 2010), the court pointed out that the claim administrator seemingly ignored the fact that the plaintiff was awarded social security disability benefits, stating “failure to address a contrary SSA award can suggest . . . unreasonableness in the administrator’s decision.” Thus, while the court acknowledged that substantial evidence existed supporting the insurer’s decision that the plaintiff was not unable to perform any occupation, it nevertheless held that the insurer had abused its discretion in its benefit determination based in part on its failure to address the SSA award.
Next, in Schully v. Continental Cas. Co., 380 Fed.Appx. 437 (5th Cir. 2010), the court affirmed a district court’s decision that the administrator had abused its discretion in denying disability benefits to the plaintiff. The court noted that there were “significant gaps” in the opinions of the experts on which the administrator based its decision. Furthermore, although the court stated that treating physicians are not given preference over other experts under ERISA, it also explained that other experts could not arbitrarily refuse to consider credible reliable evidence from the treating physician’s records.
Finally, in Rizzi v. Hartford Life & Accident Ins. Co., 383 Fed.Appx. 738, 2010 WL 2473858 (10th Cir. 2010), the court affirmed judgment in favor of the insurer, finding that its decision to deny disability benefits was reasonable and not arbitrary and capricious. Significantly, the court noted that review by independent physicians and the detailed consideration of all objective and subjective information including the medical reports in conjunction with surveillance evidence obtained by the insurer reduced the bias arising from the insurer’s conflict of interest and provided a reasonable basis for its decision.
So what can we take away from these decisions? All were decided under an abuse of discretion standard of review. All involved a claim determination where the entity making the decision would be paying the claim and thus had an inherent conflict of interest. However, only the Rizzi court seemed to be satisfied that the administrative record showed that the decision maker considered and addressed all of the evidence put forward by the individual seeking benefits. In Shexnayder, the record was silent with regard to a contrary SSA award. In Schully, the record was largely silent with regard to evidence from treating physicians’ records. But in Rizzi, the court found that because the record demonstrated “detailed consideration of all objective and subjective information” the insurer’s bias was actually reduced. Thus, the results of these cases would appear to indicate that the best course of action during the claim process and any administrative appeal may be to explain in detail how all the information submitted regarding a disability claim was considered. Depending on the claim, this may include providing an explanation of the differing standards for a determination of disability under social security and the plan at issue to explain why the social security award is not probative as to whether a claimant is disabled under the plan, or a detailed analysis of the evidence purportedly supporting a treating physician’s opinion.