Most group disability insurance policies limit the duration of benefit payments for mental impairments. An interesting ruling out of Pennsylvania focuses on what constitutes a “mental impairment.”

In Berkoben v. Aetna Life Insurance Co., 2014 U.S.Dist.LEXIS 39385 (W.D.Pa., Feb. 21), a magistrate judge’s report and recommendation, the court recommended overturning Aetna’s termination of benefits based on application of a mental impairment limitation.

The plaintiff, Jason Berkoben, had been a computer programmer for Dell Inc. until he became disabled in 2010 due to a schizoaffective disorder and bipolar disorder. Berkoben qualified both for short- and long-term disability benefits underwritten by Aetna; however, the LTD payments were terminated after 24 months of payment based on Aetna’s determination that the policy limits payment to 24 months for psychiatric conditions.

Berkoben challenged the applicability of the limitation, though based on literature supporting a conclusion that his condition was an organic brain disease. Aetna disagreed, and the parties litigated the dispute.

The policy contained the following limitation:

“You will no longer be considered as disabled and eligible for long-term monthly benefits after benefits have been payable for 24 months if it is determined that your disability is primarily caused by:

“‘A mental health or psychiatric condition, including physical manifestations of these conditions, but excluding conditions with demonstrable, structural brain damage; or

“‘Alcohol and/or drug abuse.”

Although the court applied a deferential standard of judicial review, the court noted numerous procedural irregularities and substantive defects in Aetna’s determination. The court focused on an internal document maintained by Aetna listing exceptions to its mental disorder limitation, which encompassed a number of schizophrenic conditions, although schizoaffective disorder was not listed.

The plaintiff’s primary argument was that “Aetna singularly and wrongly focused on whether he suffered from a mental health disability without even considering if his illness was an exception to the 24-month mental/nervous limitation.”

Berkoben also charged that Aetna manipulated its consultant’s opinions by failing to ask him whether the plaintiff’s condition was characterized by brain damage.

The court agreed, framing the matter as not an issue of whether the plaintiff suffered from a mental health condition, but whether the condition was one that had an organic basis and was thus an exception to the limitation. The court also found a procedural error in Aetna’s failure to determine whether the plaintiff’s condition fell within the internal list of exceptions.

The court ruled that Aetna violated ERISA’s notice requirements because it never informed the plaintiff of its reliance on the internal list of exceptions or furnished Berkoben with an opportunity to rebut the opinions and findings that his diagnosed condition was not listed among the exceptions. The court also determined that Aetna failed to notify the plaintiff as to what evidence it would consider to overturn its determination.

“The fact of the matter,” the court remarked, “is ERISA and DOL regs require the administrator to inform the claimant of what information is needed to perfect his claim, and boilerplate language that has no application to the particular disability claim does not satisfy this requirement.”

The court also found a procedural violation in Aetna’s failure to specifically address the treating physician’s opinions with its consultants, finding that failure “indicative of self-serving selectivity and thus show[ing] evidence of bias.”

The court also made a critical finding relating to Aetna’s exclusion list:

“Aetna’s list, an internally generated document, provides a list of exclusions to the mental/nervous limitation for every type of schizophrenia but schizoaffective disorder. This appears to be arbitrary, as schizophrenia is listed as an exclusion from the 24-month limitation while schizoaffective disorder, which is a form of schizophrenia, is not.

“There is no explanation in the administrative record as to how Aetna determined what mental/nervous conditions to include on its list and which ones to omit. More importantly, the list undermines Aetna’s reason for denying plaintiff’s claim – all of the mental disorders listed on Aetna’s list are mental/nervous conditions, but the sole reason Aetna provided to plaintiff for terminating his benefits and denying his appeal was that his mental disorder was a mental/nervous condition.”

Moreover, the court found, the exclusion list was the only evidence supporting Aetna’s findings, yet Aetna failed to “specify that as a reason for its decision to terminate benefits and failed to provide plaintiff with a copy of the list with its termination letter.” The court was also critical of Aetna’s list as lacking any scientific authority for deciding which disorders are included and which excluded.

Thus, the court recommended remanding the case to Aetna, but made clear that on remand, Aetna could not insist on proof of structural brain damage where no applicable testing yet exists, relying heavily on Fitts v. Unum Life Insurance Company of America, Civ. A. No. 98-00617 (HHK), 2007 U.S. Dist. LEXIS 33397, 2007 WL 1334974, *8 (D.D.C. May 7, 2007), a case finding that bipolar disorder is organic and should not be classified within a policy limitation applicable to functional non-organic psychiatric disorders.

This opinion is very revealing as to the growing consensus within the scientific community regarding the biologic basis of many psychiatric illnesses. And from a legal standpoint, the ruling highlights the importance of insurers’ internal guidelines.

Even so, many insurance companies have circumvented the issue by redrafting their mental illness limitations to apply to any condition listed in the Diagnostic and Statistical Manual of Mental Disorders, regardless of cause, even though such limitations would exclude dementia due to Alzheimer’s disease or even a viral encephalopathy.

This debate will therefore continue until mental health parity is expanded beyond health insurance to encompass disability insurance as well.

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

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