Covert surveillance obtained by insurers in disability benefit cases is often devastating to claimants. However, as demonstrated in Osborne v. Hartford Life and Acc. Ins.Co., 2012 U.S.Dist.LEXIS 131898 (W.D.Va. Sept. 17, 2012), even ostensibly damaging surveillance may not be sufficient.

Michael Osborne worked as a heavy equipment operator for a power company until he injured his neck in a car accident and began receiving disability benefits. After paying benefits for 24 months, Hartford reassessed the claim under a more demanding “any occupation” definition of disability and found Osborne was entitled to continue the benefit payments. However, a year later, the insurer hired an investigator to place Osborne under surveillance. The investigator filmed him engaging in what appeared to be strenuous yard work.

When later confronted by a Hartford investigator who showed him the surveillance video and asked him to explain the apparent inconsistency between what he was observed doing and his claimed disability, Osborne explained he was helping a friend prepare for a graduation party and that he suffered the consequences of what he did by experiencing even more pain than usual for several days thereafter.

Although Hartford could have corroborated its suspicions by having Osborne undergo an independent medical examination, the insurer instead engaged a physician, Douglas Brown, to perform a file review. Brown reported he could find no functional restrictions from his review of the records. Based on Brown’s findings, Hartford generated an employability analysis that deemed Osborne capable of significant levels of exertional activity that enabled him to work at certain enumerated occupations. Consequently, Osborne’s disability benefits were terminated and his life insurance premium waiver due to disability was also eliminated.

Osborne appealed, submitting a report from a functional capacity evaluation that lasted 8’½ hours and included validity measures showing Osborne put forth his best efforts. The test results found Osborne incapable of working in a competitive work environment. Osborne’s treating physician confirmed those findings and reported the surveillance was unrepresentative of Osborne’s limitations – she expressed her opinion that Osborne could not work on a consistent basis, adding that he “may be able to work one or two days but then he might be laid up for several days after that.” Hartford obtained another file review from Dr. Beatrice Engstrand, who concluded Osborne was capable of working on a full-time basis. As a result, Hartford upheld its determination.

Applying a deferential standard of review, the court found Hartford abused its discretion. The court interpreted the insurance policy’s definition of disability to require that claimants have an ability to work at an occupation on a full-time basis. The court ruled that Hartford’s heavy emphasis on the surveillance was an abuse of discretion, finding it unreasonable to extrapolate from a two-hour video a conclusion that Osborne was capable of working on a full-time basis.

The court cited several key rulings: Stup v. UNUM Life Ins. Co. of Am. 390 F.3d 301, 309 (4th Cir. 2004) (holding that the results of a functional capacity assessment were not sufficient to establish that the plaintiff could perform sedentary work on a full-time basis, since the assessment “lasted only 2’½ hours” and “provide[d] no evidence as to her abilities for a longer period”); Lalli v. Hartford Ins. Co. No. 1:10-cv-00152, 2012 U.S. Dist. LEXIS 23312, at *25 (D. Utah Feb. 23, 2012) (holding that surveillance footage of the plaintiff playing golf did not justify the denial of disability benefits and emphasizing that “4’½ hours of golf … does not equate to a full, eight-hour work day”); Hanusik v. Hartford Life Ins. Co. No. 06-11258, 2008 U.S. Dist. LEXIS 7520, at *11-12 (E.D. Mich. Jan. 31, 2008) (noting that the plaintiff’s functional capacity could not be established on the basis of surveillance footage, which “fail[ed] to show plaintiff either performing any single or combination of activities for an eight-hour period or strenuously exerting herself over the course of two consecutive days”).

The court was also critical of Hartford for failing to address the evidence Osborne submitted in rebuttal to the insurer’s assessment of his functional capacity, particularly the 8’½-hour functional capacity evaluation he had undergone. The court characterized that deficiency as a “failure to seriously engage in a discussion” of Osborne’s favorable evidence and cited the following cases in support: White v. Eaton Corp. Short Term Disability Plan. 308 F. App’x 713 (4th Cir. 2009); see also Donovan v. Eaton Corp. 462 F.3d 321, 329 (4th Cir. 2006) (finding an abuse of discretion where there was a “wholesale disregard” of evidence in the claimant’s favor); Glenn v. Metro. Life Ins. Co. 461 F.3d 660, 672 (6th Cir. 2006) (emphasizing that “the failure to consider evidence that is offered after an initial denial of benefits renders a final denial of benefits arbitrary and capricious”); Harris v. Holland. 87 F. App’x 851, 859 (4th Cir. 2004) (holding that the trustees of the pension plan abused their discretion in denying plaintiff’s claim for disability benefits, where they “apparently gave no consideration” to an opinion provided by a treating physician, which directly addressed one of the issues in dispute).

The court was careful to point out, though, that it was not endorsing a view the insurer was required to give special weight to the treating doctor’s opinion; it was merely stating that Hartford is not entitled to “arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician.” Black & Decker Disability Plan v. Nord. 538 U.S. 822, 834, 123 S. Ct. 1965, 155 L. Ed. 2d 1034 (2003).

This ruling points out the danger of over-reliance on non-medical evidence such as surveillance. What obviously irked the court was Hartford’s reliance on paper reviews in place of a clinical examination since the policy gave Hartford the power to mandate Osborne’s attendance had Hartford chosen such a course.

This opinion follows a definite trend demonstrating courts’ growing skepticism about reviewing doctors and the need to support conclusions with clinical evidence.

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