The plaintiff in this case, Kenneth Ayers, was an attorney who ceased working and applied for disability benefits in 2002 alleging disability on account of chronic fatigue syndrome (CFS), fibromyalgia, and depression. The Life Insurance Company of North America (LINA), a CIGNA company, approved the claim and began paying benefits at a rate of $5,000 per month. Shortly thereafter, LINA referred Ayers to Allsup, Inc. to assist him in applying for Social Security disability benefits. Unfortunately, the Social Security claim was denied through all of the administrative levels, including the hearing before an administrative law judge. However, when Ayers appealed the decision to the U.S. District Court, the Social Security matter was remanded for a new hearing. In the meantime, in 2007, LINA terminated Ayers's benefits, claiming his disability was due to depression rather than chronic fatigue syndrome; and that benefits for psychiatric disabilities were limited. Pre-litigation appeals were unsuccessful. A year later, Social Security approved Ayers's claim retroactive to 2002.
In 2008, Ayers brought suit against LINA, which counterclaimed seeking reimbursement of approximately $100,000 because of the coordination of benefits between its payments and Social Security disability payments. The parties filed cross-motions for summary judgment that were resolved with a ruling in Ayers's favor. Among the highlights of the court's ruling was the district judge's recognition that LINA utilizes internal policy guidelines that prohibit the use of the mental impairment limitation in cases involving chronic fatigue syndrome unless all physical symptoms have resolved. The guidelines advise: "[i]f a physical condition contributes to the total disability, or is either a cause or symptom of a mental condition, then the disability will not fall under the [mental impairment limitation]."
The court applied the de novo standard of review in the absence of any policy language triggering deferential review. The court relied heavily on Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666 (9th Cir. 2011), which also involved CFS. The court further noted that LINA utilizes the diagnostic criteria for CFS established by the Centers for Disease Control:
1) [t]he patient' must have clinically evaluated, unexplained persistent or relapsing chronic fatigue that is of new or definite onset (i.e., not lifelong), is not the result of ongoing exertion, is not substantially alleviated by rest, and results in substantial reduction in previous levels of occupational, educational, social, or personal activities; and 2) [t]he patient must have concurrent occurrence of four or more of the following symptoms: substantial impairment in short-term memory or concentration; sore throat; tender lymph nodes; muscle pain; multi-joint pain without swelling or redness; headaches of a new type, pattern, or severity; unrefreshing sleep; and post-exertional malaise lasting more than 24 hours.
According to the medical records, Ayers met the CFS diagnostic criteria; and his cognitive limitations due to CFS were established by neuropsychological testing performed by Sheila Bastian, Ph.D., an expert in CFS and cognitive impairment. The file also contained the results of two functional capacity evaluations that corroborated both physical limitations and an absence of stamina. Of note was a finding that the conclusions made by the second FCE examiner were altered by the physical therapist's employer to make the results appear more consistent with employability. Further, even though LINA had the psychological results reviewed by one psychologist who essentially concurred with Dr. Bastian's findings, the insurer then had Dr. Nick DeFilippis review the findings at a later date. Dr. DeFilippis rejected the CFS diagnosis, although he supported disability due to depression which led to the imposition of the mental impairment limitation.
Much of the opinion was taken up with a recitation of the medical evidence and findings issued by each doctor, but the court ultimately distilled the issued presented by the case into the question of whether "Ayers met his burden in proving that his disabling cognitive difficulties are caused by CFS." The court answered that inquiry in the affirmative. The court found no legitimate dispute as to whether Ayers met the diagnostic criteria for a CFS diagnosis; and the court further pointed out that his symptoms were the same or had worsened since he initially qualified for benefits. LINA also conceded that it was impossible "to verify 100 percent [whether] cognitive deficits were either due to depression or [CFS]." Ultimately, the court sided with Dr. Bastian due to her expertise and because she personally examined Ayers, while LINA's psychologists conducted record reviews. In addition, while LINA relied on Dr. Benincasa's findings, the court pointed out that he, too, concurred, that depression was in remission several years prior to the termination of benefits; and there were other inconsistencies in his report. Thus, the court concluded:
As such, the Court finds that the opinions of Drs. Villanueva, Benincasa, and DeFilippis do not provide convincing evidence that depression, rather than CFS, caused Ayers' cognitive disability. These doctors all failed to address the fact that Dr. Bastien eliminated depression as a potential cause and that, by 2003, Ayers' depression was in remission while his cognitive difficulties continued to worsen. Thus, by cursorily concluding that psychological issues were the cause of Ayers' cognitive impairments, Drs. Villanueva, Benincasa, and DeFilippis committed the very error that they purport to avoid; namely, by applying the diagnosis of depression without considering other potential causes or Ayers' significant medical history.
The court also cited the evidence of physical limitations in addition to cognitive impairments as supporting Ayers's disability due to CFS. In addition, the Social Security disability determination was characterized by the court as "persuasive evidence of disability." *44 (citing Salomaa, 642 F.3d at 679 (citing Montour v. Hartford Life & Ace. Ins. Co., 588 F.3d 623, 635 (9th Cir. 2009)). Even though the Social Security approval came after the claim determination, the court found the evidence "compelling" and took it into consideration under Ninth Circuit standards that permit the introduction of additional evidence under the de novo standard. Hence, based on all of the evidence presented and the issues resolved by the court, judgment was entered in favor of plaintiff.
Turning to the counterclaim, the court was unable to resolve the issues on summary judgment. The plaintiff argued that CIGNA was barred from obtaining reimbursement because of its unclean hands - the insurer torpedoed the Social Security case. However, LINA cited a litany of authorities that equitable defenses to not apply to ERISA claims while plaintiff only cited Providence Health Plan v. Charriere, 666 F.Supp.2d 1169, 1182 (D.Or. 2009). Even so, the court agreed with Ayers, finding Charrriere persuasive. Ayers argued that LINA's interest in the overpayment expired when the Social Security Appeals Council denied his claim, thus ending his administrative appeals. However, the court disagreed, finding Ayers's acknowledgement of his repayment obligation in a separate agreement meant the obligation never expired. The court also found LINA's failure to track the Social Security claim until the filing of this lawsuit was immaterial. Moreover, although Ayers was critical of the manner in which Allsup handled the Social Security claim, the court deemed that criticism insufficient to prove that Allsup deliberately sabotaged the claim.
Discussion: The court obviously reached the correct conclusion, although the court's statement of the issue was problematic. The burden of proof should have been on CIGNA to establish the applicability of the mental impairment limitation. See, Hurst-Rosche Eng'rs, Inc. v. Commercial Union Ins. Co., 51 F.3d 1336, 1342 (7th Cir.1995); Glista v. UNUM Life Ins. Co. of Am., 378 F.3d 113, 127 (1st Cir. 2004); Caffey v. UNUM Life Ins. Co., 302 F.3d 576, 580 (6th Cir. 2002); Farley v. Benefit Trust Life Ins. Co., 979 F.2d 653, 658 (8th Cir.1992); Fought v. Unum Life Ins. Co. of America, 357 F.3d 1173, 1185 (revised 379 F.3d 997) (10th Cir. 2004); Deal v. Prudential Insur.Co. of America, 263 F. Supp. 2d 1138 (N.D.Ill. 2003).
The court's opinion would also have been stronger if it had noted the litany of cases critical of insurers' reliance on reviewing doctors in cases involving psychiatric claims: Sheehan v. Metropolitan Life Insur.Co., 368 F.Supp.2d 228, 255 (S.D.N.Y. 2005)("Courts discount the opinions of psychiatrists who have never seen the patient for obvious reasons. Unlike cardiologists or orthopedists, who can formulate medical opinions based upon objective findings derived from objective clinical tests, the psychiatrist typically treats his patient's subjective symptoms"); Burt v. Metropolitan Life Insur.Co., 2005 U.S.Dist.LEXIS 22810 (N.D.Ga. 9/16/2005); Troy v. Unum Life Insur.Co. of America, 2006 U.S.Dist.LEXIS 14965 (S.D.N.Y. 3/31/2006); Smith v. Bayer Corp. Long Term Disability Plan, 444 F.Supp.2d 856 (E.D.Tenn. 7/31/2006)(aff'd in part 275 Fed.Appx. 495 (6th Cir. 2008)(followed in Allen v. AT&T Disability Income Program, 2009 U.S.Dist.LEXIS 66140 (M.D.Tenn. July 29, 2009) (criticizing Sedgwick for ignoring GAF scores, misstating treating doctors' findings, relying on reviewing, rather than examining, doctor, and for drawing insinuations unsupported by the evidence as to the claimant's motivation for seeking disability benefits); Rohr v. Designed Telecommunications, Inc. Short Term Disability Plan, 2009 U.S.Dist.LEXIS 32404 (S.D.Ohio February 11, 2009); Westphal v. Eastman Kodak Co., 2006 U.S.Dist.LEXIS 41494 (W.D.N.Y. 6/21/2006)(psychiatric reviews unethical); Morse v. Corning Inc. Pension Plan for Hourly Employees, 2007 U.S. Dist. LEXIS 12645 (W.D.N.Y. 2/23/2007); Kinser v. Plans Administration Committee of Citigroup, Inc., 2007 U.S.Dist.LEXIS 23372 (M.D.Ga. 3/29/2007)(court thoroughly rejected Dr. Schroeder's opinion, and cited his earnings and the number of files he reviewed for MetLife); Schwarzwaelder v. Merrill Lynch & Co., Inc., 606 F. Supp. 2d 546 (W.D.Pa. March 9, 2009)(also addressing Dr. Schroeder and Dr. Shallcross); Haisley v. Sedgwick Claims Management Services, Inc., 776 F. Supp. 2d 33 (W.D.Pa. March 2, 2011) (same - Drs. Givens and Goldman were involved); Zoller v. INA Life Ins.Co. of New York, 2008 U.S.Dist.LEXIS 67475 (S.D.N.Y. August 25, 2008) (criticizing frequent reviewer Dr. I. Jack Abramson); Whitehouse v. Raytheon Co., 2009 U.S.Dist.LEXIS 113780 (D.Mass. November 5, 2009)(criticizing Dr. Marcus Goldman); Satterwhite v. Metro.Life Ins.Co., 2011 U.S.Dist.LEXIS 29610 (E.D.Tenn. March 22, 2011) (criticizing MetLife for relying on reviewing doctors when a prior ruling specifically admonished the insurer to obtain an IME)(criticizing Drs. Guinjoan and Busch); Zhou v. Metro.Life Ins.Co., 2011 U.S.Dist.LEXIS 99281 (D.Md. September 2, 2011)(criticizing MetLife for relying on Drs. Goldman and Rummler; also critical of file reviews over exams when claimant cannot afford the documentation demanded); Glunt v. Life Ins.Co. of North America, 2012 U.S.Dist.LEXIS 8027 (E.D.Pa. January 25, 2012) (finding that reliance on a file review in a case involving psychiatric symptoms was deficient); Kreeger v. Life Ins. Co. of N. Am., 2011 U.S. Dist. LEXIS 19425 (C.D. Cal. Feb. 28, 2011)(criticizing LINA's use of Dr. DeFilippis).
On the reimbursement issue, the availability of equitable defenses was recognized in U.S. Airways, Inc. v. McCutchen, 663 F.3d 671, 676 (3d Cir. 2011) where the court held that "Congress intended to limit the equitable relief available under § 502(a)(3) through the application of equitable defenses and principles that were typically available in equity." Those equitable defenses include the clean hands doctrine, which was implicated in this case because LINA's counterclaim illustrated the anomaly of the insurer seeking to reap the benefit of Ayers's award of Social Security disability benefits after abandoning its support of that claim (if not outright trying to sabotage the Social Security claim) and while disregarding the significance of the SSA's disability finding. That conduct suggests CIGNA's disability determination was made in bad faith and under the influence of a financial conflict of interest. In fact, in Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 118, 128 S. Ct. 2343, 2352 (2008), the Supreme Court determined that a disability insurer's efforts to reap the benefit of a Social Security award while ignoring the SSA's disability finding constitutes "procedural unreasonableness." Nonetheless, under the ruling of Northcutt v. Gen. Motors Hourly-Rate Employees Pension Plan, 467 F.3d 1031 (7th Cir. 2006), the insurer would have been permitted to offset the payment due to the plaintiff by the amount of Social Security benefits he received, so the counterclaim's disposition is ultimately immaterial.