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Home > Blog > Blog > Long Term Disability > District Court Finds Insurer Committed Numerous Errors and Abused Its Discretion in Terminating Disability Benefits Based on An Improper Application of The Policy’s Mental Health Limitation

District Court Finds Insurer Committed Numerous Errors and Abused Its Discretion in Terminating Disability Benefits Based on An Improper Application of The Policy’s Mental Health Limitation

In Ehrlich v. Hartford Life and Accident Insurance Co., No. 20-CV-02284-JST, 2024 WL 3745008 (N.D. Cal. Aug. 8, 2024), on Rule 52 cross-motions for judgment, California Northern District Judge Jon S. Tigar granted Plaintiff’s motion and denied Harford’s motion, finding that the insurer-Defendants abused their discretion in terminating Plaintiff’s long-term disability (“LTD”) benefits based on the 24-month mental health limitation, as opposed to continuing benefits due to Plaintiff’s multiple physical conditions.

Plaintiff was a senior vice president of marketing and product management when, in October 2016, he stopped working due to polyneuropathy, encephalopathy and bacterial infection. Plaintiff also had secondary diagnoses of headache, fibromyalgia and chronic pain, all of which precluded him from performing his job duties due to symptoms including severe, intractable constant head pain, neuropathy, muscle and joint pain, numbness, tingling, fatigue, memory issues, and brain fog. Hartford/Aetna first terminated benefits in January 2018, after three pure-paper peer reviews opined that Plaintiff was not functionally impaired due to a physical condition and could work full-time. In August 2018, Hartford/Aetna reversed the termination after a fourth peer reviewer opined that Plaintiff was unable to work full-time after watching videos Plaintiff submitted of the tremors in his hands and legs.

Hartford/Aetna terminated benefits a second time in April 2019 after an internal & occupational medicine physician conducted an Independent Medical Evaluation (“IME”) and opined that Plaintiff was disabled, but that his impairments were caused by profound depression and probable conversion disorder, and therefore subject to the Policy’s 24-month mental illness limitation. Hartford/Aetna upheld the decision on appeal, relying again on the same IME report, as well as the reports of two other peer reviewers who opined that Plaintiff was not disabled because of any physical condition. However, Hartford/Aetna noted that the termination was upheld principally based on Plaintiff’s failure to submit proof that he was under the care of a psychiatrist for his mental health conditions.

Taking into account the totality of the circumstances, the Court found that Hartford/Aetna abused their discretion in terminating Plaintiff’s LTD benefits. In reviewing the Record, the Court applied a moderate degree of skepticism due to: (1) the manner in which Hartford/Aetna arrived at their determination that Plaintiff’s disability was caused by a mental illness, particularly given the numerous physical diagnoses by specialists; (2) Hartford/Aetna’s inconsistent statements and positions with respect to whether the IME physician diagnosed Plaintiff with a mental illness and the extent to which such caused Plaintiff’s disabilities; (3) Hartford/Aetna’s failure to consult a different physician on appeal concerning the purported mental illness disability as required by ERISA regulations; (4) Hartford/Aetna’s reliance on peer reviewer opinions on appeal that raised questions of adequacy and impartiality as they may have been improperly influenced by receipt and review of the prior peer reviewer and IME reports, and the intentional withholding of the only report which previously found Plaintiff disabled due to his physical condition; (5) Hartford/Aetna’s failure to provide a description of the additional information he could have submitted to perfect his claim; and (6) Hartford/Aetna’s failure to credit the reliable opinions and evidence from Plaintiff’s treating providers. The Court found that Hartford/Aetna failed to provide a full and fair review.

The Court found that because Hartford/Aetna’s termination of Plaintiff’s LTD benefits was based at least in part on the IME physician’s medical judgment that Plaintiff’s impairments were caused by a mental illness, Hartford/Aetna was required to consult with a different medical professional regarding that medical judgment on appeal but did not do so. The Court further noted that Hartford/Aetna’s failure to credit the opinions of Plaintiff’s treating physicians of total disability due to Lyme disease and fibromyalgia, particularly given that the IME referral was for “a disability evaluation on the basis of chronic Lyme disease and fibromyalgia.” Similarly, the two peer reviews on appeal purported to require objective evidence that Plaintiff’s reported pain was caused by fibromyalgia and/or Lyme disease. With regard to Plaintiff’s neurological conditions, the IME physician concluded without any discussion of the treating specialists’ opinions that Plaintiff was not disabled because of hereditary or idiopathic neuropathy or chronic inflammatory demyelinating polyneuritis. And the two appellate peer reviewers each concluded that Plaintiff did not have functional impairments caused by any physical condition that precluded him from working full time. Likewise, each of the physicians (both IME and peer review) disregarded evidence submitted demonstrating that Plaintiff experienced depression as a symptom of fibromyalgia and that a mental illness was not the cause of his disability. Notably, the Court found that Hartford/Aetna improperly relied on the reports of its peer reviewers over the opinions of treating providers, and those reports may have been improperly biased in favor of finding no disability because Hartford/Aetna had shared the reports of its other peer reviewers who concluded similarly.

Finally, Hartford/Aetna failed to distinguish Plaintiff’s award of Social Security disability benefits which found that the medical evidence corroborated the opinions that Plaintiff suffered from severe pain and fatigue secondary to fibromyalgia and Lyme disease, which were reasonably found to significantly limit his ability to persist over the course of an 8-hour workday, and workweek. The Court found Hartford/Aetna’s argument that they did not have the ability to distinguish the determination because they did not have access to Plaintiff’s social security file was not persuasive given that Hartford/Aetna obtained authorization to request Plaintiff’s file directly from the SSA but did not do so. The Court directed the parties to provide briefing on the question of remedy.

If Hartford/Aetna or your insurer has denied or otherwise limited your disability insurance claim, contact us for assistance.

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*Please note that this blog is a summary of a reported legal decision and does not constitute legal advice. This blog has not been updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The case above was handled by other law firms, but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Roberts Disability Law, P.C. may be able to advise you so please contact us.

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