Last week the Court of Appeals found that Liberty Mutual failed to consider and discuss evidence of the claimant's ("Nancy") evidence of her long-term disability. Nancy worked for one employer for more than twenty years in a variety of positions including bank teller, teller supervisor, and technical-support analyst, before leaving due to health problems. After her physician diagnosed her with multiple sclerosis, Nancy applied for and received disability benefits through her employer's group Plan ("the Plan"). Three years after Nancy began receiving disability benefits, the Plan administrator terminated her benefits, stating that she no longer fit the Plan's definition of "disabled."
Nancy subsequently sued the Plan under the Employee Retirement Income Security Act of 1974 (ERISA), claiming that the Plan did not consider all the relevant medical evidence and did not sufficiently explain its termination decision. ERISA requires employee benefit plans that deny disability benefits to "set[] forth the specific reasons for such denial, written in a manner calculated to be understood by the participant." The accompanying regulations further require the plan to describe "any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary." These requirements are designed both to allow the claimant to address the determinative issues on appeal and to ensure meaningful review of the denial.
In this case the court found that neither the initial termination letter nor the subsequent letter denying Nancy's appeal sufficiently explained the denial. Both letters asserted that all relevant medical evidence had been considered, but neither letter explained why the reviewer chose to discredit the evaluations and conclusions of Nancy's treating physicians. After reviewing Nancy's medical file, Dr. Jonathan Sands, (Liberty Mutual's medical consultant,) concluded that Nancy was not totally disabled because there was no "objective" evidence that Nancy suffered any functional limitations. However, Nancy's file contained numerous test reports indicating a reduced functional capacity, such as an MRI of her spine, evoked response tests, several physical-capacity reports, and various lab reports. The file also contained several evaluations by Dr. Bielkus, Nancy's primary physician, opining that Nancy's functional limitations stemming from her multiple sclerosis made her unable to work. She concluded that Nancy was "medically disabled on a permanent basis from any form of gainful occupation." In fact, every doctor that personally examined Nancy concluded that she was unable to work more than a few hours a day and that she could not stand, sit, or walk for more than an hour at a time. Dr. Sands did not address any of these reports in his cursory report, which dedicated less than half a page to its analysis and recommendation.
Liberty Mutual's termination letter was deficient because it merely recited the various items in Nancy's medical file in a bulleted list, stated that Dr. Sands had found no objective limitations in Nancy's functional ability, and terminated her benefits without any further discussion or explanation. The court stated, "we are troubled by the fact that neither Dr. Sands's report nor Liberty Mutual's letter addressed the contrary findings of Nancy's treating physicians or explained why Liberty Mutual chose to discredit them."
On appeal, Nancy submitted additional reports demonstrating her functional incapacity to the Plan's internal appeals committee. These reports showed that Nancy had significant impairments: She could not walk, sit, or stand for more than an hour at a time; she could only lift light items occasionally; she had limited flexibility, serious vision impairments, and diminished muscular strength; and she experienced frequent spells of dizziness, vertigo, and fatigue. Dr. Winkler, who was retained by the Plan to review Nancy's file on appeal, noted these problems but concluded that Nancy could perform a job "either seated or standing, that entails the use of a telephone, that entails the intermittent reference to a computer display or printed material without requirements of speed, and that requires conversation with members of the general public." While acknowledging that Nancy could not perform her current job, Dr. Winkler concluded that Nancy was not totally disabled but did not adequately explain his conclusion.
For example, Dr. Winkler noted Nancy's chronic fatigue but dismissed it by asserting that "there are medications that are used to treat fatigue." Additionally, Dr. Winkler noted that Nancy was limited to a six-hour workday. In fact, however, only one physical therapist had concluded that Nancy would be able to work for up to six hours; the rest of Nancy's treating physicians had concluded that she was limited to, at most, two or three hours of work each day. Dr. Winkler did not address the opinions of these other physicians.
The court held that these explanations were insufficient to meet ERISA's requirement that specific and understandable reasons for a denial be communicated to the claimant. The Plan did not explain why it chose to discount the near-unanimous opinions of Nancy's treating physicians. While plan administrators do not owe any special deference to the opinions of treating physicians, they may not simply ignore their medical conclusions or dismiss those conclusions without explanation, the court reasoned. The court concluded that the Plan acted arbitrarily in terminating Nancy's disability benefits without giving a sufficient explanation of its reasons.
The decision is another victory for a genuinely disabled person who was abused by her insurance carrier's blatant violation of the federal law protecting her entitlement to disability benefits.
Alan C. Olson practices disability law from his offices in New Berlin, Wisconsin, and throughout the United States. AOlson@GetMyLTDbenefits.com
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