Is a significant risk of relapse, if a disability benefit claimant were to return to work, a current disability? That was the question answered in Colby v. Union Security Ins. Co., 2013 U.S.App.LEXIS 1149 (1st Cir. Jan. 17, 2013). Although the court acknowledged that another court of appeals had decided the issue differently, in this case the plaintiff prevailed.

Julie Colby, an anesthesiologist, suffered from an addiction to Fentanyl, an opioid used in her anesthesiology practice. Although she successfully completed an inpatient substance abuse treatment program and avoided a relapse, Colby’s license to practice medicine was surrendered and ultimately revoked.

Colby was insured under a group long-term disability insurance policy issued to her practice, thus her claim for benefits was governed by Employee Retirement Income Security Act. Although the insurer, United Security Insurance Co., approved benefits for the length of Colby’s in-patient treatment, it refused to pay benefits beyond her discharge, maintaining a “risk for relapse is not the same as a current disability.” Following exhaustion of pre-litigation appeals, Colby brought a suit against USIC.

The district court issued an initial ruling finding USIC’s termination of benefits was unreasonable (Colby v. Assurant Emp. Benefits (Colby I) , 603 F. Supp. 2d 223, 244 (D. Mass. 2009)) and remanded the case for the insurer to reconsider its decision. As the court of appeals noted, though, “The remand had little practical effect. USIC’s position hardened.” As a result, following further litigation, the plaintiff won again – in Colby v. Assurant Emp. Benefits (Colby II) , 818 F. Supp. 2d 365 (D. Mass. 2011), the district court concluded “that categorically excluding the risk of drug abuse relapse is an unreasonable interpretation of the plan.” Id. at 378. USIC disagreed and appealed from that ruling.

Although the court of appeals accorded deference to USIC’s policy interpretation, the court nonetheless found it unreasonable. Focusing on the policy’s requirements, the court explained that Colby was entitled to benefits if she were unable to perform the duties of her regular occupation as a physician. While there was no dispute that substance abuse, dependence and addiction qualified as a “sickness” under the terms of the policy, the question was whether the plaintiff’s “risk of relapse” constituted an ongoing sickness.

Colby maintained she faced an acute risk of relapse because resuming work as a physician would afford her easy access to opioids and other addictive substances. The court agreed, noting that the risk of relapse “was not merely theoretical.” Six months after her release from in-patient treatment, Colby was arrested for driving under the influence of alcohol. Moreover, she had co-morbid diagnoses and personal issues that increased her risk.

The court acknowledged the circuit split on the issue, comparing Stanford v. Cont’l Cas. Co., 514 F.3d 354, 360 (4th Cir. 2008) (upholding the insurer’s denial of long-term disability benefits to Fentanyl-addicted nurse anesthetist), with Kufner v. Jefferson Pilot Fin. Ins. Co., 595 F. Supp. 2d 785, 787-88 (W.D. Mich. 2009) (overturning the insurer’s denial of continuing long-term disability benefits to opioid- and alcohol-dependent anesthesiologist).

However, the court determined that “categorically excluding risk of relapse as a source of disability is simply unreasonable.” The court supported its conclusion by noting that, while the policy could have been written to exclude a risk of relapse, there were no policy provisions to that effect. The court deemed the absence of an exclusion “telling” because “the discretion of a plan administrator is cabined by the text of the plan and the plain meaning of the words used.” Hence, “Plucking an exclusion for risk of relapse out of thin air would undermine the integrity of an ERISA plan.”

The insurer tried, but failed, to turn the policy language to its advantage by arguing the policy was written in the present indicative tense. Since a risk of relapse is a “speculative future possibility,” USIC argued that such a condition is not a present impairment. The court disagreed, finding the “primordial flaw” in that argument USIC’s persistent refusal “to consider whether the plaintiff was presently disabled through risk of relapse.”

Instead, the insurer assumed that Colby could not be disabled following her release from treatment because she was no longer feeling the effects of opioid treatment.

The court went even further in pointing out that the general principle of risk of relapse is not limited to substance abuse, citing Lasser v. Reliance Standard Life Ins. Co., 344 F.3d 381, 391-92 & n.12 (3d Cir. 2003) (addressing a claim made by an orthopedic surgeon at risk of additional heart attacks). The court also gave an example of an air traffic controller with a seizure disorder who would be at risk of further seizures based on radar illumination and the runway lighting.

The court also turned to Judge Harve Wilkinson’s dissent in Stanford v. Continental. Wilkinson criticized the majority’s conclusion that the plaintiff would have to suffer a relapse before qualifying for benefits by arguing that such a view would “thwart the very purpose for which disability plans exist: To help people overcome medical adversity if possible and otherwise to cope with it.” The court added that USIC’s position would also create a perverse incentive because a declaration that Colby was fit for duty upon her release for treatment placed both her and her patients at risk of endangerment.

Finally, the court rejected an argument USIC made long after litigation had started that Colby could be accommodated with supervision and monitoring. The court found that argument was made too late and was waived; the possibility of an accommodation was also made too late to be practical. Hence, the court upheld the award of retroactive benefits and also found the district court’s award of attorney fees was an appropriate exercise of judicial discretion.

This is a critical opinion on an issue faced by many disabled individuals who would be prone to a life-threatening relapse if they returned to work. In addition to this ruling, the Stanford and Lasser cases also offer fascinating insight into how courts deal with the risk of relapse.

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