Judge rules favorably for the claimant after Lincoln National Life Insurance Company denied the claim at that change in definition of disability.
GREGORY DELL: Hi I’m Greg Dell with Attorneys Dell & Schaefer, and today Alexander Palamara and I are going to discuss a recent case that came out of the Oklahoma federal court. It was a case against the Lincoln National Life Insurance Company, which is becoming one of the larger disability companies.
Probably moving themselves into the top five since they recently acquired the Liberty Mutual disability division, which had a nice sized block of short-term and long-term disability claims. So this was a case that was a victory for a claimant. And tell us a little bit about the case, and what we think some of our viewers could learn from this case.
ALEXANDER PALAMARA: Certainly. Whenever there’s a victory, and whenever there’s a loss, there’s always something to learn from each case. And we’re always, obviously, reviewing as much case law as we can, because we can use it for our fields or use it for our own litigation cases. This case out of Oklahoma was a positive one.
For a little background, this person worked at a hospital. She’s a Radiologic technologist who worked at a hospital for a bunch of years. And actually fortunately for her, she was covered under a long-term disability insurance policy. But unfortunately for her, she had to make a claim under the policy. This was back in 2011 she made a claim. At first the claim was denied. Filed an initial appeal. Claim was overturned, and benefits were initially paid for 36 months.
And like most long term disability insurance policies, this policy had what’s known as a change in definition of disability. That after a certain amount of time, what it means to be disabled changes. So in this policy, it’s actually one of the better ones, it’s actually 36 months. We often see 24 months, sometimes as little as 12 months. This policy had 36 month change in definition of disability.
At that point, the insurance company did what they typically do, and they deny the claim at that change in definition of disability. They relied upon a doctor review, and the doctor said, oh, I think that she can do sedentary work.
GREGORY DELL: They never did an independent exam of her.
ALEXANDER PALAMARA: Never an independent exam. Just a quote unquote, “independent physician or consultant review”, where they just essentially review medical records. She filed her own appeal, gave some basic arguments. The appeal was denied. With the second denial, they relied upon another doctor review and also a skills analysis to see what job she’s able to do. They found some sedentary job she can do.
She filed a third appeal, and with a third appeal, she actually did a lot of work on this appeal. She got good doctor support. She actually did a functional capacity evaluation. She sent an MRI records and whatnot that prove osteoarthritis and her spine and back conditions. And the FCE was very supportive of her claim.
Her doctor with supportive of her claim. Essentially stating that, while she could maybe sit six hours a day, she suffers from a lot of pain. It’s going to cognitively affect her ability to work. She’s going to miss many days per month. A few days per week each time if she tries to work 40 hours per week. But unfortunately for her after another consultant review, the insurance company, again, upheld the decision to deny the claim, and a lawsuit filed.
So a lawsuit was filed in Oklahoma federal court, and obviously as we said earlier, the judge ruled favorably for the claimant. And this case is kind of unique. Doesn’t happen very often nowadays. In some states it’s becoming more often. But this policy out of Oklahoma did not have what’s known as a discretionary clause in it. And that’s important for disability insurance claims. Now unfortunately, most policies nowadays, if it’s legal in the state where the policy is issued, they’re going to have discretionary clauses, because it gives so much strength to the insurance companies ability to approve and deny claims.
And what a discretionary clause does, essentially, it gives the discretion to the insurance company to interpret the policy, and then to make a decision regarding the claim for benefits. And the other thing that it does, though, on the back end for the litigation purposes, is that instead of a judge reviewing your lawsuit and saying, I find this person disabled, they should win and get benefits. That doesn’t happen in ERISA claims where there’s discretionary clauses.
In order for a plaintiff to prevail when there’s a discretionary clause, they have to prove one, that they are disabled. If the judge agrees they’re disabled, they don’t necessarily win. Then the judges has to agree that the decision by the insurance company was arbitrary and capricious. You can Google arbitrary and capricious. It’s a very high started to accomplish in the legal field. It’s hard to win these cases because it’s arbitrary and capricious standard when there’s a discretionary clause.
This case, thankfully, did not have a discretionary clause, so the judge got to review it de novo. Which essentially means the judge gets to review it like it’s the first time someone is reviewing it. And he or she gets to make a decision whether he or she believes that the person is disabled. The judge finds the person is disabled under the terms of the policy, in this instance whether the person can perform the duties of any occupation. The judge finds that person does not have the ability to perform any occupation, and the person wins.
So in this instance, the judge thought they did an OK job with reviewing the claim and doing these consultant reviews. Didn’t really find any fault with the consultant reviews. Now the one thing I failed to mention earlier is that this claimant, not only did she get long term disability benefits the insurance company, she also got awarded social security disability benefits. Which we all know takes some time to get approved. And they have a heavy denial rate at denying such claims.
So not only did the insurance company find her disabled, social security also found a disabled. So two different entities that are separate and apart found her to be disabled. Now with the denial letters that I previously mentioned, the insurance company, and you’ll see it in probably your denial letter if you have one, and you’ve got approved for social security. This may be a paragraph that’s about five sentences, four sentences long.
It says, we took into account you got social security benefits. There’s different parameters, different reasons why we approve claims, and they approve claims. So why are we took into account, we don’t find it convincing for us to uphold your claim. And more often than not, when I review a claim files, the social security administration’s claim file is not even in the insurance company’s claim file.
So what kind of review did they actually do of the Social Security Disability claim and approval? Well this is an instance didn’t really do much of a review. They included the typical five sentence paragraph in the denial letter. And in this instance, that’s what the judge found fault on. The judge actually ruled in favor of this plaintiff. Not saying that their reviews that they had conducted by their physician consultants weren’t enough, because the judge obviously found that her own doctors reviewed the MRIs. The FCE was convincing as well.
But the judge found most fault with the fact that the insurance company didn’t do a true review of the social security decision. And the judge actually even wrote, Lincoln gives mere lip service to the social security award letter, and found that not to be enough. And the judge pointed out how getting Social Security benefits, their standard is not an easy one to accomplish. And Lincoln cannot just go about saying, we took into account, and really not take it into account.
So this sense that this case is actually unique because of the de novo review, and because this judge actually was a very good judge and saw through the poor review that Lincoln did in this case.
GREGORY DELL: So did the judge award benefits or remand for further review?
ALEXANDER PALAMARA: The judge awarded benefits in this case, so the person is now back on claim. Unfortunately, it doesn’t mean that everything is going to end well, because Lincoln can still do it another review in the future and to deny this case again. But for the time being, she remains on claim. But she does have very good doctor support, the FCE results, and if she keeps on making her claim stronger and stronger by submitting more documentation with her claim, maybe she can stay on claim until the age 65.
GREGORY DELL: All right. Well, thank you for that very detailed, informative summary. And I like that this case was unique, because not a lot of claimants have the opportunity to even have a social security decision available yet, because they’re often denied before social security even gets approved. So in this case, having the approval of social security was very helpful for her.
ALEXANDER PALAMARA: For sure.
GREGORY DELL: So if anyone has a claim with Lincoln National, Liberty Mutual, any of the disability insurance companies, our lawyers are available to assist you anywhere in the country. We always offer a free initial phone consultation, and we look forward to the opportunity to help you.