Insurance companies are very good at making their denial of long-term disability benefits look substantial and well-founded, at least on paper. In reality, however, a look beyond the administrative record into the actual process that the administrator followed may reveal a lack of medical knowledge, sloppy handling of the evidence, and a pro-carrier bias against the claimant. Once these substantive deficiencies are revealed, the court will likely find that the denial of long-term disability benefits was unreasonable, arbitrary or capricious.
A court will often times have discretion to hear new evidence in a claim that a long-term disability carrier improperly denied benefits in violation of the Employee Retirement Income Security Act of 1974 (ERISA). The court and the parties are not limited to the administrative record of evidence and information that was before the plan administrator for its final decision.
The admission of additional evidence is not automatic, but several factors may warrant opening the record for such additional evidence. Those factors include the complexity of the medical problems and the need for interpreting medical evidence for the benefit of a judge who is not a medical professional, as well as the unusual and irregular course of the administrative review that occurred in the case. As held recently, when applying a de novo standard of review, a district court "may permit the introduction of additional evidence necessary to enable it to make an informed and independent judgment."
For example, the LTD insurance provider may have had the claimant's medical records reviewed independently only up to a certain date prior to the carrier's final decision denying benefits. Meanwhile, more recent medical records may have been left out of the administrative record, including those considered by the Social Security Administration. This gap in time is a gap in the administrative record. A Plan's selective review of the medical evidence to justify a denial of benefits is arbitrary and capricious. As the courts have found that the plan administrator may not arbitrarily repudiate or refuse to consider the opinions of a treating physician. Moreover, the denial of LTD benefits may be found improper when the decision is based on a conclusion by a non-examining physician who did not examine the entire record and discounted relevant medical evidence. Also, a fiduciary's denial based upon a consulting physician's report, which selectively cited to the record, may be unreasonable.
The benefits of increased accuracy of the record far exceed the costs of an undeveloped administrative record. A deposition of the carrier's reviewing doctor may therefore be necessary to clarify his or her opinions so that the court has a basis to make an informed judgment of whether objective evidence of the claimant's conditions is even possible or necessary.
The complexity of the medical problems and the need for interpreting conflicting medical evidence for the benefit of any judge who is not a medical professional or, an unusual and irregular course of the administrative review that occurred in the case, may warrant that discovery be taken beyond the administrative record.
The administrator must weigh the evidence for and against, and the reasons for rejecting evidence must be articulated if there is to be meaningful appellate review. An administrator's selective review of the evidence would support the court's reversal of the decision. Depositions of the individuals involved in terminating the claimant's benefits would be important in order for there is to be meaningful review by the court of whether the administrator did in fact weigh the evidence for and against, and within reasonable limits, the reasons for rejecting evidence.
By prying the lid off the carrier's administrative record, a claimant may demonstrate entitlement to long-term disability benefits where the carrier's denial was tainted by the inability or unwillingness to properly evaluate evidence of disability.
Alan C. Olson practices employment law in New Berlin, Wisconsin. AOlson@Employee-Advocates.com
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