When reviewing a claim for disability benefits a plan administrator is not required to do an in-person exam of the claimant. However, in certain circumstances courts have found that an administrator’s failure to do so is arbitrary and capricious.

Such is the case in Connelly v. Reliance Standard where a court reviewed the decision made by Reliance Standard Life Insurance Company to deny benefits to Ms. Connelly. Connelly, who worked for Fulton Financial Corporation as a scanning and indexing specialist was hospitalized in November 2011 and diagnosed with depression, panic disorder, and agoraphobia.

Reliance approved and paid Connelly’s claim for disability benefits in June 2012 based on a review of her medical records by in-house medical personnel. After paying her claim for 5 months a registered nurse reviewed Connelly’s medical records on Reliance’s behalf and determined Connelly no longer suffered from a psychiatric impairment. In forming her opinion, the nurse relied solely on medical records and did not physically examine Connelly.

Reliance terminated Connelly’s claim in November 2012 and Connelly appealed the denial to no avail. Reliance employed a board certified psychiatrist who also merely performed a paper review. Connelly was forced to file a lawsuit against Reliance in federal court.

In reviewing Reliance’s decision, the Pennsylvania District Court noted that the policy reserved to Reliance the right to have a claimant interviewed and/or examined psychologically or psychiatrically to determine the existence of disability which is the basis of the claim. Reliance had declined to exercise this right while evaluating Connelly’s claim.

The court also pointed out that the mere fact that the claim involved an alleged mental impairment did not, in and of itself, require Reliance to employ a physician to conduct an in-person exam though it had a right to do so.

Although Reliance was not required to exercise its right under the policy, an in-person exam would certainly have helped Reliance better evaluate the severity of Connelly’s symptoms particularly since Connelly suffered from depression and anxiety, which as the court explained, “presents mainly through subjective symptoms, i.e. Connelly’s thoughts and feelings.”

Courts have acknowledged that when a psychiatrist evaluates a patient’s mental condition, his opinion and diagnosis depend greatly on interviewing and spending time with the patient. Since a psychiatrist typically treats a patient’s subjective symptoms, some courts have discounted the opinions of psychiatrists who have never seen the patient. Furthermore, the inadequacy of relying solely upon a record review when determining benefits for someone claiming a mental disability has been highlighted by various courts.

Since neither the nurse nor the psychiatrist on whom Reliance based its decision performed an in-person exam of Ms. Connelly it brought into question the adequacy of Reliance’s claim review.

Ultimately the court concluded that Reliance’s decision was arbitrary and capricious due Reliance’s failure to conduct such an exam, coupled with:

  • their reliance upon the opinion of a non-treating physician;
  • their reliance upon favorable parts while arbitrarily ignoring unfavorable parts of the notes and letters from Connelly’s treating physician and therapist;
  • their change in position regarding Connelly’s disability without any corresponding change in her medical condition; and
  • the fact that Connelly suffered from depression and anxiety, which presents mainly through subjective conditions.

It is important to remember that the court’s decision was not based solely on Reliance’s failure to conduct an in person review. Even where the policy involved grants the administrator the right to examine the claimant the administrator is not always required to do so.