Smith V Novelis

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 .

Smith v. Novelis, 2009 U.S.Dist.LEXIS 90094 (N.D.N.Y. September 29, 2009)(Issue: Continuing Disability Reviews). The court found numerous reasons to overturn Liberty's termination of the plaintiff's disability benefits. In addition to Liberty's conflict of interest, the court found numerous procedural irregularities which included giving little or no weight to a social security disability determination after the insurer assisted the claimant in applying for benefits. In addition, the court was deeply troubled by the insurer's sudden decision to cease paying benefits after 13 years when an independent evaluation had concluded that plaintiff's condition was unchanged. The court cited several rulings that found an abuse of discretion in "[d]ecisions to terminate benefits in the absence of a change in condition." *40-*41. Thus, the court concluded:

The Court finds merit to the conclusion that, when there has been no change in the relevant plan or policy, under which Plaintiff was deemed "totally disabled" for more than a decade based on objective and subjective medical evidence, and when there has been no change in Plaintiff's condition, 17 any effort to sua sponte re-open Plaintiff's file and consider terminating his benefits based on the exact same evidence and standard as before smacks of arbitrary conduct. Furthermore, allowing a plan administrator to then credit the opinion of a newly hired "independent physician" over a treating physician would appear to invite physician-shopping, a temptation that should be avoided by a fiduciary such as a plan administrator. *42-*43.

The court then went on to discuss the particular evidence on which the insurer relied. The court found a FCE unreliable and inconsistent. The court also rejected the insurer's contention that the treating doctor agreed with the FCE findings by noting that when read in its entirety, it was clear the treating doctor disagreed with the FCE conclusions. The court also rejected an independent medical examination's findings as flawed in several ways. Moreover, the court found ample objective support for the claimed disability based on MRI and CT findings, along with multiple opinions dating back several years that the plaintiff's condition was unlikely to improve. The court also cited numerous opinions requiring that pain complaints be taken into consideration. Finally the court rejected the results of a transferable skills analysis because the underlying predicate for the TSA was the FCE which the court found flawed, citing Rappa v. Connecticut General Life Ins.Co., 2007 U.S.Dist.LEXIS 91094 (E.D.N.Y. 12/11/2007), where the court noted that a TSA based on a faulty FCE "cannot be relied upon") and Alfano v. Cigna Life Ins.Co. of N.Y., 2009 U.S.Dist.LEXIS 7688 (S.D.N.Y. January 30, 2009).

Discussion: The key piece in this case was the comment about the defendant's use of an independent examiner after it had paid benefits for so many years without question - that such tactics "appear to invite physician-shopping, a temptation that should be avoided by a fiduciary such as a plan administrator."

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