An Incorrect Calculation of Disability Benefits and Subsequent Termination of Those Same Benefits Doesn’t Sway Tenth Circuit to Reverse Decision in Favor of MetLife

A MetLife insured benefit receiver’s hopes of collecting his underpaid disability payments were squashed when the Tenth Circuit Court of Appeals denied his appeal on March 16, 2011. Michael Palmer, the plaintiff in Palmer v. Metropolitan Life Insurance Company, filed a lawsuit against Metropolitan Life Insurance for the underpayment and subsequent termination of his disability benefits under ERISA (the Employee Retirement Income Security Act of 1974) that Palmer had as an employee of Alltel Corporation. Summary judgment was granted in favor of MetLife by district court and Palmer proceeded to appeal the decision based on the “standard of review,” meaning that Palmer and his disability attorney questioned the decision that was reached by MetLife and the insurance providers use of its discretionary authority.

Background of Palmer’s Disability Benefits Claim

Employed at Alltel Corporation since June 1, 2005 as a Business Solutions, Michael Palmer’s last day of work at Alltel was February 2, 2006. On February 3, 2006, Palmer had disc replacement surgery, and on July 11, 2006, he applied for long-term disability benefits under Alltel’s MetLife Insurance Policy, claiming disability because of lower-back problems. Palmer’s disability claim was approved on October 12, 2006, and the letter informing him of this decision stated that his disability benefits were payable as of August 2, 2006. In February 2008, Palmer contacted MetLife to inform the insurance company that his disability benefit payment was incorrect as the amount was calculated on his salary only but did not take into consideration his commission.

Not only did MetLife not increase Palmer’s benefit payment, but the insurance company contacted Palmer’s physician (with Palmer’s cooperation) and obtained Palmer’s medical records for the time period of April 1, 2005 through June 1, 2005 in an attempt to prove that Palmer’s back problems were a pre-existing condition. According to Palmer’s medical records, Palmer had a “long history of low back pain, which increased with [a] motor vehicle collision in 1999.” Based on this new information, MetLife proceeded to terminate Palmer’s disability benefits on March 1, 2008, alleging that Palmer’s disc problem was a pre-existing condition.

Palmer’s Disability Benefits Lawsuit against MetLife

Palmer and his disability attorney brought a lawsuit against MetLife under ERISA pursuant to 29 U.S.C. ยง 1132(a)(1)(B), which specifies that a claimant is entitled to a deferential review “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”

Both MetLife and Palmer’s disability attorney’s filed Motions for Summary Judgment, agreeing to concede that a decision about this case could be made without the necessity of a trial. MetLife, who originally award Palmer disability benefits, held that the termination of those benefits were based on the evidence that Palmer’s disability was the result of a pre-existing condition and that the insurance provider did not arbitrarily or capriciously terminate Palmer’s benefits. Consequently, MetLife contended that Palmer should not have been awarded benefits in the first place, and should not be awarded extra monies on the miscalculation of his benefit amount either.

Palmer and his disability attorney acknowledged that Palmer’s back problems were a pre-existing condition, but claimed that MetLife committed “procedural irregularities” in obtaining his records outside of the usually accepted method of procurement. Palmer also claimed that MetLife’s termination was a result of their “unauthorized and untimely second initial determination of his claim.” He and his disability attorney argued that it was improper for MetLife to reverse Palmer’s initial award of disability benefits. Palmer pointed out that MetLife made a wrong decision on the same facts that they had when they made the first decision and should not be allowed to revisit and change their decision. In addition, Palmer held that he was due the additional benefits that were owed him due to the miscalculation of his already-received benefit payments.

The Decision of the Tenth Circuit Court of Appeals

After review of the district court ruling and ERISA standards and compelling case law, the Court of Appeals held that MetLife’s decision was determined correctly under ERISA and that the insurance carrier had the right to reevaluate Palmer’s claim and reach a new and different decision with the additional evidence that proved that Palmer’s back problem was a pre-existing condition. In addition, the Court determined that even though MetLife had miscalculated the benefits already paid to Palmer, Palmer is not entitled to any additional monies to accommodate the original miscalculation of his disability benefits.

About the Author

Gregory Michael Dell is an attorney and managing partner of the disability income division of Attorneys Dell & Schaefer. Mr. Dell and his team of lawyers have assisted thousands of long-term disability claimants with their claims against every major disability insurance company. For a free consultation, please call 800-828-7583 or contact us online.