An insurer recently learned a hard lesson in how not to terminate disability benefits in Bertelsen v. Hartford Life Ins.Co., 2014 U.S.Dist.LEXIS 19225 (E.D.Cal. Feb. 14, 2014).

There, the plaintiff, Karen Bertelsen, worked as an engineering document control manager until she became disabled in 2008 on account of back pain caused by degenerative disk disease of the lumbar spine.

Hartford Life Insurance Co. approved her disability claim, finding her disabled both from her own occupation as well as from performing the duties of any occupation, and the Social Security Administration concurrently approved a disability benefit claim.

After paying benefits for more than three years, however, Hartford conducted surveillance and also had Bertelsen examined by Dr. Aubrey Swartz, who found no objective neurologic findings that supported an inability to work. The plaintiff’s treating chiropractor issued a rebuttal to those findings. However, Hartford disagreed and terminated Bertelsen’s benefit payments.

The plaintiff then appealed and submitted additional records from a physiatrist, physical therapy records, witness statements and an occupational assessment. However, Hartford upheld its decision, relying on a file review performed by Dr. Steven Lobel.

Despite applying the abuse of discretion standard of review, the court found evidence that Hartford’s decision was tainted by conflicts of interest and overturned the denial, relying heavily on Saffon v. Wells Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 870 (9th Cir. 2008), to support a conclusion that a termination of benefits is suspect when there is no improvement following a prior decision that approved the benefit claim.

Although the denial stated that the plaintiff no longer met the definition of disability, the insurer failed to explain why that was the case or explain why the information the plaintiff submitted in support of her ongoing disability was deficient.

The court also deemed the contention that the plaintiff’s impairment was no longer medically supported “disingenuous.”

The court pointed out: “Defendant cannot discredit its previous finding of disability or the underlying medical evidence without an explanation. Defendant previously accepted medical evidence from 2008 to 2011 in finding the plaintiff disabled, first in her own occupation and then disabled in any occupation.

“Defendant’s failure to explain its reversal and failure to distinguish the same medical evidence it previously relied upon to find the plaintiff disabled heightens this court’s scrutiny of the defendant’s inherent conflict.”

The court also criticized Hartford’s failure to credit the claimant’s reliable evidence. No credit was given to the plaintiff’s reports of pain, and Lobel simply rejected the pain complaints as “subjective.” However, according to Saffon, pain does not need to be proven by objective evidence because it is inherently a subjective phenomenon.

The court also determined that Hartford “cherry-picked its evidence.” As an example, none of Hartford’s consultants, nor the independent examiner, were given the SSA finding or the witness statements.

Although the surveillance and Swartz’s findings were sent to the treating doctors in an effort to get them to change their opinions, Hartford did not reciprocate by sending evidence favorable to the claimant to their consultants.

The court further concluded that Hartford placed an “inordinate amount” of weight on the surveillance since the plaintiff’s medical restrictions were consistent with what the surveillance revealed.

Hartford was additionally faulted for disregarding the Social Security finding without affording an explanation for doing so. The court pointed out:

“Comparing the SSA’s definition of disability above with the defendant’s definition of disability does not disclose why the plaintiff might be disabled under the SSA’s definition and not the defendant’s. In fact, it would seem that the SSA’s definition of disability is stricter than the defendant’s.

“Although the defendant noted the existence of different definitions used by the SSA and its policy, it failed to explain why the differences result in a finding that the plaintiff is disabled under the SSA definition but not the policy. This lack of explanation further demonstrates the pervasive nature of defendant’s conflict.”

Accordingly, the court ordered the benefits reinstated.

Surprisingly, the court failed to note Swartz’s notoriety, the ostensible “independent” medical examiner. In Hangarter v. Provident Life & Acc. Ins.Co., 373 F.3d 998, 1011 (9th Cir. 2004), the 9th U.S. Circuit Court of Appeals cited to Swartz’s frequent retention by insurers and consistency in finding against the claimants he examined.

The lesson of this ruling, though, is that once awarded, insurers need to present a valid rationale for terminating benefits other than a recital of the mantra that the claim for benefits is no longer supported. Indeed, the court offered a road map to insurers when it pointed out:

“For example, if an administrator terminates benefits based on the plaintiff’s improvement, one would expect the medical evidence to disclose an improvement, Saffon, 522 F.3d at 871 (“MetLife had been paying [Graciela] Saffon long-term disability benefits for a year, which suggests that she was already disabled. In order to find her no longer disabled, one would expect the MRIs to show an improvement”).”

The court acknowledged that Hartford suspected the plaintiff of fabricating her disability, but then failed to suggest how she might have “fooled her doctors into diagnosing her condition and prescribing medications and epidurals beyond what her symptoms called for.”

The 7th Circuit made a similar observation in Carradine v. Barnhart, 360 F.3d 751, 755 (7th Cir. 2004), a Social Security disability case, where it noted “the improbability that [plaintiff] is a good enough actress to fool a host of doctors and emergency room personnel into thinking she suffers extreme pain … if they thought she were faking her symptoms.”

While the court expressed sympathy for the task faced by disability insurers in assessing claimants’ truthfulness, the court found the manner in which Hartford terminated benefits could not be countenanced, noting, “An administrator does not do its duty under the statute and regulations by saying merely ‘we are not persuaded’ or ‘your evidence is insufficient.’ Nor does it do its duty by elaborating upon its negative answer with meaningless medical mumbo jumbo.”.

Those lessons were forcefully driven home in this opinion.

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