Facing a long-term disability (“LTD”) claim, insurers often attempt to tip the scales against insureds in order to deny legitimate claims for benefits.  This imbalance can become especially pronounced where an insured primarily suffers from disabling conditions that are subjective in nature and difficult to objectively measure.  Instead of accepting the statements of physicians who certify an insured’s disability claim, insurance companies often deny claims due to a lack of “objective evidence” or perform a “paper review” of an insured’s medical file by contracting with “independent” peer-review medical vendors who supply physicians to review claimants’ medical files.  These vendors and physicians have an inherent bias in favor of insurance companies, as they are financially dependent upon insurance companies and routinely contradict the opinions of insureds’ treating providers.

In a recent LTD decision involving Aetna Life Insurance Company (“Aetna”), Woolsey v. Aetna Life Ins. Co., 2020 WL 1083932 (D. Ariz. Mar. 6, 2020), the District Court of Arizona, under an abuse-of-discretion standard, found that Aetna had committed several violations of the Employee Retirement Income Security Act of 1974 (“ERISA”), entitling the matter to be remanded.  The court found that Aetna failed to effectively and meaningfully communicate with the plaintiff, failed to consider the comorbid effect of his disabling conditions, arbitrarily dismissed the conclusions of his treating providers, failed to address the requirements of the plaintiff’s specific vocation, violated its duty to investigate, failed to disclose paper-review reports to the plaintiff and failed to explain what was necessary for him to perfect his appeal.  The decision highlighted several of the tactics that we routinely see group-disability insurers use to deny ERISA claims.

Plaintiff Michael Woolsey worked as a financial advisor for UBS Financial Services until he made a claim for short-term disability (“STD”) and LTD benefits with Aetna on January 6, 2016, due to issues with migraines and depression that precluded him from working in his own occupation.  Id. at *1.  Woolsey also successfully underwent treatment for prostate cancer and experienced suicidal ideations.  Due to the nature of many of Woolsey’s disabling conditions, treating notes largely reflected his own self-reported symptoms.  Aetna initially approved his STD claim based on representations from his primary-care provider, a physician’s assistant who referred him to a neurologist and psychologist.

Following a transition from STD to LTD benefits, Woolsey’s claim for LTD benefits was denied on July 1, 2016.  Woolsey appealed Aetna’s determination.  He submitted additional medical records as well as a supportive disability letter from his neurologist who noted that Woolsey “clearly remains unable to work because of his frequent headaches” and “continues to remain disabled.”  Id. at *4.  During its appeal review, Aetna contracted the third-party vendor Reliable Review Services (“RRS”) to conduct paper reviews of Woolsey’s file.  Despite the support of Woolsey’s treating providers, the two reviewers found his record to be insufficient to support a determination of “significant impairment.”  Aetna then denied Woolsey’s appeal on December 15, 2016, upholding its LTD benefits denial.  The reviewers determined that specific restrictions that would prevent Woolsey from working were not supported, because of a lack of clinical correlation for such restrictions.  Id.

The court noted that Woolsey’s medical records prior to his LTD claim were “shockingly thin,” and that Woolsey had attempted to return to work.  The court also noted that Aetna initially denied his claim due to a lack of “objective clinical examination findings to support subjective symptoms.”  Id. at *8-9.  However, the court found several ERISA violations that entitled the matter to be remanded back to Aetna to cure its defects.

First, the court criticized Aetna’s reliance on the opinions of RRS’ paper reviewers.  Id. at *10.  The court stated that “undoubtedly, . . . RRS is well-compensated for its services.  Its share of Aetna’s independent-review business increased from 2015 to 2016.”  Id.  The court further found that the statistical evidence of Aetna’s relationship with RRS supported a finding common in ERISA cases: that independent reviews are prone to the same conflicts of interest that afflict ERISA plan administrators.

In fact, RRS touts on its Website that “Disability plans are serviced through independent peer review, which provides clinical expertise to support plan decisions.”  (Emphasis added).  This is not surprising; insurers like Aetna are its main source of income.  If RRS only provided opinions that had an inherent bias in favor of insureds, it would surely go out of business.  Its profit-driven business structure is exactly the reason why courts routinely dismiss these biased peer reviewers’ opinions in favor of the opinions of the doctors who had actually treated insureds.

The court further criticized Aetna’s paid consultants, who failed to consider the aggregate effect of Woolsey’s conditions, but instead deferred to other physicians for assessments in areas outside of their areas of expertise.  Id. at *10.  The court thus found a “procedural violation for Aetna’s failure to consider the possibility that the conditions’ combined effect was disabling.”  Id.  The court also noted the paper reviewers’ dismissive attitude toward Woolsey’s treating providers, evidenced by how they “gave short shrift to, or fail to address entirely [Woolsey’s doctor’s] observation that [Woolsey] ‘clearly remains unable to work.’”  Id.  The court found that more deference to Woolsey’s treating providers’ opinions was warranted and that the RRS paper reviewers’ dismissive treatment of Woolsey’s treating providers’ opinions was irregular.  Id., citingC.F.R. § 2560.503-1(h)(2)(iv) (requiring plan administrators to consider documentation submitted by a claimant at the appeal stage).

In addition, the court in Woolsey criticized Aetna’s deficient and inadequate communication with the plaintiff.  The court found that “Aetna engaged [the plaintiff] in dialogue regularly, but not meaningfully.”  Woolsey, 2020 WL 1083932 at *12, citing Booton v. Lockheed Medical Ben. Plan, 110 F.3d 1461, 1463 (9th Cir. 1997) (determining that what ERISA, “[i]n simple English[,] . . . calls for is a meaningful dialogue between ERISA plan administrators and their beneficiaries” such that “if the plan administrators believe that more information is needed to make a reasoned decision, they must ask for it.”)  While Aetna communicated in part with Woolsey’s treating providers, the court noted that “Aetna failed to disclose those reports to [the plaintiff] and explain what was necessary to perfect his appeal ‘in a manner calculated to be understood.’”  Id.,citing 29 C.F.R. § 2560.503-1(g)(1).  The court further found that Aetna had violated its duty to investigate when it largely discredited or ignored the opinions of Woolsey’s treating providers, who concluded that he was unable to work.  Id. at *13.

The Woolsey case underscores the tactics that Aetna and other group disability insurers use to deny disability claims.  We often seen insurers deny a claim for disability benefits after discrediting a claimant’s subjective accounts of disability (while implicitly demanding objective evidence of a condition for which no objective results could exist), relying on paper reviewers to deny a LTD claim, hiring biased and financially conflicted vendors to conduct a paper review of a claimant’s medical file, discrediting the opinions of treating providers (who concluded that a claimant is unable to work), failing to furnish copies of paper reviewers’ reports to the claimant and failing to engage in a meaningful dialogue with claimant.  Woolsey sheds light on these insurer-friendly tactics and indeed found them to be procedural ERISA violations.  Hopefully, courts encountering similar insurer tactics to deny disability claims will respond to them with similar skepticism as the Woolsey court did here.

If your disability insurer denied your claim for STD or LTD benefits, please contact our firm for a free consultation.  We have extensive experience with handling the denials of ERISA STD and LTD claims.