Disability insurance claimants who have been denied their long-term disability benefits frequently ask whether the insurance company is permitted to deny their benefits based on the opinions of hired physicians who have never even examined them, but have only reviewed their medical records. They ask, how can they possibly know my true condition without examining me? Unfortunately, paper reviews by hired gun doctors are a common practice by disability insurance companies as they tend to get away with this abusive tactic since many courts deem a paper review as reasonable. However, in a recent disability lawsuit against The Standard Insurance Company, the Sixth Circuit Federal Court of Appeals disagreed.

Court of Appeals Reverses Standard Insurance Company Disability Denial: Holding Standard Could Not Base Its Denial of Benefits on the “Care of Physician” Provision without Examining Claimant

Sandra M. filed a long term disability lawsuit against Standard Life Insurance Company under ERISA over Standard’s denial of long-term disability benefits. Standard ignored the Plaintiff’s treating physicians’ opinions, as well as their documented medical records, which provided evidence that she was disabled from a physical condition, as well as a mental nervous condition. Standard focused solely on the mental nervous condition approving her benefits for 24 months and terminating her benefits once the 24 months expired. It is common for a disability insurance company to try to limit payment to only 24 months. Ms. M appealed the decision claiming that she was also disabled due to a physical condition called ankylosing spondylitis (AS), which was supported by her doctors’ opinions and medical records. Standard upheld their decision to terminate her benefits based on the 24 month limitation for mental nervous conditions. Standard also claimed that her failure to be examined by a Rheumatologist for AS was another basis for denial.

Standard’s “Care of Physician” Provision

According to Standard’s “Care of Physician” provision in its long-term disability policy:

You must be under the ongoing care of a Physician in the appropriate specialty as determined by us during the Benefit Waiting Period. No [long-term disability benefits} will be paid for any period of Disability when you are not under the ongoing care of a physician in the appropriate specialty determined by us.

Standard Insurance Company’s Wrongfully Argues Claimant Did Not Receive Appropriate Care

Standard hired two physicians to perform a paper review of Ms. M’s medical records. These physicians concluded that the medical records supported a diagnosis of AS, but the lack of clinical findings precluded a finding of disability. They recommended denial of her claim. In its denial letter, Standard claimed lack of clinical findings and also noted that her failure to see a rheumatologist meant she had failed to satisfy the policy’s “Care of Physician” provision, which conditioned disability benefits on the claimant receiving appropriate specialist care.

After exhausting all of her administrative remedies, she filed an ERISA long term disability lawsuit against The Standard. The District Court upheld The Standard disability denial, but the Sixth Circuit Court of Appeals reversed and held that Standard’s reliance on the “Care Of Physician” provision is problematic since both doctors that reviewed her file faulted her for failing to see a rheumatologist, but Standard never told Ms. M that she would be denied if she failed to see one. Furthermore, her treating doctor told her in a letter that there would be little difference between his treatment and a rheumatologist’s, other than the prescribing of a controversial drug called Enbrel which she was hesitant to take. Even more important was that Standard had the authority under the policy to have the Plaintiff undergo an independent medical examination by a rheumatologist, but failed to do so.

Failure to have Rheumatologist perform an IME was Arbitrary and Capricious

Since Standard was both the payer and administrator under the policy, they were operating under a conflict of interest and, as a result, the Court needed to look into their incentive to cut costs. After applying the arbitrary and capricious standard of review, the court concluded that the decision to reject Plaintiff’s claim without having a rheumatologist conduct an IME was arbitrary and capricious. The Court went on to state that “when an administrator exercises its discretion to conduct a file review, credibility determinations made without the benefit of a physical examination support a conclusion that the decision was arbitrary. The failure to conduct a physical examination-especially where the right to do so is specifically reserved in the plan, may, in some cases, raise questions about the thoroughness and accuracy of the benefits determination.”

The Court reversed and remanded to the district court with instructions to remand to the plan administrator for a full and fair review of Plaintiff’s claims, which will presumably include a rheumatology evaluation. This case is a victory, but unfortunately the court gave The Standard another chance to review the claim and possibly deny it again. This case was not handled by our law firm.

Attorneys Dell & Schaefer always offer a free consultation at any stage of your claim for disability insurance benefits.