This recent California Federal ERISA long term disability case is another example of an unreasonable denial by the Standard Insurance Company. While this lawsuit was not handled by our disability insurance lawyers, we felt that disability insurance claimants could learn a lot from the findings of this disability lawsuit.

The Standard Denies Benefits After Paying for 24 Months

After winning an administrative appeal, Annina Puccio collected 24 months of long term disability (LTD) payments from Standard Insurance Company based on a mental disorder, osteoarthritis and fibromyalgia. At the end of the 24 months, she applied for additional LTD, as allowed by Standard, based on a new and independent claim of disability due to Addison’s disease and other gastrointestinal disorders. Unfortunately, this case is only a partial victory as the court has given The Standard another opportunity to review the claim and possibly deny benefits. If disability benefits are denied again, then the claimant will need to file another Appeal and a new lawsuit. We hope that Standard will do the right thing the second time around. In our opinion, the court should have awarded benefits and then made The Standard re-evaluate the claim on an ongoing basis.

Standard initially denied this claim based only on a review of Puccio’s medical records, concluding her Addison’s disease “is treated with hydrocortisone dosage and as the medical documentation indicated is well controlled.” Pursuant to an administrative review requested by Puccio, the claim was again denied. Standard concluded “Puccio’s records failed to provide sufficient detail as to why her Addison’s disease or gastrointestinal issues are independently disabling.” Meanwhile, the Social Security Administration awarded Puccio disability benefits.

Standard is Required to Reevaluate the Disability Claim

After the administrative review denial of her claim, Puccio filed a lawsuit as allowed by the Employee Retirement Income Security Act (ERISA). In response, Standard filed a Motion for Summary Judgment which the U.S. District Court for the Northern District of California denied in Puccio v. Standard Insurance Company.

The district court found that Standard abused its discretion in denying the claim when it did not conduct its own medical evaluation, never contacted any of Puccio’s many treating physicians and did not ask for additional medical records. Although Standard was well aware of the SSA award, it never asked for any records from the SSA as to its findings of disability or to distinguish why the SSA awarded disability at the same time Standard denied it.

The California Court Instructs The Standard as to the Proper Way to Review A Long Term Disability Claim

The court sent Puccio’s claim back to the Plan Administrator for further review. In its opinion, the district court detailed the procedure Standard must follow in its reevaluation process:

1. Although an in-person medical evaluation is not always required before denying a claim, in a complicated case such as this one, Standard must conduct an in-person medical examination. Puccio has multiple medical conditions and volumes of unclear medical records. A purely paper review by Standard’s consulting physician was not a sufficient basis for denying the claim.

2. Standard has an obligation to provide its consulting expert all the relevant evidence. In its letter after the administrative review affirming the denial of the claim, Standard stated that Puccio had not provided a sufficient explanation of how her Addison’s disease prevented her from working. The district court concluded that the comment was not good enough. Puccio is “entitled” to receive a detailed description of additional information that will be helpful to Standard in evaluating her claim. The request for more information must be made in terms she can understand along with an explanation of why the documents that were previously submitted are insufficient, and “what specific documentation would be sufficient.”

3. Although Standard is not bound by the decision of the SSA to award disability, its “complete disregard” of it is evidence that the Plan Administrator’s denial of Puccio’s claim was arbitrary and an abuse of discretion.” The Administrator needs to “compare and contrast” the medical evidence considered and provide reasons for its contrary decision.

If you have any questions about your disability claim, or have been denied disability insurance benefits, contact our disability insurance lawyers for a free consultation.