Willcox v Liberty Life Assurance Company of Boston (Liberty) is an interesting disability insurance case. Theresa Willcox originally brought her disability claim before the U.S. District Court in Minnesota. When Liberty Life determined that she did not qualify to have her short-term disability benefits extended into long-term disability benefits, she made the usual appeals to the decision. Liberty Life made its final decision in May 2006, which led to her disability attorney filing a law suit pursuant to ERISA § 502, 29 U.S.C. § 1132.

Prior to trial her long-term disability attorney presented the Court with fifteen exhibits, all drawn from publicly available resources. This presented a problem for the Court as ERISA generally does not allow the Court to consider evidence outside the administrative record. Evidence outside the administrative record means any additional information that was not submitted with the ERISA appeal. At the same time, the exhibits contained material designed to help the Court evaluate whether Willcox had been given a fair hearing—anatomical charts, medical dictionary definitions, journal articles. One exhibit was provided to demonstrate the possibility that a conflict of interest existed. It addressed the qualifications of the neurologist Liberty Life hired to evaluate Willcox’s medical files.

The exhibits presented by her disability attorney did not include any medical data or diagnostic test results that weren’t already present in Willcox’s administrative record. He asked the Court to consider this information. Liberty Life argued that the District Court should allow Liberty Life to offer rebuttal exhibits and remand the case back to the disability plan for administrative review if the Court felt that the exhibits should be accepted into evidence. The court granted Liberty’s request and the administrative record was essentially reopened. This is a very rare occurrence in ERISA disability Cases.

So what were these medical exhibits about? They included generic anatomical charts, medical dictionary entries, journal articles, and similar material that would help a claims handler or judge understand what the test results in the medical record revealed.

What were the test results that needed to be understood? There were a series of medical exams designed to evaluate the presence of a condition known as L5 radiculopathy. There were also MRIs and CT scans. This condition causes weakness in the leg, impaired sensation, foot drop and pain. It is caused by compression of the nerve that comes from the L5-S1 segment of the spine.

Why would L5 radiculopathy cause Willcox’s disability? Because of the debilitating pain in her lower left leg that did not respond to surgical options, she could no longer work full-time. Her job was sedentary, but the long hours of sitting caused excruciating pain. Because of the involvement of her spine, walking to relieve her pain was not an option. She was no longer able to fulfill her duties as a claims adjuster for Blue Cross Blue Shield.

What precipitated her disability? She was injured in a car accident in March 2003. She tried the chiropractic route first but had to undergo a spinal diskectomy and fusion in November 2004. After this surgery, she began working part-time from home. The pain in her back resolved, but the L5 radiculopathy did not improve.

Court orders review of medical exhibits.

The District Court chose to order Liberty Life to conduct an initial review of the information that Willcox’s disability attorney had presented to the Court. The disability insurance plan was also ordered to consider more than the 15 exhibits. If Willcox presented more information regarding her disability, Liberty was to consider it.

Willcox added medical records from treatments she underwent in 2006 and 2007, two questionnaires filled out by two of her treating physicians and two witness statements regarding her physical limitations (one statement was her own).

Court ordered review of file results in persistent denial of disability benefits.

Liberty Life retained a different neurologist to review her medical records. This physician concluded that despite the restrictions her condition created in her ability to walk, stand or lift objects, there was no reason to conclude that Willcox was barred from a position as sedentary as an insurance claims adjuster. Liberty Life reaffirmed its decision to deny Willcox’s long-term disability claim.

Willcox took her claim before the District Court once again. After reviewing Liberty Life’s disability determination using the abuse of discretion standard of review, this Minnesota District Court determined that Liberty Life had abused its discretion because it failed to evaluate Willcox’s medical record in its entirety and relied entirely on the shallow medical overview of the neurologist it hired. The court revered Liberty’s disability denial.

When Court reverses disability plan’s decision, Liberty Life appeals.

Liberty Life appealed the lower courts reversal of the claim denial. Liberty Life chose to challenge both the District Court order to reopen Willcox’s claim and its conclusion that Liberty Life had abused its discretion.

When Willcox’s disability attorney and Liberty Life argued before the Court of Appeals, both sides were fully agreed that ERISA governed the disability insurance policy. They also agreed that the proper standard for reviewing Liberty Life’s decision was abuse of discretion, a review that is deferential to Liberty Life.

Liberty Life acknowledged that it had invited remand for consideration of the new evidence presented by Willcox’s disability attorney. Yet, Liberty Life was now arguing that the evidence should not have been considered. Willcox’s disability insurance attorney pointed to the significant difference between the exhibits he had presented to the Court for consideration and other cases where the reviewing courts had refused to consider extra material. In Rittenhouse v. UnitedHealth Group Long Term Disability Ins. Plan and Brown v. Seitz Foods, Inc. Disability Benefit Plan, the evidence had been specific to the plaintiff’s symptoms or diagnosis.

Willcox’s disability attorney pointed to the fact that each exhibit served only one purpose—to assist the court in its ability to interpret complex medical evidence. Each exhibit had been culled from medical publications and websites without thought of its effect on litigation. Considering that in Barnhart v. Unum Life Ins. Co. of Am. the Court had itself gone to public medical sources to establish a fair context for a decision and Vega v. Nat’l Life Ins. Servs., Inc. held that generic materials that assist “the district Court in understanding medical terminology or practice related to a claim would be … admissible.”

The Court of Appeals found that the District Court’s decision to remand review of the new evidence to Liberty Life, instead of taking this upon itself, expressed the appropriate deference due to Liberty Life as the plan administrator. For Liberty Life to then complain that the District Court had abused its discretion by remanding consideration back to the disability insurance plan hinted at the capricious and arbitrary manner in which Liberty Life had handled the claim.

The Court of Appeals looked for any evidence that the District Court had used the additional medical evidence Willcox supplied for the remand to reach its conclusion that Liberty Life had abused its discretion, as this would have been problematic. No such evidence appeared in the District Court’s decision. Rather Liberty Life had clearly abused its discretion during its first review.

Liberty Life had originally sent Willcox’s file for review by an internist. This physician recommended that a neurologist or specialist in physical medicine review the file. Liberty Life then sent the file to a neurologist who listed all the medical records he reviewed. This neurologist’s report was full of errors. He stated that there was “no objective evidence” of radiculopathy, when in fact there were multiple tests demonstrating the symptoms of radiculopathy. He also stated that a nerve block that had provided relief for 24 hours had provided no relief at all.

Court finds disability insurance plan depended on faulty reports.

Based on this faulty report, Liberty Life had denied Willcox’s application for long-term disability benefits. While Liberty Life had no obligation to give more value to the opinions of physicians who had treated her, it was under obligation to weigh the evidence she provided fairly. The neurologist Liberty Mutual hired failed to do this.

When the District Court remanded Willcox’s case back to the disability insurance plan, Liberty Life had a second opportunity to get it right. The second neurologist had the same materials as the first neurologist, yet also stated that there was no evidence to support her claim. This physician also ignored the tests that supported her claim and only considered the tests that were inconclusive. It would appear that both physicians hired by Liberty Life had failed their fiduciary duty by combing the record for evidence to deny Willcox’s claim. The decision reached by Liberty Mutual could be nothing but arbitrary and capricious and an abuse of discretion when it depended upon these doctor’s opinions.

Liberty Life wasted the premiums paid into its disability insurance pool pursuing this appeal. The Court of Appeals affirmed the decision of the District Court. The District Court had neither abused its discretion by doing as Liberty Life suggested by remanding Willcox’s claim for further administrative review, nor had the Court made an error in concluding that Liberty Life had abused its discretion when it relied on medical reviews that ignored medical evidence or misread findings that confirmed Willcox’s disability.

About the author: Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. To request a free legal consultation call 800-411-9085.

California Governor Arnold Schwarzenegger has the opportunity to sign California Assembly Bill 1868 (“AB 1868″) and put an end to unreasonable discretionary clauses contained in ERISA governed long term disability policies. Discretionary clauses provides authority to the insurer to determine eligibility for benefits or coverage, interpret the terms of the policy, or interpret the terms of the contract in a manner inconsistent with state law. In my opinion discretionary clauses tie the hands of courts and allow disability insurance companies to wrongfully deny disability claims. The proposed AB 1868 bill that needs Governor Schwarzenegger’s approval would prohibit any insurance company from issuing any insurance policy in the state of California that contains a discretionary clause.

In the recent case of Morrison v. Standard Insurance Company, the 9th Circuit U.S. Court of Appeals ruled that the California Insurance Commissioner does not need to approve any disability insurance policies that contain discretionary clauses.

The elimination of discretionary clauses in California is a great start, but a bill similar to AB 1868 should be on the books in every state. The discretionary clauses allow disability insurance companies to hide behind the wall of ERISA and its arbitrary and capricious standard of review. The elimination of the discretionary clause will give every claimant who has a denied disability claim the opportunity to have an independent judge review their claim denial.

Disability Attorneys Dell & Schaefer support AB 1868 and urge you to send a message to Governor Schwarzenegger by clicking here. In the “Choose Your Subject” box, please select insurance issues. You can cut and paste the following message to the Governor in order to show your support for AB 1868:

Please support Assembly Bill 1868 which bans discretionary clauses in insurance policies. As a result of the Federal Courts’ interpretation of the ERISA statute, when insurance companies insert language into the policies vesting themselves with discretion to decide claims, the Federal judges who review denials will give substantial deference to the insurer’s decision. This means the judge will not be determining if the claimant is entitled to benefits, but will rather be looking to see if the denial was “arbitrary or capricious,” and will ignore the merits of the claim. The insured essential has no right to their day in court. Any standard of review that ignores the merits of an individual’s claim is inherently unjust. Such a standard leaves an already vulnerable group of individuals less able to obtain the disability benefits they both desperately need and rightfully deserve. It is an exceedingly unfair and unreasonable interpretation of a statute, which does not align with the concepts of fairness and justice.

AB 1868, which bans discretionary clauses in group long-term disability policies, would create an even playing field for insurance claimants and could help dissuade insurance companies from unfairly denying claims. This, in turn, would help many people with disabling conditions rely on disability benefits to pay their bills when they cannot work.

Without these protections against discretionary clauses, insurance companies who deny valid disability claims have a completely unfair advantage, and thus, will more often than not succeed in denying valid claims. With the protection in AB 1868, insurers will be incentivized to review claims more thoroughly, which will even the playing field somewhat and reduce the need for an employee to resort to the legal system. Here in California, prohibiting discretionary clauses will make the standard of court review for group policies purchased by an employer the same as it already is for individual policies.

About the author: Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. To request a free legal consultation call 800-411-9085.

Our law firm was recently contacted by an individual that was receiving long term disability income payments from Prudential. This disability claimant has been on long term disability for approximately 12 months. His disability is the result of a disabling knee condition. His Prudential long term disability policy defines "disability" for the first 24 months as the inability to perform the substantial and material duties of his occupation. After 24 months the definition of disability changes to the inability to perform the material duties of any gainful occupation. Gainful occupation is an occupation that will pay at least 60% of the claimants pre-disability earnings. This is known as the "any occupation" definition.

→ Click to continue reading Beware of unreasonable Prudential Disability Insurance lump sum buyout offer.

The Prudential Insurance Company of America (PRU), one of the world’s largest long term disability insurance companies, recently issued a press release regarding their return to work strategies. In my opinion, when Prudential or any long term disability insurance company discuss “return to work strategy”, this is tantamount to saying how quick can we stop paying a long term disability income claim. It’s no secret that Prudential can make a lot more money if less people are paid long term disability. No employer wants to see their employee miss work due to a disabling condition, but it is is scary when a long term disability company thinks they are qualified to make decisions about when a disabled person can return to work. Unfortunately, many long term disability insurance companies rely on computer programs to tell them how long a person should be out of work based upon a specific medical condition. Prudential and many other long term disability insurance carriers attended a national conference to discuss “effective return to work strategies”.

For more information about the meeting check out dmec.org.

Prudential’s August 26, 2010 Press Release states as follows:

NEWARK, N.J., Aug 26, 2010 (BUSINESS WIRE) — Kimberly Mashburn, vice president of Strategic Partnerships for Prudential’s Group Insurance business, a unit of Prudential discussed the critical role of managers and effective return to work strategies at the annual Disability Management Employer Coalition (DMEC) conference, August 1- 4, 2010 in San Diego, Calif.

Workplace absence can be very expensive. Costs and consequences of absence can include direct costs like disability premiums, benefits paid to disabled employees, continuing employee benefits, and wages to replacement workers. Also, indirect costs like reduced productivity, increased overtime, increased supervisory time, increased stress & pressure, recruitment and training of replacement workers, increased medical costs, and administrative cost all add up. While many disability absences are out of a manager’s control, some may not be.

“Some disability absences are driven by subjective feelings about work, so managers should make sure they are building an environment that breeds commitment,” said Mashburn. During her August 1 workshop, she provided the following actionable steps that managers can take to enhance prompt return to work and boost productivity:

  • Create a positive work environment that employees want to come back to;
  • Prepare for planned absences by discussing how to cover the work with the employee going on leave;
  • Keep personal and professional connections when employees are out of work;
  • Plan for the return to work using all the options available at your company; and
  • Monitor the return to work to help ensure additional absence is mitigated.

“New laws, escalating costs, fewer employees, and health and productivity issues are the challenges of the post-recession economy,” said Joe Wozniak, Certified Professional in Disability Management and Chief Financial Officer of DMEC. “This year’s conference allowed attendees to learn best practices and proven solutions that help employers return workers to productive employment from peers and thought leaders like Prudential.”

About the author: Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. To request a free legal consultation call 800-411-9085.

Certain Underwriters at Lloyd’s London insurance company took almost two years to make a decision regarding a doctor’s disability application for benefits. When he sued, the Court stayed the suit until an arbitration panel could review his claim. This article discusses the how the final disability benefit award was finally settled.

Most people don’t think of cardiologists developing heart conditions. It is far more common than most people realize.

Dr. Zev Lagstein held a disability policy with Certain Underwriters at Lloyd’s, London. The policy required Lloyd’s to pay him $15,000 per month for up to 60 months if he lost his ability to practice medicine due to a disability.

When he developed complications from heart disease, including severe migraine headaches and other neurological problems he applied for benefits. He supported his claim with the opinions of several physicians who concluded after examination that he was permanently disabled from practicing not only as a cardiologist but as a physician.

Months passed without Lloyd’s reaching a decision. Lagstein went back to work against his doctor’s advice, which only complicated matters. Finally after almost two years had passed since he filed his long term disability claim, Lagstein sued. The policy mandated binding arbitration, so Lloyd’s moved that the case be stayed until a three – member arbitration panel issued its decision. A arbitration panel found Lloyd’s in the wrong and awarded Lagstein more than $6 million to cover policy benefits, emotional distress damages and punitive damages. Lloyd’s responded to this decision by filing a motion to vacate the arbitration award.

The motion was heard before the U.S. District Court, District of Nevada. The judge sitting on the bench was shocked by the size of the award and used this as his primary reason for vacating the decision of the arbitration panel. He also vacated the punitive damages the arbitrators entered as being outside its jurisdiction. Lagstein appealed.

The Ninth Circuit Court of Appeals found that the District Court did not have the authority to vacate an arbitration award just because it disagreed with the size of the award. See Collins v. D.R. Horton, Inc. Rather proof that the arbitration panel had exceeded its powers, was necessary. The Court found that § 10 of the Federal Arbitration Act does not sanction judicial review of the merits behind an arbitration award. The District Court had stepped outside the scope the law gives the Court in these matters.

Lloyds argued that the arbitration board had manifestly disregarded the law, yet could produce no evidence to demonstrate this. In Kyocera, the Court had found that an award is completely irrational "only where the arbitration decision fails to draw its essence from the agreement." Lloyd’s claimed the issue was the fact that Lagstein was not disabled because he had returned to work. Thus the panel’s findings were irrational.

The Court of Appeals did not find the arbitration panel’s findings irrational. The majority of the panel had found that Lloyd’s violated the policy’s "referee provision" by hiring a physician of its own choosing while failing to inform him of the import of this action. The majority also found that he was disabled thus Lanstein was entitled to benefits, whether Lloyd’s agreed with these conclusions or not.

The Court of Appeals also found fault with the District Court’s finding vacating the punitive damages which were awarded by the panel after they had issued their initial arbitration award. The panel had requested an extension of an additional 15 days in which to submit its initial award. Both parties agreed. The filing occurred before the deadline with punitive damages set to be determined at a later date. Nothing in Lagstein’s policy expressly withdrew determination of procedural issues from the panel, so the panel was within its rights to set another hearing for determining what punitive damages, if any, would be awarded.

Both rulings by the District Court were vacated and Lloyd was ordered to pay over 6 million dollars to Dr. Lagstein.

About the author: Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. To request a free legal consultation call 800-411-9085.

There seems to be a trend recently in which the Hartford disability insurance company is closely scrutinizing long term disability claims regardless of how long a claimant has been on claim. In the past 7 days I have been contacted by two separate claimants that have been on claim with Hartford for over 20 years and are having issues with Hartford. We usually see problems develop with long term disability claims when a new claims adjuster is assigned to a disability benefit claim. In my opinion, Hartford is one of the most difficult and unreasonable long-term disability insurance companies to deal with. I based my opinions on long-term disability claims my firm has handled and the numerous lawsuits around the country that discuss the conduct of Hartford.

A woman recently contacted me and she asked that I share her experience with Hartford so that other disability claimants can be aware of Hartford’s claim handling tactics. This woman stated the following:

"The Hartford sent us a letter demanding that we sign a bunch of papers allowing them access to ALL doctors previously seen, All bank accounts, several questionnaires or they would cut off all benefits (which they did). I spoke to a paralegal at a local law firm that told me to sign all papers unless I had something to hide. We reluctantly signed the papers (I didn’t feel that they needed our bank account info amongst other info not pertaining to this claim). My wife has been on disability with Hartford for 13 years and she has seen many doctors. Her primary doctor has recently filled out a letter stating that there was no time table for her return to work ( she just had an epidural in her spine last week). The Hartford has just sent us a letter stating that they have basically annoyed several other doctors that my wife has seen recently (she has renal issues also) trying to get them to give information but they are blackmailing us as they did at the beginning by saying you MUST tell your doctors to send them the information within 21 days or we will shut off your benefits. They have continually tried every angle to cut off my wife’s benefits with these harassment techniques. We didn’t want to sign any of these papers but we did. We think we should tell them that we are revoking their right to contact everyone. (My wife also gets social security because of this injury and we fear The Hartford will destroy that also leaving us in ruins). Now the doctors that my wife sees are being tormented which will have an effect on the care my wife receives AND now they are resorting to another type of blackmail as they expect us to do their work contacting these doctors to force them to give in to their demands or they will cut us off. I don’t believe we signed up for that duty. I originally thought that they were going to negotiate a payoff settlement but instead it appears that they are trying the bullying tactic so they can stop paying."

This woman’s experience and frustration with Hartford is consistent with the hundreds of Hartford disability claim emails we receive each year. In this scenario, a claimant should never revoke Hartford’s ability to contact a treating doctor, however Hartford does not have a right to receive whatever information they feel like asking for.

About the author: Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. To request a free legal consultation call 800-411-9085.

Disability Insurance Attorneys Gregory Michael Dell and Rachel Alters of Dell and Schaefer have filed a lawsuit in the United States District Court for the Southern District of Florida against Liberty Life Assurance Company of Boston "Liberty Mutual" for failure to pay long-term disability benefits owed to a disability claimant in violation of The Employee Retirement Income Security Act of 1974 (ERISA). The Plaintiff suffers from Fibromyalgia Syndrome which causes her unrelenting pain in her arms, legs, wrists, neck, shoulders and feet. Additionally, she suffers from severe fatigue and cognitive impairment as a result of her Fibromyalgia Syndrome. All of which prevents her from being able to perform the material and substantial duties of her occupation as a Benefits Coordinator, for Bridgestone Americas, Inc., an occupation that requires her to sit at a desk and type on a computer 6-8 hours a day.

The Plaintiff’s treating physicians all concur that she is disabled and unable to work due to severe pain, fatigue and cognitive impairment. She underwent a functional capacity examination which revealed that she was only able to sit or stand for a maximum of 2-4 hours in an 8 hour day. Her pain was so severe on the first day of testing she was unable to complete the exam. A neuropsychological examination revealed that she was impaired in her high order thinking which was likely due to her fibromyalgia syndrome.

Liberty failed to provide a "full and fair review" of the Plaintiff’s claim in violation of ERISA. Liberty ignored her treating physicians’ opinions, with whom she has treated with for over 15 years, who opined that she was clearly disabled and unable to work. Liberty disregarded the neuropsychological test results as well as the functional capacity exam results. Instead Liberty determined that the Plaintiff was not disabled, could work 40 hours a week in her regular occupation and should not limit her activity when she is in severe pain, but should be as active as possible in order to prevent her joints from stiffening. According to Liberty and the physician they paid to review our client’s medical records, working 40 hours a week would actually be beneficial to her condition. Liberty provided these opinions without ever examining the Plaintiff. They based their denial solely on a paper review of her medical records ignoring the medical opinions given by her treating physicians that she should not and could not work.

In our opinion, Liberty has really bent over backwards to wrongfully deny this claim. It is shocking that Liberty has relied on the opinion of a doctor that says 40 hours of work each week will make our client recover from her 15 years of suffering from fibromyalgia.

About the author: Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. To request a free legal consultation call 800-411-9085.

Our client was an OB/GYN with 18 years of experience who was suffering from Sensory motor and Peripheral Neuropathy; disc degeneration and herniations of the lumbar, thoracic and cervical spine, with associated radiculopathy; osteoarthritis / degenerative joint disease; and the loss of vision in his left eye. He attempted to continue to work through the constant pain he was experiencing, but was eventually forced to cease working and file for disability insurance benefits under his privately disability policy with MetLife.

→ Continue reading MetLife approves disability insurance benefits for OB/GYN suffering from multiple orthopedic conditions

In a recent long-term disability case against The Standard Insurance Company the court granted specific discovery request in order to further explore The Standard’s potential conflict of interest. The Standard objected to all questions that the claimant’s disability attorney had asked with regard to The Standard’s potential bias and conflict of interest. Prior to granting the disability claimant’s specific interrogatories sent to The Standard, the federal judge noted previous information which showed a bias in the working relationship between the Standard and the physicians that they hired to review long-term disability claims.

→ Continue reading The Standard Disability Insurance Company paid one doctor $577,000 to review 1,939 files over 2 years

Our client was a former United States postal worker who became disabled due to a back injury he sustained in an automobile accident in 2003. Several years before the accident, he purchased a disability insurance policy offered by his credit card company, which provided a lump sum payment in the amount of one million dollars if he became permanently disabled. The disability insurance policy was administered and funded by Federal Insurance Company. Following the accident he was in and out of work for approximately ten months. Upon returning to work he aggravated his back, and was forced to miss additional work. Despite his best attempts to return to work he was ultimately forced to cease working in October of 2004. At that time he filed for Social Security disability benefits, which were ultimately awarded in June of 2005.

→ Continue reading Federal Insurance Company and former postal worker reach confidential settlement regarding lump-sum disability policy