If Your Long Term Disability Claim is Denied due to a Pre-Existing Condition, All May Not be Lost

In a recent case out of Massachusetts, a Court sided with a disabled claimant and found that Aetna’s decision to deny the claim for benefits was wrong. Aetna justified its denial as it believed the disabling medical condition to be a “pre-existing” condition and the policy governing this claim, like most Long Term Disability (“LTD”) policies, contained a provision that states that benefits will not be paid for pre-existing conditions that cause someone to be disabled during their first year of coverage. Specifically, the policy stated that “a disease or injury is a pre-existing condition if, during the 3 months before the date you last became covered: it was diagnosed or treated, or services were received for the disease or injury, or you took drugs or medicines prescribed or recommended by a physician for that condition.”

Background Facts:

In this instance, claimant John Lavery was hired by Restoration Hardware on 5/12/14. He was told that his LTD coverage would begin on 6/1/14. Prior to being hired, Mr. Lavery saw his primary care physician due to a lesion on his back. That doctor looked at it, thought it was most likely a basal cell carcinoma, which is a very basic and easily treated issue, and referred him to a dermatologist. On June 10, 2014, after he thought his LTD coverage was in effect, Mr. Lavery saw a dermatologist who actually diagnosed a more serious condition of Malignant Melanoma which actually requires more intense treatment like chemotherapy.

Due to the extensive treatment for his serious condition, Mr. Lavery was left unable to continue to perform the duties of his own occupation. As such, Mr. Lavery made a claim for LTD benefits with Aetna. When Aetna received and initially reviewed the claim, the first adjuster assigned to the claim actually recommended approving benefits. However, this adjuster was overruled by a second adjuster who found the claim to be pre-existing.

After receiving the initial denial, Mr. Lavery filed an appeal. During Aetna’s appeal review, Aetna had a “clinical consultant” review the case. After conducting the evaluation, the clinical consultant made the determination that the medical condition was not pre-existing as the first doctor visit with the primary care physician was not treatment, there were no services rendered, no medications were prescribed and a final diagnosis was not made. This clinical consultant recommended approval of the claim.

However, just like the initial review by Aetna when the first claims adjuster recommended approval, this clinical consultant was overruled. Aetna again found this claim to be pre-existing and added a new wrinkle to its argument by stating that due to a change that occurred to the governing policy that occurred on May 1, 2014, Mr. Lavery actually was not covered under the policy until July 1, 2014, which was after he saw the dermatologist on June 10, 2014.

According to Aetna, as of May 1, 2014, the governing policy now did not initiate coverage to new employees until “the first day of the calendar month following the date you complete a probationary period of 30 days of continuous service for your Employer…” In Mr. Lavery’s situation, because he was not hired until May 12, 2014, this would mean that his LTD policy would not cover him until July 1, 2014. Remember that previously he was told that his policy coverage would start on June 1, 2014 and the policy previously said nothing about this probationary period. The previous language of the policy allowed for coverage to begin on June 1, 2014. The craziest part of this situation is that the new changes to the policy were not actually published until June 23, 2014 even though it supposedly went into effect on May 1, 2014. So there was no way Mr. Lavery or any employee could have known about the change prior to June 23, 2014. Mr. Lavery claimed disability beginning June 10, 2014. Because Aetna again found his claim to be pre-existing and because Aetna moved the goal line for this claim while the play was in motion, a lawsuit was filed.

The Judge’s Decision:

A review of the Judge’s order seems to show that the Judge was not buying Aetna’s arguments. Thankfully, the Judge ruled in favor of Mr. Lavery.

First, the judge was not concerned that Mr. Lavery saw his primary care physician for his lesion prior to June 1, 2014. The judge pointed out that that Aetna’s own consultant explained in detail “the distinction between a basal cell carcinoma and a malignant melanoma in the system.” The judge then noted that two reviewers of Aetna moved to approve the claim, but were overruled for unknown reasons as no additional medical information was provided to Aetna to justify this change. The Judge noted that the “two unexplained reversals of the recommendation to award benefits, in the absence of new information and in the face of a detailed explanation for the awarding of benefits, weigh towards a finding that (Aetna) acted unreasonably.”

Next, the judge took on the issue of the changes to the policy language. The Judge noted that Aetna previously did not deny the claim for this reason. When Aetna relied upon the policy language change to justify its appeal denial, Aetna was basing its decision on new or additional rationale. As such, it should have given Mr. Lavery a reasonable opportunity to respond to this new denial argument prior to a final decision being made. Aetna did not do such.

The judge considered remanding the case back to Aetna to allow Mr. Lavery to respond, but the Judge found this would ultimately be unfair. The Judge noted that Mr. Lavery made the decision to visit the dermatologist on June 10, 2014 as at that time, based on the language of the policy given to him at that time, a reasonable interpretation of the policy would mean that any diagnosis of the dermatologist would not be pre-existing. As Mr. Lavery had no way of knowing of the modification to the policy as it was not published until June 23, it would be unfair to hold it against him. The Court reasoned that if Mr. Lavery was made aware of the alteration he could have changed when he was “treated” and delayed seeing the dermatologist until after July 1, 2014, when his coverage would have gone into effect under the new terms of the policy. Because the information was not available to him or anyone else covered under the policy until June 23, 2014, the Judge felt that it would not be fair to use it against him. For these reasons, the Court found Aetna’s actions unreasonable and ruled in favor of Mr. Lavery.

While the outcome of this case is great, it is very unique. Typically, pre-existing condition denials are very hard to beat. Thankfully, Aetna acted so unreasonably here that it helped the Judge rule in favor of Mr. Lavery. If you have had a claim denied by Aetna or any insurance company and you believe the decision was wrong or unreasonable, please do not hesitate to contact Attorney Alexander Palamara at Dell & Schaefer for a free consultation.