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Court Rules Unum’s Denial of LTD Benefits was Arbitrary and Capricious

In Joan Clark v. Unum Life Insurance Company of America and Unum Group Corporation (Unum), Clark worked approximately 33 years for Aerospace Testing Alliance (ATA) in Tullahoma, Tennessee, as an instrument technician. For about half of those years, she suffered from systemic lupus erythematosus (lupus). Except for a short time in 2012, she continued to work.

In 2016, due to the worsening of her condition, she quit work on the advice of her physician and applied for long-term disability (LTD) benefits. Despite Clark providing reams of medical evidence to support her disability, Unum denied her claim based on reports by its own reviewing physicians. Even though the plan granted authority to the administrator to require Clark to undergo an independent physical examination, it did not do so.

After Clark exhausted her administrative remedies, she filed this ERISA lawsuit. The U.S. District Court for the Middle District of Tennessee, Nashville Division, held that Unum’s denial of LTD benefits was arbitrary and capricious due to multiple errors in its reviewing process. The Court reversed Unum’s decision and remanded the case with instructions to Unum to conduct a full and fair review.

Unum Made Many Errors Which Resulted in an Arbitrary and Capricious Denial of LTD Benefits

The Court reversed Unum’s decision and noted that, “No factor alone justifies a finding that Unum’s decision was arbitrary and capricious; however, taken together, they show that Unum’s reasoning process was not deliberate and principled.”

Those factors were:

  • Unum ignored favorable evidence. Clark presented evidence from her treating physician, including test results, that “explicitly contradicted Unum’s finding that Clark’s condition had not worsened.” But, the Court continued, Unum “seemed to ignore this evidence.”
  • Unum selectively reviewed evidence. The Court found that Unum’s letter denying Clark’s appeal “included a host of inaccurate assertions and findings that were subsequently refuted by Clark’s supplemental records.” The Court was concerned that Unum never explained the discrepancies between its reasons for the denial and Clark’s “actual treatment history as documented in the supplemental records.”
  • Unum failed to conduct its own physical evaluation. The Court concluded that when a plan administrator has the “right to physically examine the employee, discounting the employee’s pain without conducting a physical examination…supports a finding of arbitrariness and capriciousness.”
  • Unum relied heavily on its own physician consultants. In this case, all reviewing physicians were in-house physicians paid by Unum. In addition, Unum had a conflict of interest since it both determined eligibility and paid benefits “out of its own pocket.” This type of conflict supports the courts finding that Unum’s decision was arbitrary and capricious.

The Remedy is to Remand

The Court held that since the problem here was with the “integrity of the plan’s decision-making process,” the remedy was to remand to Unum with instructions for further proceedings consistent with its decision.

This case was not handled by our attorneys, but we think it can be helpful to those who are struggling with an insurance company that seems to ignore the medical records, relying instead on the reports of its own paid reviewing physicians. If you have questions about this case, or any question about your disability claim, contact one of our disability attorneys at Dell & Schaefer for a free consultation.