It is typical that group disability insurance policies limit the duration of disability payments for psychiatric conditions.

However, in Reid v. Metropolitan Life Ins. Co., 2013 U.S.Dist.LEXIS 66755 (N.D.Ga. March 29, 2013), an insurer’s reliance on reviewing doctors to evaluate a claim failed to convince a court that the limitation was applicable in the face of overwhelming evidence that the plaintiff, Sandra Reid, suffered from dementia, which did not fall within the limitation.

Reid, who had been employed by IBM and its predecessor from 1986 until 2007, last worked as an advisory project manager, which involved her leadership of a team managing hardware or software projects. Beginning in 2001, though, Reid began experiencing memory problems and she was diagnosed with depression, and later with bipolar disorder, which she claimed as her disabling impairment when she ceased working and applied for disability benefits.

All along, however, brain MRIs revealed cerebral atrophy. In addition, Reid had a familial history of Alzheimer’s disease.

MetLife approved the claim and internally documented the organicity of Reid’s condition and that the mental disorder limitation appeared inapplicable; however, even after neuropsychological testing results pointed in the direction of an organic brain disorder, MetLife nonetheless invoked the limitation.

Reid appealed and she submitted additional documentation supporting her contention that her medical condition fell within the exception to the limitation applicable to organic brain disorders. However, MetLife adhered to its decision that the plaintiff was suffering from a bipolar affective disorder that fell within the limitation. Reid then filed suit.

The court noted the parties filed cross-motions for judgment pursuant to Fed.R.Civ.P. 52, akin to a bench trial on the papers. The court applied a deferential standard of review, utilizing the unique procedure utilized by the 11th U.S. Circuit Court of Appeals, which first looks at the matter from a de novo perspective and only if the determination is found wrong is the matter reassessed from a deferential perspective. Although the court debated the standard of review and whether the burden fell on MetLife to prove the applicability of the exclusion, the court determined that the burden of proof issue was inconsequential.

The court determined that MetLife’s decision was wrong from a de novo perspective. The court based its decision on the American Psychological Association’s Diagnostic and Statistical Manual of Mental Disorders and the nomenclature used by that treatise, finding that Reid’s dementia diagnosis was well-supported.

The court assessed the evidence and found the treating doctors’ opinions were consistent, unequivocal and well-supported, while MetLife’s reliance on non-examining physician consultants was problematic. The court cited two rulings that questioned the appropriateness of insurers’ utilization of reviewing doctor opinions in disability cases involving psychiatric disorders – Sheehan v. Metropolitan Life Ins. Co., 368 F.Supp.2d 228 (S.D.N.Y.2005) (noting that a psychiatrist evaluating a patient’s mental health relies heavily on their ability to observe the patient’s mannerisms, demeanor and expressions and therefore inherently involves credibility determinations) and Smith v. Bayer Corp. Long Term Disability Plan, 275 F. App’x 495, 508 (6th Cir. 2010) (holding under arbitrary and capricious standard thatSheehan highlights the inadequacy of record review when determining benefits for someone claiming a mental disability as an examination could have helped the plan administrator to better evaluate the severity of the plaintiff’s symptoms).

Shifting to a deferential review paradigm, the court also ruled that MetLife’s determination was unreasonable and, therefore, an abuse of discretion. The court explained that based on the “quality and quantity of the medical evidence and the opinions on both sides of the issues,” the insurer’s reliance on file reviews was unreasonable since those reviews consistently rejected the clinical findings without explanation.

The court complained about MetLife’s “cookie-cutter approach” to diagnosis, contrary to the methodology of the Diagnostic and Statistical Manual of Mental Disorders and which failed to address the plaintiff’s co-morbid diagnoses. Hence, the court determined, “MetLife’s exclusive reliance on secondhand opinions and refusal to credit reliable evidence of the plaintiff’s treating physicians or such physicians’ consideration of the significance of an MRI showing the plaintiff’s brain atrophy as part of their diagnosis was arbitrary and capricious.” The court, therefore, ordered the plaintiff’s benefits reinstated and directed her counsel to file a petition for fees.

The court’s analysis showed that despite giving deference, it was not going to act as a rubber stamp. MetLife tried to insulate its decision by obtaining multiple file reviews, however, the court’s criticism of file reviews in a matter such as this made MetLife’s efforts worthless. What obviously influenced the court was the insurer’s duplicitousness in first documenting that the limitation would not be applicable and then applying it.

Although the court chose to bypass the issue of which party bore the burden of proof in establishing the limitation’s applicability, it is a basic tenet of insurance law that the burden falls on the insurer to establish that a policy exclusion or limitation is inapplicable given the public policy against forfeitures of insurance coverage for which premiums have been paid. A number of Employee Retirement Income Security Act (ERISA) cases have placed the burden on the insurer in such situations – See, Hurst-Rosche Eng’rs, Inc. v. Commercial Union Ins. Co., 51 F.3d 1336, 1342 (7th Cir.1995); Glista v. UNUM Life Ins. Co. of Am., 378 F.3d 113, 127 (1st Cir. 2004); Caffey v. UNUM Life Ins. Co., 302 F.3d 576, 580 (6th Cir. 2002); Farley v. Benefit Trust Life Ins. Co., 979 F.2d 653, 658 (8th Cir.1992); Fought v. Unum Life Ins. Co. of America, 357 F.3d 1173, 1185 (revised 379 F.3d 997) (10th Cir. 2004) (Under ERISA, an insurer bears the burden of proving facts supporting an exclusion of coverage.).

And in Deal v. Prudential Insur.Co. of America, 263 F. Supp. 2d 1138 (N.D.Ill. 2003), the court explicitly placed the burden on the insurer to establish the applicability of the mental impairment limitation. However, both the burden of proof issue and any issue concerning the insurer’s conflict of interest proved to be inconsequential in this matter since the evidence was so clearly one-sided.

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