Medical conditions that wax and wane can be a great challenge both to disability benefit claimants and insurers as Kirkpatrick v. Liberty Mutual Group, Inc., 2012 U.S.Dist.LEXIS 29465 (S.D.Ind. March 6, 2012) teaches.

This ruling involved Leona Kirkpatrick who worked as a claim adjuster for Liberty Mutual for about 14 years before claiming that a flare-up of symptoms caused by systemic lupus erythematosus rendered her disabled. Although the insurer agreed the lupus diagnosis was appropriate and acknowledged that lupus can flare unpredictably, the insurer maintained that the plaintiff worked with that condition for several years and deemed her condition stable.

Applying the arbitrary and capricious standard of review, the court nonetheless overturned Liberty’s determination. The plaintiff maintained that Liberty failed to consider the totality of her medical condition and ignored her chronic pain and that Liberty’s inherent conflict was a factor in the denial decision. The court agreed. The court concluded, “Liberty Life made a determination apparently devoid of reasoning, and in doing so, it acted arbitrarily.” The court also pointed out in a footnote (n.9) that the issue is not whether Liberty performed a “thorough review,” instead, “the issue is whether it engaged in a rational analysis of the evidence, formed an opinion founded on a rational basis and communicated the basis for its conclusions so as to permit effective appeal and review.” The court also found error in Liberty’s conclusion that there was inadequate evidence of a change in condition when the plaintiff stopped working, citing Hawkins v. First Union Corp. Long-Term Disability Plan, which found:

“A desperate person might force himself to work despite an illness that everyone agreed was totally disabling. Yet even a desperate person might not be able to maintain the necessary level of effort indefinitely. A disabled person should not be punished for heroic efforts to work by being held to have forfeited his entitlement to disability benefits should he stop working.” 326 F.3d 914, 918 (7th Cir. 2003).

The court also criticized Liberty for failing to adequately address whether the plaintiff could meet the requirements of her occupation. The insurer maintained that Kirkpatrick was not disabled because she could perform a sedentary job, but court pointed out the plan required a focus on whether the claimant is capable of performing the “material and substantial duties” of her occupation, which involved more than whether the claimant could physically sustain sedentary employment. The biggest problem with Liberty’s determination, though, was the insurer’s failure to consider the implications of the unpredictability of lupus and that the condition could be completely debilitating during a flare-up. The court also criticized the insurer for failing to take all of the medical evidence into consideration, and concluded, “Liberty Life’s reliance on a record review report filled with errors and inconsistencies cannot pass muster even on deferential abuse of discretion review.”

Although Liberty employed a second reviewing doctor to consider the claim appeal, the court found that his report suffered from the same deficiencies as the first doctor’s report and displayed evidence of “selective decision-making.”

Finally, although the court disagreed with the plaintiff that Liberty showed arbitrariness by failing to consider the totality of the plaintiff’s condition and the comorbidity of her disparate impairments, the court accepted the plaintiff’s criticism that Liberty failed to evaluation how “pain might interfere with her ability to perform her job.”

The court concluded that “Liberty Life engaged in arbitrary and capricious decision-making at nearly every turn” and remanded the case to Liberty to perform a “more reasoned inquiry” that “considers and addresses Kirkpatrick’s physical condition as a whole, including her chronic pain.”

This ruling exemplified what the Supreme Court appeared to be trying to say in Metro.Life Ins.Co. v. Glenn, 554 U.S. 105 (2008) by citing Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951) as a guide for review of ERISA fact-finding.

That ruling admonished courts to “assume more responsibility for the reasonableness and fairness of [administrative] decisions than some courts have shown in the past.” The court was obviously skeptical and clearly questioned why Liberty would dispute a claim submitted by a claimant who had been a valued employee for 14 years and who suffered from a condition that is well-known to cause unpredictable flares that could preclude work for indeterminate lengths of time. In addition to the valuable findings made in the ruling as to the unpredictable nature of the plaintiff’s condition, the decision could also have included citations to several other cases that have elaborated on that issue even further such as Ruggerio v. Fedex, 2003 U.S.Dist.LEXIS 14048 (D.Mass. Aug. 14, 2003) where the court recognized that plaintiff was an “unreliable worker [because her symptoms] do not manifest in a linear fashion and, at worst, totally disable her for unspecified and unpredictable periods of time.” Likewise, although the ruling was vacated following a settlement, a district judge in Hawaii held in Bright v. Life Insur.Co. of North America, 327 F.Supp.2d 1230 (D.Hawaii 2004) that “Bright’s documented flare-ups are clearly disabling. At other times, she might even be able to do occasional sedentary (or even non-sedentary) work for a few hours or even longer. But even if that were so, it does not mean she can hold employment (work a regular job) in her own occupation, where others must depend on her.”

Another case involving the same insurer that could also have been discussed is Willcox v. Liberty Life Assur.Co. of Boston. 552 F.3d 693 (8th Cir. 2009). There, the court was extremely critical of an insurer’s selective review of the evidence and its disregard of clinical findings supporting the claimant’s disability. The court made it clear that insurers may not focus only on evidence that supports a claim denial, but must fairly examine and consider all of the evidence.

I was one of the attorneys who represented the plaintiff in the Bright ruling cited in this article.

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