That was the question posed in Duncan v. Metropolitan Life Ins. Co., 2016 WL 6651317 (D. Utah November 10, 2016), which held that MetLife’s interpretation of its mental impairment limitation as it applies to schizophrenia was inconsistent with the Diagnostic and Statistical Manual of Mental Disorders (DSM).The case involved Michelle Duncan, who worked for U.S. West and then Verizon for twenty-two years before she developed psychiatric symptoms, including extreme paranoia and auditory and visual hallucinations, which forced her to cease working in 2011.Duncan subsequent underwent numerous hospitalizations.Although her claim for disability benefits was approved, Verizon’s group disability insurer, MetLife, terminated Duncan’s benefits after two years based on its mental impairment limitation.While schizophrenia was exempted from the limitation, MetLife asserted that Duncan’s diagnosis of schizoaffective disorder did not fall within the exception.The court rejected that finding.

The court began its analysis by discussing the appropriate standard of judicial review.While finding that the plan reserved discretionary authority, the court pointed out that MetLife’s conflict of interest was a factor to be taken into consideration.MetLife tried to assert that the conflict was mitigated by its hiring of an independent psychologist to examine Duncan.The court disagreed, finding:

The hiring of non-employee medical professionals may lessen a conflict, but does not resolve it. In addition, the doctors’ roles in this case were limited to determining a diagnosis and discussing disability, issues that are not disputed in this case. The independent medical professionals were not asked to interpret the term “schizophrenia” or to explain the differences or similarities between schizophrenia and schizoaffective disorder. Because MetLife’s interpretation of schizophrenia is the sole issue before the Court, the hiring of outside doctors has little effect on MetLife’s conflict of interest in this case.

The court then turned to a review of the record and observed that MetLife’s decision was based on the findings of a medical director, who opined that the schizophrenia exception did not include schizoaffective disorder.However, the court pointed out, If Dr. Meissler gave a reason for her interpretation, it is not recorded in the claim file.”Nor did MetLife undertake a meaningful review of the initial decision when Duncan appealed prior to filing suit; and it failed to provide any rationale for its interpretation until it issued the appeal denial, which denied Duncan opportunity to challenge that rationale.The court viewed MetLife’s conduct as sandbagging, and concluded,

The procedural irregularities in MetLife’s interpretative process heighten the likelihood that MetLife made its interpretation in part to avoid a substantial payment of benefits to Ms. Duncan rather than making a decision based “solely in the interests of the participants and beneficiaries’ of the plan.” Therefore, MetLife’s conflict of interest is a factor that weighs against affirming MetLife’s interpretation in this case.

The court’s discussion then turned to the plan language and MetLife’s interpretation.  By failing to define schizophrenia, the court found the use of the term “schizophrenia” ambiguous and disagreed with MetLife’s argument that “a reasonable person would not understand a diagnosis of schizoaffective disorder to be the same as a diagnosis of schizophrenia.”  On the contrary, numerous court opinions and authoritative websites list schizoaffective disorder as a type or category of schizophrenia.  The DSM-V also “uses the term schizophrenia to refer both to a specific disorder and to a spectrum of disorders, including schizoaffective disorder.”  Moreover, the schizophrenia exception precedes an exclusion for dementia, which is a general term that includes many neurocognitive disorders.”  Thus, the court interpreted the exception for schizophrenia to apply to both “the schizophrenia spectrum of disorders or to the specific disorder of schizophrenia, and is therefore ambiguous.”

Although the court found the policy term ambiguous, it went even further and held that MetLife’s interpretation was unreasonable since it was inconsistent with the DSM.  Hence, the court held, “MetLife’s reliance on the name of the diagnosis and the diagnostic criteria in the abstract–without attempting to determine whether an individual could actually satisfy the diagnostic criteria of schizophrenia–is an arbitrary and capricious way of defining the scope of schizophrenia exclusion.”  The court further noted that MetLife’s policy uses many “umbrella terms that encompass many diagnoses.”  Because the plan language looks to “features or criteria,” the court found that “MetLife’s requirement that Ms. Duncan be diagnosed with schizophrenia, without considering whether Ms. Duncan’s condition satisfied the criteria of schizophrenia is inconsistent with the requirements for any other exclusion.”

The court also looked at Berkoben v. Aetna Life Ins. Co., 8 F. Supp. 3d 689 (W.D. Pa. 2014), which raised similar issues, and observed that Aetna’s mental illness limitation was accompanied by a list that excepts schizophrenia but specifically includes schizoaffective disorder as falling within the limitation.  However, Berkoben determined that Aetna’s decision was arbitrary since it relied on “an internal policy that lacks any apparent medical, psychiatric, or scientific authority for which mental disorders are included on the exclusions list and which are not.”  Hence, the court concluded that the “potential overlap between schizophrenia and schizoaffective disorder is so great that it is not reasonable for MetLife to rely solely on the name of the diagnosis or diagnostic criteria in the abstract to define the scope of the schizophrenia exclusion.

Finally, the court held that MetLife’s interpretation was contrary to public policy; and that the plan should not be able to utilize “a hyper-literal interpretation of schizophrenia” since it “results in the denial of benefits to every participant with schizoaffective disorder simply because some of those participants may not satisfy every criterion of schizophrenia.”  The court also expressed concern that

a Plan participant initially diagnosed with schizophrenia may develop the additional symptoms of schizoaffective disorder, at which time MetLife would terminate benefits in spite of the fact that the symptoms of schizophrenia did not change. Therefore, MetLife’s literal reading is the type of overly restrictive interpretation that results in arbitrary claim denials and undermines public policy.

However, because the court could not determine from the record whether Duncan met all of the criteria for schizophrenia, it remanded the case to MetLife. The court awarded fees to the plaintiff, though.

This is an important ruling. Since psychiatric conditions cannot be diagnosed with the same precision as other medical conditions, the court’s findings will help other claimants in the same situation. It is time, though, for a re-examination of the entire rationale for mental impairment limitations in disability insurance policies as medical science improves its understanding of the biological basis for mental illness so that distinctions such as the one that occupied this lengthy and extensive judicial opinion no longer have to be litigated.

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