Clients whose disability benefits have been denied frequently ask, “How can the insurance company terminate my benefits without having examined me?” The answer can be traced to a 2003 Supreme Court decision, Black & Decker Disability Plan v. Nord, 538 U.S. 822, 825, 123 S. Ct. 1965, 1967 (2003), which held that an ERISA plan administrator is not required to defer to the opinions of a treating physician. In the 20 years since Nord was decided, the medical review industry has exploded. But courts are increasingly questioning the independence of these reviews, and the pendulum may be swinging back in favor of independent medical examinations (IMEs).

The Nord Decision and Its Aftermath

The Nord decision is often cited to justify the use of file-only medical reviews in ERISA disability cases, but the Nord case did not actually involve file-only reviews. Rather, Kenneth Nord was examined by a doctor for his disability plan administrator prior to the plan’s denial of his LTD benefits.

Nord challenged that decision in court, arguing that his disability plan was obligated to defer to the opinion of his treating physician, who endorsed disability. Nord cited the Social Security Administration’s now rescinded “treating physician rule,” which required that the SSA give “controlling weight” to the opinion of a treating physician, subject to certain conditions. See 20 CFR §§ 404.1527(d)(2), 416.927(d)(2) (2002).

The Supreme Court rejected Nord’s argument, ruling that ERISA plan administrators “are not obliged to accord special deference to the opinions of treating physicians.” 538 U.S. at 825. In reaching that conclusion, the Court relied on administrative law principles, ruling that the U.S. Department of Labor, which is charged with interpreting the ERISA statute, could have adopted the SSA’s treating physician rule but didn’t. The Court concluded:

Plan administrators, of course, may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician. But, we hold, courts have no warrant to require administrators automatically to accord special weight to the opinions of a claimant’s physician; nor may courts impose on plan administrators a discrete burden of explanation when they credit reliable evidence that conflicts with a treating physician’s evaluation.

Id. at 834.

Courts have interpreted Nord to condone the practice by ERISA plan administrators of relying on the opinions of non-examining doctors to deny disability claims, even though Nord did not involve a paper review. Ironically, the opinions of non-examining doctors would be inadmissible hearsay in Social Security proceedings due to the lack of an in-person examination and the inability of the claimant to cross-examine the expert. See Richardson v. Perales, 402 U.S. 389, 402-05 (1971).

Notwithstanding the hearsay character of such reports, every federal circuit court of appeal has sanctioned the practice by ERISA plan administrators of relying on the opinions of non-examining doctors to evaluate disability claims. See, e.g., Davis v. Unum Life Ins. Co., 444 F.3d 569, 578 (7th Cir. 2006) (citing Nord as support for the practice by an insurer of relying on a file review to deny a claim); Gannon v. Metro. Life Ins. Co., 360 F.3d 211, 214 (1st Cir. 2004) (ruling that non-examining physician file reviews can be reliable medical evidence).

The Backlash Against Paper Reviews

Although courts continue to permit the use of file-only physician reviews in ERISA-governed disability claims, courts have become increasingly skeptical of denials based on the opinion of a file-only physician review where the evidence otherwise overwhelmingly favors the claimant.

Several courts have cited the practice by insurance companies of favoring the opinions of non-examining doctors over examining ones as evidence of arbitrary and capricious decision-making. For example, in Holmstrom v. Metro. Life Ins. Co., 615 F.3d 758, 775 (7th Cir. 2010), the Seventh Circuit observed:

None of the doctors who concluded that Holmstrom failed to establish disability ever examined her. Every doctor who has actually seen her in the pertinent time period has concluded that she is disabled. An administrator may give weight to doctors who did only a records review, see Nord, 538 U.S. at 831, but in this case, the evidence provided by the doctors who examined her in person is so overwhelming that the reliance on record-review doctors who selectively criticized this evidence is part of a larger pattern of arbitrary and capricious decision-making.

See also Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 676 (9th Cir. 2011) (citing insurer’s failure to obtain medical examination as evidence of conflict of interest);
Helfman v. GE Group Life Assur. Co., 573 F.3d 383, 395-96 (6th Cir. 2009) (“[C]redibility determinations made without the benefit of a physical examination support a conclusion that the decision was arbitrary.”); Calvert v. Firstar Finance, Inc., 409 F.3d 286, 295 (6th Cir. 2005) (ruling that failure by insurer to conduct exam raised questions about the thoroughness and accuracy of the benefits determination).

The Return of IMEs?

Against the forgoing back drop, disability insurers have increasingly resumed the practice of arranging independent medical examinations prior to denying or terminating disability benefits. Some disability insurers now routinely include an offer of an independent medical examination in correspondence to preempt an argument by claimants that they were deprived of an exam. See, e.g., Braun v. Unum Life Ins. Co. of Am., No. 22 CV 1223, 2022 U.S. Dist. LEXIS 226701, at *9 (N.D. Ill. Dec. 16, 2022) (rejecting Unum’s argument that because it offered to arrange for an IME of the plaintiff, discovery as to file review doctor’s conflict of interest was not warranted).

While the return to independent medical examinations is welcome, the same economic motivations that contribute to bias in file reviews apply in the IME context as well. See, e.g., Demer v. IBM Corp. LTD Plan, 835 F.3d 893, 904 (9th Cir. 2016) (“[I]t is not hard to imagine an . . . examiner who does not engage in a neutral, independent review, such as where the examiner receives hundreds of thousands of dollars from a single [insurer] and performs hundreds of reviews for that source every year.”). Ironically, it may be easier to overturn a denial of disability benefits based on a file review than one based on an IME, since the findings of an examining doctor are harder to dispute than those of a file-reviewing doctor.

Moving Forward: Navigating Disability Claims in the Era of Non-Examining Doctor Reviews

Disability determinations made in the absence of an examination are rampant in the insurance industry, though the tide has started to turn thanks to an increasing awareness by the courts of economic considerations underlying the medical file review industry. Thus, disability insurers are once again deploying independent medical examinations as part of their disability determinations. Because the results of an IME may be harder to dispute than the conclusions of a file-reviewing doctor, claimants should exercise caution when consenting to an IME and discuss their options with an experienced benefits lawyer.

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