District Court Finds Guardian Improperly Applied a Pre-Existing Condition Exclusion to Deny Plaintiff’s ERISA-Governed Disability Claim

In Kim v. The Guardian Life Insurance Company of America, No. 823CV01579DOCADS, 2024 WL 2106240 (C.D. Cal. May 9, 2024), California Central District Judge David O. Carter granted judgment to Plaintiff finding that Guardian had improperly determined that Plaintiff’s long-term disability (“LTD”) claim was excluded from coverage based on the LTD policy’s pre-existing condition exclusion.

Plaintiff was employed at Dreamhaven, Inc. as an Art Director and was a participant in the company’s group LTD plan insured by Guardian. On or about January 5, 2021, Plaintiff began to suffer from fever, chills, aches, hyperkinetic movement disorder, insomnia, cognitive deficits, “head pressure,” restlessness, agitation, panic attacks, and “cognitive clouding.” He lost the ability to organize his thoughts. His affect, cognition, and behavior were significantly different. He became suicidal and paced all night. The pacing was sufficiently severe that over a couple of days he wore out a pair of shoes. For the first time, he developed symptoms of psychosis. On January 5, 2021, Plaintiff also became symptomatic for Covid-19, and tested positive on January 7, 2021. While the likelihood is small, Covid-19 can cause psychosis and a variety of other mental health problems. In the ensuing weeks, Plaintiff developed a shuffled gait, made rocking movements, and suffered from “horrible” skin sensations. He constantly shook his head, stared at the ceiling, and made unusual and grotesque physical movements. He grunted, jerked his hands, twitched, and made abnormal eye and facial movements. His cognitive problems worsened, affecting his memory, and he was constantly confused. Plaintiff treated first with his psychiatrist and then with a neurologist who certified that Plaintiff was unable to work based on uncontrolled movements due to tardive dyskinesia [TD] and an inability to remain in one position due to tardive akathisia [TA].

Plaintiff submitted a claim for LTD benefits asserting a date of disability of March 25, 2021. Guardian denied the claim concluding that, while Plaintiff was disabled, his disability was caused by pre-existing conditions that were excluded under the Policy. The denial letter explained that Plaintiff was “prescribed Lexapro, an SSRI used to treat depression and anxiety” in late 2019 and early 2020. Guardian upheld its decision on appeal after obtaining three medical reviews. First, a neurologist concluded that based on the medical records, Plaintiff did not appear disabled due to TD and TA. Second, an infectious disease physician who reviewed only “abstracted” copies of the medical records opined that Covid-19 did not cause Plaintiff’s disabling conditions. Finally, a psychiatrist opined that Plaintiff was unable to work as of January 2021, and the conditions for which Plaintiff treated in 2020 did not cause or contribute to his impairment. Guardian concluded that while Plaintiff had contracted Covid-19 in January 2021, the symptoms were not related to that infection, but were based on his anxiety and depression which were preexisting.

On de novo review, the Court first noted that because Guardian relied on an exclusion as the basis for denying the claim, it had the burden to establish that the exclusion applied. It then concluded that Guardian failed to meet this burden. It found that the record demonstrated that Plaintiff had not seen a therapist in years before January 2021. His minimal prior anxiety and depression were categorically different than the symptoms he suffered beginning in early 2021, such that any preexisting condition did not substantially contribute to his disability. The Court further noted that Guardian’s own peer review psychiatrist informed Guardian that there was no connection between Plaintiff’s disability and his pre-existing conditions. And Plaintiff’s medical records demonstrated that Covid-19 has been shown to cause psychosis and could potentially have caused psychosis here. However, the Court noted that it was not necessary for Plaintiff’s claim to demonstrate that Covid-19 triggered his health problems in early 2021. Plaintiff must have merely demonstrated that what rendered Plaintiff disabled was not caused or substantially contributed to by a pre-existing condition or its treatment. The Court found that Plaintiff sufficiently established that he was disabled under the Policy and that treatment for his pre-existing conditions did not cause his disability. Rather, Plaintiff’s medical records support the onset of psychosis and anxiety after Covid-19 in January as possible sequelae which is supported by medical literature. The Court awarded past-due benefits, prejudgment interest, attorney’s fees, and costs.

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