In ERISA Disability Benefit Suit, District Court Finds Reliance Standard Committed Procedural Error and Failed to Adequately Consider Medical Evidence

In Wongsang v. Reliance Standard Ins. Co., No. 1:23-CV-1 (RDA/IDD), 2024 WL 1559292 (E.D. Va. Apr. 10, 2024), Virginia Eastern District Judge Rossie D. Alston, Jr. granted Plaintiff’s motion for summary judgment finding Plaintiff remained totally disabled from any occupation within the meaning of the long-term disability (“LTD”) policy.

In 2016, Plaintiff first sought, and Reliance awarded, short-term disability benefits through the maximum benefit period for disability due to symptoms of arthralgia, back pain, neck pain from cervical herniated discs, fibromyalgia, chronic fatigue, Epstein Barre virus, IBS, and migraines. The etiology of Plaintiff’s symptoms was not fully clear. Thereafter, Reliance approved and paid Plaintiff’s LTD claim from the end of 2016 through June 2, 2022, when it terminated benefits after an activities check found that Plaintiff identified herself as a self-employed freelance writer, had authored and independently published a book that was selling on Amazon, had maintained a blog for years, was doing content editing for others, and reported was reading multiple books at a time as well as leaving extensive written reviews. Reliance concluded, based on its findings, that Plaintiff did not appear to have any cognitive deficits and there was no medical evidence to support ongoing impairment from any occupation due to her physical condition. Plaintiff requested a copy of her claim file, which was not timely provided within 30-days of request and submitted an appeal on November 1, 2022. On January 3, 2023, Plaintiff filed suit, after the 45-day period for rendering an appeals decision expired and Reliance had not issued a determination nor notified Plaintiff of any special circumstance warranting an extension of that deadline. After the lawsuit was filed, Reliance notified Plaintiff that it was requesting an IME.

On cross-motions for summary judgment, the Court first held that Plaintiff’s lawsuit was timely because Reliance had failed to render a decision before the deadline to do so and had not provided the required notice of an extension. With regard to the standard of review, the Court found that although the policy vested Reliance with discretionary authority, it had failed to comply with required procedures such that a de novo review was appropriate. Additionally, the Court rejected Reliance’s effort to augment the record with a medical review, vocational assessment, and denial letter on appeal, all of which were issued after expiration of the 45-day deadline and after Plaintiff had filed the lawsuit. The Court reasoned that the administrative record had already closed, and Reliance did not demonstrate a compelling reason for why it had failed to provide the evidence during the administrative appeal period.

As for the merits, the Court found that Reliance had taken a “minimalist approach” in terms of its process for denying Plaintiff’s benefits, choosing not to order an IME to affirm if Plaintiff’s complaints or symptoms were accurate (until after expiration of the appeals time period) and relying almost exclusively on clinical staff members’ review of the file rather than the medical evidence of treating or examining providers. Reliance offered no explanation for its refusal to credit Plaintiff’s reliable evidence, including the opinions of her treating physicians all of whom opined that Plaintiff was not capable of any work. Instead, Reliance relied heavily on Plaintiff’s reading and writing events discovered in the activities check to argue she was not totally disabled. The Court pointed out that Plaintiff had never claimed disability due to cognitive deficits and found that to the extent Plaintiff’s hobbies mattered at all regarding Plaintiff’s physical impairments, they were not determinative as Reliance suggested. Further, the Court reported that Reliance could not cherry-pick the “best medical evidence” to support its desired conclusion, and isolated notations of some improvement cannot form the basis for its denial in the face of both objective and subjective evidence to the contrary. The Court wrote: “Reliance cannot seek shelter in opaque medical statements in the face of considerable medical evidence to the contrary.”

As for the appropriate remedy, the Court awarded benefits from the date of denial to the present, as opposed to a remand, noting that Reliance’s failure to comply with ERISA procedure coupled with having sought to prevail in the litigation on a basis raised for the first time on judicial review (application of the subjective symptom limitation), should not be rewarded with another “bite at the apple.”

If Reliance or your insurer has denied your ERISA disability insurance claim, contact us for assistance.