In Wright v. Raytheon Co. Short Term Disability Plan, 2008 U.S.Dist.LEXIS 81951 (Sept. 17), a district court in Arizona thoughtfully applied Metropolitan Life v. Glenn, 128 S.Ct. 2343 (2008), to find that MetLife acted under a conflict of interest when it denied Alan Wright’s disability claim. The plaintiff, who had undergone heart bypass surgery, suffered disabling complications due to non-union of his sternum following the surgery.

Wright’s claim was initially reviewed by Dr. Amy Hopkins, a physician who is well-known to have been frequently retained by MetLife. Indeed, the evidence showed she had received payments of nearly $500,000 from MetLife between 2001 and 2004, although her earnings from MetLife dropped precipitously in 2005.

Hopkins found no disability, suggesting Wright simply needed to lose weight and avoid stress. Wright appealed, and in addition to challenging Hopkins’s opinion, one of his treating physicians wrote a letter to MetLife asserting that his opinions had been grossly misrepresented by Hopkins.

The file was then reviewed by Dr. Michael Rosenberg, a cardiologist hired through Network Medical Review/Elite Physicians. The record showed that annual payments from MetLife to that organization rose from $79,410 in 2001 to more than $2 million in 2005. Rosenberg recommended the claim denial be upheld due to a lack of ”objective” evidence. The claim was again denied, although subsequent to the denial, one of Wright’s treating doctors wrote to MetLife complaining that Rosenberg’s report ignored the pulmonary aspects of the disability claim. MetLife offered no response other than to uphold the benefit denial.

The court found MetLife abused its discretion based mostly on the factors set forth in Glenn: ”[H]istory of biased claims administration; evidence of procedural unreasonableness; emphasis on medical reports favoring denial coupled with de-emphasis of reports suggesting a contrary conclusion; failure to provide independent vocational and medical experts with all of the relevant evidence, and the ultimate adequacy of the record’s support for the agency’s factual conclusion.”

The court also took into consideration a finding made in an earlier Supreme Court ruling, Black & Decker v. Nord, 538 U.S. 822 (2003), that repeatedly hired experts ”have a clear incentive to make a finding of ‘not disabled’ in order to save their employers money and to preserve their own consulting arrangements.”

The court concluded that MetLife’s review was selective and determined the record as a whole did not support the denial of benefits. Focusing on Network Medical Review’s financial bias, the court was clearly troubled by the marked increase in payments from MetLife, which the court found ”supports the conclusion that MetLife had a close relationship with NMR in which both entities stood to benefit from the denial of claims.” The court also found instructive an opinion from a district court in California addressing a different company that hires itself out to review disability claims.

In Caplan v. CNA Financial Corp., 544 F.Supp.2d 984, 991-92 (N.D.Cal., 2008), the court pointed out: ”Hartford’s structural conflict of interest is accompanied by its reliance on UDC, a company which Hartford knows benefits financially from doing repeat business with it, collecting more than thirteen million dollars from Hartford since 2002. It follows that Hartford knows that UDC has an incentive to provide it with reports that will increase the chances that Hartford will return to UDC in the future-in other words, reports upon which Hartford may rely in justifying its decision to deny benefits to a Plan participant.”

The court found the identical incentives at play in this case; and the court deemed the evidence showing the close financial relationship between MetLife and the review company established a conflict.

In addition, the court pointed to MetLife’s ”clearly erroneous findings of fact” based on omissions or misrepresentations of relevant information, as well as MetLife’s selection of consultants in fields of medicine that were not directly relevant to the condition at issue. By the time the claim arose, Wright’s primary impairment was an obstructive airway disease, which MetLife virtually ignored. Consequently, because the reviewing cardiologist repeatedly noted in his report that his opinions were from a ”purely cardiovascular standpoint,” the actual disabling impairment was ignored. In addition, the court found MetLife’s doctors were biased against the claimant’s obesity and anxiety even though those conditions were caused by complications due to the sternum non-union and not the other way around.

Finally, although the defendant argued that if benefits were to be awarded, they should be awarded solely for short-term disability since there had been no exhaustion of a claim for long-term disability, the court disagreed. The court found further appeals as to the long-term disability would have been futile due to the short-term disability denial. The court also remarked that the lengthy litigation history of the case favored the benefit payment. Disability began in September 2004, and the court ruled it would be unfair to deem four years of litigation as limited solely to short-term disability. Thus, the court recommended the payment of both short term and long term disability benefits.

This case raises a very troubling concern. By limiting its review to the claim record and denying discovery, as directed by cases such as Perlman v. Swiss Bank Corp., 195 F.3d 975, 981-2 (7th Cir. 1999)(”Deferential review of an administrative decision means review on the administrative record.”), courts presume the independence of physicians even when extrinsic evidence establishes significant bias. Between this case and the cited Caplan ruling, there needs to be concern about reports from doctors affiliated with organizations such as NMR or UDC, particularly since in almost every one of these cases, the doctor has merely conducted a record review and has not examined the claimant. The 6th U.S. Circuit Court of Appeals, in particular, has questioned the accuracy of disability claim determinations based on a reviewing doctor’s opinion, pointing out the inherent weakness as to the lack of first-hand clinical observations. See, e.g., Calvert v. Firstar Finance Inc., 409 F.3d 286 (6th Cir. 2005). Perhaps the repeated citation to administrative law cases in the Supreme Court’sGlenn ruling will reopen an examination of the leading ruling on this issue, Richardson v. Perales, 402 U.S. 389 (1971), which held, in the context of a Social Security disability benefit determination, that the only medical opinions that will be considered as substantial evidence are opinions from doctors who have examined the claimant. Since firsthand knowledge is the keystone of testimonial competence (Fed.R.Evid. 602), the routine disregard of the rules of evidence in ERISA cases, which are not exempted from either the Federal Rules of Evidence or the Federal Rules of Civil Procedure is astonishing.

The other important consideration in this ruling was the court’s willingness to pay all benefits due and not give the insurer another bite at the apple. At least two federal circuits have come to the same conclusion. In both Cook v. Liberty Life Assurance Co. of Boston, 320 F.3d 11 (1st Cir. 2003) and Oliver v. Coca Cola Company, 497 F.3d 1181 (11th Cir. 2007), the 1st and 11th Circuits recognized the unfairness of subjecting the claimant to further procedures and awarded benefits even beyond a change in the definition of disability in the applicable disability benefits plan. When the plan has been found to have abused its discretion, the only appropriate remedy to correct such fiduciary misconduct is to award all benefits due.

This article was initially published in the Chicago Daily Law Bulletin.

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