An insurer’s choice to rely on file reviews in place of examinations can be critical to the outcome of litigation, a lesson taught by Tolstedt v. Standard Ins. Co., 2013 U.S.Dist.LEXIS 134946 (D.Mont. June 24, 2013). There, the plaintiff, Michael Tolstedt, a trial lawyer from Billings, Mont., began taking prescription medication for depression on Sept. 30, 2009.

Two weeks later, Tolstedt suffered a heart attack and underwent two heart surgeries, which led his cardiologist to recommend that he cease working as an attorney and limit himself to a low-stress work environment. Tolstedt took that advice and left the practice of law, although he continued working as a coach and substitute teacher.

The dispute between the parties focused on whether the Tolstedt’s disability was physical or psychiatric. Standard maintained that Tolstedt had been successfully treated for his cardiac condition and that he was not physically disabled.

However, the Tolstedt’s cardiologist maintained otherwise and reported that Tolstedt’s disability was due to coronary artery disease. Standard failed to have Tolstedt examined and relied instead on medical consultants who reviewed the records.

Although a magistrate judge had recommended that Standard’s motion for summary judgment be granted, the U.S. District Court judge rejected that recommendation after finding the evidence was in dispute. Reviewing the record de novo, the court determined that Tolstedt was entitled to ongoing benefits and that Standard could not apply the policy’s 24-month limitation on the duration of benefit payments applicable to psychiatric conditions.

Following Black & Decker v. Nord, 538 U.S. 822 (2003), the court did not give deference to the treating doctor, but found the treating cardiologist’s opinion was entitled to more weight based on the nature and extent of the doctor-patient relationship. The court relied heavily on Finazzi v. Paul Revere Life Ins. Co., 327 F.Supp.2d 790, 795 (W.D.Mich. 2004), which found that:

” … to terminate disability benefits in the face of persistent opinions of two long-term treating physicians, one of whom is a board certified cardiologist, that plaintiff is not able to endure the stress even of sedentary work and that return to work may endanger his life, based exclusively on opinions of three board certified cardiologists, who never examined plaintiff, have not expressly challenged or criticized the opinions of the treating physicians, and who have stated merely that clinical findings demonstrate plaintiff should be able to perform the duties of sedentary or light work, without obtaining a single independent medical examination of plaintiff, is not a reasoned decision.”

The court noted that Finazzi applied an arbitrary and capricious standard of review, yet still determined that the treating doctor’s findings outweighed the opinions of non-examining doctors. Under a de novo standard, the court found it had greater discretion to weigh physician testimony than under a deferential standard of review.

The court pointed out that the treating cardiologist is a specialist and chairman of cardiovascular medicine at the Billings Clinic and that he had treated the plaintiff for several years. The court thus accepted the cardiologist’s opinion that Tolstedt would face a significant risk of another heart attack if he returned to his stressful position. Rejecting the insurer’s consultants’ findings, the court remarked:

“Defendant’s consulting cardiologists were paid to review plaintiff’s medical records, but they never personally examined him and defendant never ordered an independent medical examination. Defendant’s consulting cardiologists never directly challenged Dr. Sample’s findings that continuing his work as an attorney would increase plaintiff’s risk of suffering another, potentially fatal, heart attack.

“Defendant’s consulting cardiologists merely stated there was no evidence to support the conclusion that plaintiff’s heart disease was related to his work stress and, therefore, the plaintiff is not entitled to disability benefits. (AR 253-254.) The court rejects this notion. As the Michigan court stated in Finazzi, ‘the information available to (consulting physicians) would have been more complete and their opinions commensurately more reliable if they had personally examined plaintiff.’ 327 F.Supp.2d at 795. They did not.”

Thus, the court deemed the treating cardiologist’s opinions “more credible” than those generated by the reviewing doctors. The treating doctor’s recommendations were described as “clear and consistent” throughout. Therefore, the court concluded that the insurer erred by terminating Tolstedt’s benefits.

A claimant for disability benefits should not have to die or risk serious injury in order to collect benefits. That observation was made by a district court in Illinois, which observed, “To suggest, as CNA does, that a permanent heart condition that may be aggravated by stress can only rise to the level of a disability when and if the insured suffers a heart attack is unreasonable.” Saliamonas v. CNA, Inc., 127 F. Supp. 2d 997, 1001 (N.D. Ill. 2001).

However, the key point made in this ruling is not whether or not stress can cause another heart attack. Rather, the court’s criticism of Standard focused on the insurer’s failure to utilize its authority to have the claimant examined by a physician. Every disability insurance policy contains a clause giving the insurer the right to have the claimant examined by a physician of its choosing.

The Nord ruling has had the unfortunate consequence of encouraging insurers to forego independent medical examinations and to instead rely on opinions of non-examining, file-review physicians.

The leniency shown by courts to that practice seems to currently be trending in the opposite direction, since there is no substitute for an examination. In contrast to this case, in Leipzig v. AIG Life Insur.Co., 362 F.3d 406 (7th Cir. 2004), which presented the same issue, the insurer won under a deferential standard of review because it had obtained an examination.

In all likelihood, Standard would have won this case as well had it obtained an examination. Instead, the insurer relied exclusively on the conclusions rendered by file-review doctors whose opinions were formed exclusively by their review of the records, thus proving that there is no substitute for opinions formed by first-hand observation.

I represented the plaintiff in the Leipzig case mentioned in this article.

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