Juszynski v. Life Ins. Co. of North America

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Juszynski v. Life Insurance Company of North America, 2008 U.S.Dist.LEXIS 24928 (N.D.Ill. 3/28/2008)( Issues: Continuing Disability Review, Post Hoc Rationale) .  The plaintiff in this case initially became disabled in 2001, and his disability benefits commenced in January 2002.  On September 30, 2005, however, LINA terminated the claim and after exhausting pre-suit appeals, Juzynski filed suit.  The court considered cross-motions for summary judgment, or in the alternative, to conduct a trial on the papers and enter judgment in accordance with Fed.R.Civ.P. 52.  After consideration of the parties’ submissions, the court entered judgment for Juszynski pursuant to Rule 52.

When the claim was initially submitted in 2001, Juszynski’s treating doctor listed six diagnoses: (1) peripheral neuropathy, (2) cerebellar degeneration, (3) chronic alcoholism, (4) gout, (5) recurrent falls, and (6) multiple fractures.  The treating doctor also reported to LINA at the inception of the claim that the plaintiff was permanently disabled.

In addition to applying for benefits from LINA, Juszynski also successfully applied for social security disability benefits.  Thereafter, LINA received regular reports from Juszynski’s primary treating doctor certifying his disability as permanent.  Moreover, as Juszynski approached the two year change in definition under his policy from the need to provide disability as to his inability to perform his “own occupation” to one requiring an inability to perform “any occupation,” he was diagnosed with an additional impairment, peripheral arterial disease; and he femoral popliteal bypass operations in both legs.  Shortly thereafter, LINA wrote to Juszynski, advising of its determination that he was disabled from performing any occupation.  Later still, Juszynski provided MRI evidence of arthritic degeneration in both the cervical and lumbar regions of his spine.

Although no medical improvement was indicated, in early October 2005, LINA terminated benefits as of September 30, 2005, alleging it lacked updated medical evidence showing Juszynski’s ongoing disability.  Juszynski maintained that he had sent updated evidence, but it was not noted as received until after the termination decision had been made.  Juszynski also provided additional evidence from his cardiologist, a neurologist, and from his primary care physician.  While not all the forms were completed, the primary physician unequivocally certified disability and identified specific limitations.  Nonetheless, a nurse case manager and a LINA medical director, John Mendez, M.D., recommended that the denial be upheld based on an alleged lack of diagnostic testing or examination findings sufficient to support disability.

Juszynski submitted a second appeal with new medical information, but a second medical director, Marie Hatam, M.D., again recommended upholding the denial.  Litigation ensued.

The court applied the de novo standard.  Although the court disagreed with the plaintiff’s argument that LINA had the burden of proof in showing medical improvement, the court nonetheless placed great weight on the initial approval of benefits and the absence of evidence of improvement, citing Ladd v. ITT Corp., 148 F.3d 753 (7th Cir. 1998); McOsker v. Paul Revere, 279 F.3d 586, 589 (8th Cir. 2002); and Nickola v. CNA Group Assurance Co., No. 03 C 8559, 2005 U.S. Dist. LEXIS 16219, at *25 (N.D. Ill. Aug. 5, 2005).

The court also found the weight of the evidence favored the continuation of benefits.  The court noted the principal treating doctor’s findings were “consistent and largely uncontradicted,” while LINA’s decision was based on selective excerpts rather than the entire record.  Pointing out the evidence relied on by LINA, the court found the specific records provided only “marginal support for LINA's contention that benefits should have been terminated.” *19.  The court addressed those points in order.

First, the claim that a treating neurologist “certified” sedentary work capability was rejected as simply untrue.  Moreover, the limitations given by that doctor (indicating sitting capacity between 2.5 and 5.5 hours per day) falls below the Social Security and Department of Labor definition of “sedentary” capacity which requires that “sitting … generally total about 6 hours of an 8-hour workday." Social Security Ruling No. 96-9p, 1996 SSR LEXIS 6, at *8 (SSA July 2, 1996).

Second, the court found that LINA misrepresented the record with respect to the other physicians. The court determined that LINA read too much into the doctors’ return of either incomplete or blank capacity assessments, finding that such actions “cannot fairly be interpreted as affirmative evidence that Juszynski had no physical limitations.” *23.

Third, the court was unpersuaded that the failure of the specialists to unequivocally certify total disability from all occupations had any meaning.  Citing NLRB v. Louis A. Weiss Mem'l Hosp., 172 F.3d 432, 444 (7th Cir.1999) (noting that "[a]n absence of evidence does not cut in favor of the one who bears the burden of proof"), the court found the absence of explicit certification by the specialists offered “only limited support” for the determination and that LINA had the right, but declined to exercise it, to have the claimant examined.  The court commented,

In this case, while there is a clear basis to question whether LINA's financial interests may affect its objectivity in deciding whether or not to terminate benefits, there is no evidence that LINA made any effort to obtain an independent assessment of Juszynski's physical limitations. *25.

Fourth, the court rejected LINA’s argument that the opinions of the primary treating doctor were “conclusory remarks” or “unsupported opinions.”  LINA maintained the doctor had “joined Plaintiff’s advocacy team;” however, the court pointed out that the doctor had given similar opinions prior to Juszynski obtaining legal representation.  Further, the treating doctor cannot be deemed any more biased than the in-house doctors who “were burdened by their employer-employee relationship with the insurer.” *28.  Further, the court pointed out that “LINA apparently saw fit to rely on Dr. MacEntee's reports at [the time benefits were approved].  The court is skeptical, therefore, of LINA's more recent decision to completely disavow the value and accuracy of Dr. MacEntee's reports concerning Juszynski's physical limitations.” *29.

Next, the court overruled the insurer’s contention that Davis v. Unum Life Ins.Co., 444 F.3d 569 (7th Cir. 2006) supports the use of in-house doctors.  The court found Juszynski persuasively distinguished Davis because that case was adjudicated under the arbitrary and capricious standard of review while this case was determined under the de novo standard.  Thus, “[u]nlike in Davis, the court here is obligated under de novo review to consider not merely whether the opinions of LINA's in-house consultants were rationally supported by the record, but also how much weight to give those opinions relative to those of the other physicians.” *30-*31.  The court was persuaded by Juszynski’s argument that LINA’s doctors’ opinions are entitled to less weight than doctors who performed first-hand evaluations – on two grounds: 1) that the doctors supporting disability relied on first hand evaluations; and 2) that the in-house consultants relied on a limited selection of the available information and appeared to rest solely on a single report.  Indeed, LINA admitted that it did not consider the residual effect of all of Juszynski’s conditions, particularly in view of the plaintiff’s citation of evidence that some of the diagnoses were of degenerative impairments that had worsened.

Additional criticism was leveled at LINA for its disregard of the Social Security disability determination.  While Social Security’s findings were not deemed binding on LINA, the court found those findings relevant and LINA’s disregard of the Social Security determination constituted further evidence that LINA selectively reviewed the evidence.

The court also rejected LINA’s contention that Juszynski’s benefits would be limited to 24 months due to alcoholism, an issue which was first raised in litigation.  The court pointed that the burden of proving the applicability of the limitation rested on LINA; and the court found that while there was some evidence that alcoholism contributed to disability at the time the claim was submitted, there was no evidence that alcoholism affected his condition from January 2002 onward when he stopped drinking.  The court found:

Without any such documentation or expert opinion, the court cannot speculate as to whether or to what degree the alcoholism documented in 2001 may have affected Juszynski's symptoms in subsequent years. The court thus finds that LINA has not provided sufficient evidence that the limitation applies. *41.

The court also addressed Juszynski’s argument that LINA waived the issue because it had never been asserted prior to litigation.  Citing cases that held “an insurer waives defenses to coverage not articulated to the insured during the claims review process where the insurer had sufficient information to investigate and raise those defenses if it had so chosen” ( Lauder v. First Unum Life Ins. Co., 284 F.3d 375, 381 (2d Cir. 2002); Marolt v. Alliant Techsystem, Inc., 136 F.3d 617, 620 (8th Cir. 1998)), the court concluded, “Juszynski persuasively argues that LINA's attempt to invoke the alcoholism limitation only after the conclusion of its own claim reviews is prohibited by ERISA.” *44.  Both 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1 prohibit the introduction of new reasons for the denial after the pre-suit appeals are concluded; and the court agreed with plaintiff that to allow new reasons “would effectively undermine ERISA's statutory requirement that a claimant be provided adequate notice of ‘specific reasons for such denial’ and afforded reasonable opportunity for review by the insurer.” *45.

Consequently, judgment was entered in Juszynski’s favor awarding a reinstatement of benefits, an award of prejudgment interest at the prime rate compounded monthly, and attorneys’ fees.