Rabuck v. Hartford Life & Accident Ins.Co.

The casenote of the month is from the Disability E-News Alert! a monthly newsletter describing new disability insurance developments.  For subscription information, e-mail Mark DeBofsky or visit www.disabilityenewsalert.com .

Rabuck v. Hartford Life and Accident Ins.Co., 2007 U.S.Dist.LEXIS 80246 (W.D.Mich. 10/30/2007)(Issue: Selective Review).  In this lengthy ruling, the district court thoroughly demolished Hartford’s termination of the plaintiff’s benefits, finding the insurer’s actions arbitrary and capricious.  The plaintiff had been the president of a manufacturing company that made precision industrial component.  In 2002, at the age of 53, Rabuck suffered a heart attack with significant cardiopulmonary and neurological complications and left him in need of a heart transplant.  Despite significant compromised functional abilities, Rabuck returned to work two months after undergoing surgery, and he worked even though he had a ventricular assistive device to keep his heart functioning while awaiting a transplant.  Eventually, Rabuck underwent a heart transplant in 2003, but experienced an acute rejection episode that resulted in follow-up hospitalization.  Ultimately, the plaintiff’s physicians were able to stabilize his cardiac function, but his employer requested his resignation due to significant memory loss and other performance deficiencies.  Rabuck then applied for disability benefits from Hartford which ultimately approved the claim after collecting all of the medical records and opinions from the treating physicians and documenting that Rabuck’s condition was unlikely to improve without another heart transplant.

At Hartford’s request, Rabuck concurrently applied for Social Security disability benefits which were also approved.  However, Hartford continued to aggressively review the claim and sent Rabuck’s file for review by Dr. Joseph Vita, a cardiologist.  Dr. Vita reported that he found no evidence that Rabuck was unable to return to work on a full time basis.  Shortly thereafter, in May 2005, Hartford terminated the benefit payments.  In its letter advising of the benefit termination Hartford made no mention of the Social Security determination or of any cognitive impairments, and concluded that Rabuck was capable of working in his occupation on a full time basis.

Rabuck appealed and submitted a wealth of medical documentation showing that he had developed gout, hyperlipidemia, and that memory problems and complications due to immunosuppressive drugs such as infection and significant environmental restrictions were also present.  The plaintiff also required frequent medical monitoring.

Hartford had the file reviewed again by a physician retained through University Disability Consortium.  That doctor mischaracterized Rabuck’s occupation and concluded that the plaintiff had full-time work capacity in his occupation.  Hartford then upheld its determination even though it had obtained a letter from the Rabuck’s employer citing the plaintiff’s short term memory impairments and explaining how those impairments which led to erratic behavior made it impossible for him to continue working.  Hartford also obtained a vocational report that confirmed long hours were characteristic of high level executive occupations a point that the treating cardiologist had emphasized when he reported that Rabuck lacked the ability to work long hours and could only tolerate part-time work.  Plaintiff then filed suit.

On consideration of the parties’ requests for judgment, the court first acknowledged that the arbitrary and capricious standard applied and that the court was required to uphold the plan administrator’s decision if it was the “result of a deliberate, principled reasoning process and is rational in light of the plan’s provisions.” *68 (citations omitted).  The court did, however, point out that it was also required to consider Hartford’s conflict of interest.

Despite the deferential nature of the court’s review, the court found the decision to terminate benefits was arbitrary and capricious.  First, the court found that Hartford could have, but chose not to have, the claimant examined.  Because the insurer relied on a file review, under Sixth Circuit authority, the failure to conduct an examination is a factor to consider and the review raises “questions about the thoroughness and accuracy of the benefits determination.” *73 (citations omitted).  Particularly since the review included critical credibility determinations, there is reason to question the adequacy of such a review.  Id. (citations omitted).  Moreover, although Hartford labeled the file reviews as “independent,” the court found no support in the record for that conclusion and cited Black & Decker v. Nord, 538 U.S. 822, 832 (2003) as the basis for concern about “physicians repeatedly hired by benefit plans [who] may have an incentive to make a finding of ‘not disabled’ in order to save their employers[‘] money and preserve their own consulting arrangements.”  Here, the court pointed to Hartford’s “significant and ongoing relationship” with University Disability Consortium (UDC).  *75.

The court determined that it was unclear what record were reviewed by the UDC doctors; and the absence of any acknowledgement of non-exertional limitations such as the short term memory loss showed “cherry-picking” of the record.  The court also found reliance on a single questionable note relating to fishing and golfing rendered the reviewing doctor’s conclusion that Rabuck regularly engaged in such activities “speculative.” Nor did the doctors comment on the effect of Rabuck’s medications.  The court also found Hartford’s vocational determination inadequate.  Just as the medical reviews appeared to be based on selective consideration of only a portion of the evidence, the vocational evaluation also failed to fully consider the entire picture.  The court found that there had to be more than a “bald assertion” that the claimant could perform certain occupations; and that there needed to be a rational connection between the plaintiff’s medical condition and whether he could realistically perform the occupations identified.  The court cited and followed the conclusion reached in Baker v. Metropolitan Life Ins. Co., No. 3:05-cv-262, 2006 WL 3782852, at * 17 (M.D. Tenn. Dec. 20, 2006): "Although the practice of law is a physically 'sedentary' occupation, the claimant's occupation was in the sophisticated and demanding legal practice of mergers and acquisitions, and the vocational component of MetLife's termination of LTD benefits was arbitrary and capricious because it did not adequately take into account the claimant's cognitive deficits.” *85-*86.  Because the reviewing cardiologist failed to assess the non-exertional limitations that related to Rabuck’s cognitive ability to perform his occupation, the court deemed the conclusion “incredible.”  *86.  The court also later concluded, “Inability to meet the employer's expectations with regard to cognitive functioning was record evidence that Hartford could not dismiss out of hand without being arbitrary and capricious.” (citing Rochow v. Life Ins.Co. of North America, 482 F.3d 860 (6th Cir. 2007)).

The court also pointed out that Hartford required Rabuck to apply for social security disability benefits, yet ignored the Social Security determination other than to reduce the plaintiff’s benefits on account of the award.  Although the Social Security decision is not binding, the failure to consider it at all raises a “certain skepticism of the plan administrator’s decision-making.” *89 (citing Calvert v. Firstar Fin., Inc., 409 F.3d 286, 295 (6th Cir. 2005)).

The court was likewise critical of the second reviewer’s effort to use “estoppel by silence” to suggest that the treating doctor agreed with him; and characterized that reviewer’s recitation as “manipulative and incredible.” *97-*98.  Moreover, Hartford disregarded the treating cardiologist’s written statement in favor of a second hand account of what the doctor purportedly said to the reviewing physician.

Thus, the court found Hartford’s decision arbitrary and capricious and awarded an immediate reinstatement of benefits along with payment of all benefits that had accrued with interest based on the monthly average one-year treasury bond yields from 2005 – 2007 (5.84%).  The court also directed the plaintiff to file an application for attorneys’ fees.  The court then concluded:

Where an ERISA plan grants the insurer discretion, its obligation is rather easily met -- it must act reasonably and in a principled fashion, and not arbitrarily. The record presented by Hartford in this case cannot support a finding that it met even this low threshold of care. Defendant, obviously motivated by its own self-interest, engaged in an unprincipled and overly aggressive campaign to cut off benefits for a gravely ill insured who could not possibly have endured the rigors of his former occupation on a full-time basis. Defendant's decisions, and the methods used to reach them, cannot withstand judicial review, even under the lenient arbitrary and capricious standard.

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