The Court of Appeals for the Seventh Circuit issued a decision in June 2019 involving an Illinois woman who was denied long-term (LTD) and short-term disability (STD) benefits from her insurance carrier, United of Omaha Life Insurance Company. The appeal focused on deficiencies in the analysis of both the insurance company and the district court in determining whether the claimant should have gotten benefits.
Ms. Shirley Lacko’s title was “Senior Manager in the Audit Department.” She worked for BKD, Inc., an accounting firm in Illinois. Her position was very technical and required a certain level of skill and experience or education.
Although she worked there for over 15 years, she stated that she became unable to work in 2015 due to several medical issues, including rheumatoid arthritis, congestive heart failure, gastroparesis, anxiety, breathing problems, musculoskeletal impairments, and cognitive difficulties related, in part, to her long-term use of medications used to manage her other conditions. She also applied for Social Security Disability, and the Social Security Administration approved her application.
Lacko filed a claim for both STD and LTD, but she was given only part of the short-term benefits that she requested. Her request for LTD was denied altogether. Lacko appealed the decision and went through the lawsuit process. The district court sided with the insurance company, but the appeals court reached a very different result.
The Inherent Conflict of Insurance Benefit Providers
One of the issues that the Court of Appeals for the Seventh Circuit addressed is that there is an inherent conflict in the fact that the insurance company who is going to be paying benefits is also the one that decides whether they should provide benefits.
The Court noted that it is certainly possible that the insurance company’s decision would not really be fair because it is skewed toward saving the insurance company money by paying out as few claims as possible. There is a bias that is hard to escape, and the Court needs to keep that in mind when assessing claims like Lacko’s application for benefits.
Some signs of potential internal bias include things like:
- A history of biased decisions
- Inconsistent positions compared to the Social Security Administration
- Changing demands to avoid having to pay claims
- Selectively reviewing the evidence, including medical records. When the analysis seems to ignore key facts, that can be a tell-tale sign that the insurance company is only acting in their interests and not really evaluating the claim in a fair and equitable way.
STD, LTD, and Social Security Disability Benefits
One of the major problems that the Court had with the insurance company’s decision was that it was not consistent with the award of SSD benefits. While an award of SSD benefits does not always mean that you will get STD or LTD, it is often a good sign that you will likely qualify.
The insurance company argued that the reason Lacko got SSD but did not get long term disability under her ERISA plan was that Social Security takes her age into account, but the insurance plans do not. It also used a different description of her job compared to what the SSA used, as well.
In Lacko’s case, the SSA evaluated her SSD claim using its five-step analysis. It noted that she qualified for the first three steps, which include:
1. She was not engaged in substantial gainful activity;
2. She had severe medically determinable impairments, which included inflammatory arthritis, disorders of the back (discogenic and degenerative), chronic heart failure, and affective disorders; and
3. Her impairments did not meet or equal a listing. Steps four and five require the SSA to evaluate a claimant’s functional capacity, which includes Lacko’s ability to work. They also conducted a mental residual functional capacity assessment (MRFC) as well. That kind of evaluation addresses whether Lacko could mentally keep up with the demands of her job or any other position.
The MRFC determined that Lacko had both memory and understanding limitations. The results indicated that she could remember locations and work-like procedures and understand simple instructions. However, it also concluded that she had trouble understanding and remembering more detailed instructions. Her concentration, focus, and persistence were also limited. Lastly, her ability to adapt and respond appropriately in a work setting was moderately reduced as well.
In determining whether Lacko should get benefits under the disability insurance policy, Mutual of Omaha focused on what she could do rather than acknowledging her limitations. It noted that she could still work but overlooked that her current job required skill and knowledge that she simply could not meet any longer because of her various medical conditions. Her role as a Senior Manager was “skilled work,” and she was no longer qualified to perform that work because of her medical limitations. The Court found that the insurance company was essentially ignoring the evidence of Lacko’s cognitive limitations when it determined that she should not receive STD or LTD. This type of “cherry-picking” or selectively reviewing medical records or information is one of the signs of bias that the Court set out. It had serious concerns that both the insurance company and the lower court was overlooking this information.
The Court took a grim view on the insurance company’s conduct, noting “[w]e have repeatedly condemned that type of selective consideration of only the evidence that supports one outcome.”
Using the Wrong Job Description
The other difference that the Court noted between the SSA’s analysis and the insurance company’s analysis was that they were using two different job descriptions for Lacko. The insurance company used a generic “manager” description, while the SSA used a description that fell under “Accountants, Auditors, and Related Occupations.”
This more specialized category emphasized the higher-level mental demands of Lacko’s job compared to the average manager. The Court found that the SSA used the correct job description, while the insurance company’s use of a general manager job description did not fit with what Lacko was actually doing in her role as a Senior Manager.
The Court stated that the insurance company’s use of the generic job description was severely lacking, noting that “nothing in the vocational expert’s description mirrors or even alludes to the technical or specialized duties [that Lacko had].” It also pointed out the experience and education necessary to fulfill Lacko’s role as Senior Manager were essentially ignored.
Ultimately, the Court reversed the decision of the district court and remanded the case back to the lower court for consideration and revision.
Our office did not handle this case, but we see this type of conduct from insurance companies on a regular basis. We are on the lookout for this behavior and fight to help those applying for disability benefits to avoid denials based on biased or incorrect information. If your disability claim has been denied because you feel that the insurance company is ignoring vital information, we can help. Contact our office for a free consultation today.