District Court Partially Affirms ERISA Insurer’s Application of a Limited Benefit Period to Long-Term Disability Claim

In Paulson v. Guardian Life Insurance Company of America, No. 122CV877RDAIDD, 2024 WL 422664 (E.D. Va. Feb. 5, 2024), Virginia Eastern District Judge Rossie D. Alston, Jr. granted, in part and denied in part, Plaintiff’s motion for partial summary judgment, and remanded the matter back to Guardian to provide a full and fair review.

Plaintiff was employed as a Vice President of Philanthropic Engagement at Washington Area Women’s Foundation (“WAWF”) and was a participant in ERISA governed short-term and long-term disability plans insured and administered by Guardian. In January 2019, Plaintiff submitted a claim for STD benefits due to symptoms of migraines and cervical radiculopathy. Guardian approved and paid Plaintiff’s STD claim through the maximum benefit period.

The LTD Policy contained a Limited Benefit Provision (“LBP”) for, among other conditions, “musculoskeletal and connective tissue disorders” and “headache.” It also provided that the LBP would not apply to disabilities caused or contributed by “radiculopathies.” Guardian approved Plaintiff’s LTD claim but accepted liability only through the LBP 24-month maximum duration. On appeal, Plaintiff disputed the application of the 24-month LBP to her claim, arguing (1) that she suffered from migraine disease, which is not a specific limiting condition, and (2) that a diagnosis of cervical radiculopathy supported by EMG also prevents application of the LBP. Guardian upheld its determination on appeal after its peer reviewing physician (1) opined that migraines are a type of headache (which is subject to the LBP), and agreed that Plaintiff’s headaches were incapacitating, and (2) concluded that Plaintiff’s cervical radiculopathy was not independently disabling as it did not cause any limitations on activity. Guardian’s letter advised “there was no evidence of any restrictions or limitations from a condition not listed under the LBP that would preclude [Plaintiff] from performing the major duties of gainful work as of March 18, 2021 and, therefore, no additional benefit payment would be forthcoming.” Plaintiff then filed suit.

Plaintiff argued that she was not given proper notice that Guardian considered her migraine headaches to be subject to a 24-month limitation period or that Guardian did not consider her cervical radiculopathy to be disabling. Applying an abuse of discretion standard, the Court found that Plaintiff was on notice that Guardian denied her continuing benefits based on her migraines because of the application of the headache limitation in the LBP, noting that the limitation was cited both in the LTD approval letter and again in a second letter advising when benefits would terminate.

With respect to Plaintiff’s cervical radiculopathy, the Court found that Guardian offered shifting explanations for the denial of benefits. Initially, Guardian asserted that Plaintiff’s radiculopathy was also subject to the 24-month LBP. But in the denial letter Guardian acknowledged that Plaintiff’s radiculopathy was supported by an EMG, which removes it from the LBP. And yet, Guardian then offered a new basis for the denial of benefits that neither the cervical radiculopathy nor any other condition supported continued disability. The Court held that this “shift” in Guardian’s decision-making violated ERISA’s notice requirements because Plaintiff did not have an opportunity to appeal the denial on that basis. The Court further noted that the remedy for this notice violation is remand to Guardian for a full and fair administrative review.

The Court next applied the eight factors outlined in Booth v. Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan, 201 F.3d 335 (4th Cir. 2000) and concluded that they weighed in favor of Guardian. The Court found that Guardian acted reasonably by classifying migraines as a category of headaches, reasoning (1) that Guardian’s interpretation was what was commonly understood by the reasonable person; (2) that Guardian’s interpretation supported the purpose of the Plan which was to provide benefits in accordance with its provisions; (3) that Guardian reviewed available materials and sought out a second opinion, and thus its decision-making was reasoned and principled; (4) that Guardian’s determination was consistent with procedural and substantive requirements as it relates to the migraines, although not to the cervical radiculopathy; and (5) that while a structural conflict existed between Guardian’s role as fiduciary and payor, there was significant evidence that the structural conflict did not impact Guardian’s decision-making, including approval of benefits for the 24-month LBP and multiple levels of review. In sum, the Court found that all of the relevant Booth factors weighed in favor of Guardian and demonstrated that Guardian’s application of the LBP provision to Plaintiff’s migraine headaches was “the result of a deliberate, principled reasoning process” and “supported by substantial evidence.”

If Guardian or your insurance company has denied or terminated your disability claim, contact us for assistance.