District Court Finds That Unum Abused Its Discretion In Concluding Plaintiff’s Disability Was Psychological Rather Than Physical

In Moseley v. Unum Life Ins. Co. of Am., No. CV 22-40079-RGS, __F.Supp.3d__, 2023 WL 2324771 (D. Mass. Mar. 2, 2023) Massachusetts District Judge Richard G. Sterns denied Unum’s summary judgment motion, instead finding that Unum abused its discretion when it ceased providing disability benefits to Plaintiff pursuant to the mental illness limitation of her long-term disability policy. The Court entered judgment for Plaintiff, directed Plaintiff to file a motion for attorneys’ fees and costs, and remanded the matter to Unum to allow an independent medical examination (IME) and for reassessment of Plaintiff’s claim.

Unum had been paying LTD benefits to Plaintiff based on her diagnosis of Lyme Disease. In August of 2020, Unum terminated benefits citing the mental illness limitation of the LTD Policy. Plaintiff filed suit challenging the decision and arguing that Unum abused its discretion by concluding that the basis for her disability is psychological rather than physical. Unum moved for summary judgment.

The Court did not get into the substance of Unum’s claim determination as it found that Unum had committed procedural error in failing to provide Plaintiff with an IME upon request, thus rendering Unum’s benefits determination inherently arbitrary and capricious. See Lavery v. Restoration Hardware Long Term Disability Benefits Plan, 937 F.3d 71, 78 (1st Cir. 2019) (recognizing that procedural unreasonableness is an “important factor to consider in deciding whether to set aside a discretionary decision”). The Court noted that Unum’s Regulatory Settlement Agreement (RSA) unambiguously states that “[a]n IME … should be sought whenever … [t]he claimant or the AP requests an IME, either directly or through the claimant’s representative.” When Plaintiff requested an IME, Unum denied the request stating, “a current IME would not assess your client’s functional capacity from more than a year and a half ago when she was still receiving benefits and the policy was still in force.”

The Court reasoned, even assuming the RSA allows Unum to deny an express IME request from a claimant, the denial of Plaintiff’s request was erroneous given the inadequacy of Unum’s purported rationale. The parties did not dispute functional capacity. Unum agreed that Plaintiff was, and continuously had been, disabled for two years. The issue instead was the basis for that functional incapacity—a psychological condition or a physical condition.

The Court further noted that Unum’s adverse determination hinged, at least in part, on the alleged lack of objective medical evidence to support a diagnosis of Lyme disease. It reasoned that an IME could have remedied these alleged deficiencies, and the only plausible reason the court could find to deny Plaintiff an IME under these circumstances would be a desire to prevent her from having the opportunity to supplement the record to bolster her claim.

As this case demonstrates, an insurer’s failure to comply with procedural requirements may place your disability claim in jeopardy. If your insurer has denied your disability insurance claim, contact us for assistance.