Experts Archives - McKennon Law Group

Disabled NFL Players Face the Same ERISA Hurdles as Everyday Workers: Plans that Use Biased Physicians and that Deny Disability Claims without a Fair and Full Review

National Football League (“NFL”) players are covered by an employer-sponsored long-term disability (“LTD”) policy called the Bert Bell/Pete Rozelle NFL Player Retirement Plan (“Plan”). This NFL Plan, like most employer long-term disability plans, is governed by ERISA. Therefore, disabled NFL players face many of the same evidential challenges as company-bound employees when filing a claim for disability. These similarities are evidenced in the recent decision, Dimry v. Bert Bell/Pete Rozelle NFL Player Retirement Plan, 2020 WL 5526607 (N.D. Cal. Sept. 15, 2020)(“Dimry”). The court held in Dimry that Plan administrator (“Bert Bell”) abused its discretion when denying Mr. Dimry’s disability claim primarily for the following reasons: (1) Bert Bell did not provide Dimry with a “full and fair” review; (2) Bert Bell demanded “objective evidence” which was not required by the Plan; and (3) Bert Bell failed to consider Mr. Dimry’s Social Security award.

Dimry originally filed a complaint against Bert Bell to recover LTD benefits in 2016. Shortly after, the Social Security Administration (“SSA”) found that Dimry had been disabled since 2012. The district court found that Bert Bell had abused its discretion when it denied Mr. Dimry’s LTD claim because it ignored two reports from Mr. Dimry’s treating physicians in favor of two so-called “neutral physicians” who were paid almost $300,000 by Bert Bell to review claims. The district judge found in favor of Dimry finding Bert Bell had abused its discretion since the denial of Mr. Dimry’s benefits claim was “based upon an unreasonable bias in favor of Plan-selected physicians” and remanded the matter to Bert Bell to re-evaluate Mr. Dimry’s disability claim. On remand, Bert Bell relied on the Plan’s medical director, Dr. Jackson, who opined that Mr. Dimry’s primary impairment appeared to be pain and subjective complaints that were not supported by objective evidence. Relying on Dr. Jackson’s report, Bert Bell again denied Mr. Dimry’s claim. Another lawsuit followed.

Dimry first argued that there was a conflict of interest because the three physicians who had reviewed his claim were biased since the first two physician reviewers had been paid almost $300,000 and Dr. Jackson had been paid $223,000 by the Plan. The court explained that “Even apart from any issue preclusion that may apply given the Dimry I court’s findings, under Demer ‘[t]he magnitudes of these numbers, particularly when combined, raise a fair inference that there is a financial conflict which influenced the [the physicians’] assessments.’ Demer, 835 F.3d at 902.”

Dimry next argued that he was excluded from Bert Bell’s “review of his claim following the remand in violation of the requirement that there be ‘a meaningful dialogue between ERISA plan administrators and their beneficiaries’ and that the Plan give a ‘full and fair review’ to an appeal of an adverse benefits determination.” A full and final review requires giving the claimant an opportunity “to submit written comments, documents, records, and other information relating to the claim for benefits” and provide the claimant with any new or additional evidence, as soon as possible, to give the claimant an opportunity to respond. In Dimry, not only did Bert Bell not provide Dr. Jackson’s report to Mr. Dimry, Bert Bell never informed Dimry that it was consulting Dr. Jackson or that he was issuing a report which it intended to rely on. The Court held that by excluding Dimry from the renewed review, Bert Bell was in violation of “the rule that there be a meaningful dialogue between ERISA plan administrators and their beneficiaries.”

Next, Dimry challenged Bert Bell’s finding that the objective medical evidence did not support his claims of neck and back pain. Although Dr. Jackson opined “that Mr. Dimry’s pain complaints could be accurate despite not being fully supported by the objective medical evidence given the nature of his impairment,” Bert Bell made no attempt to follow up with Mr. Dimry’s complaints of pain. The Court agreed with Dimry that requiring objective evidence to support his pain complaints was “illogical and without support in inferences that may be drawn from the facts in the record.” First, the Plan did not contain language limiting benefits to claimants that can provide objective evidence to support subjective complaints of pain. Second, the Court found that while Bert Bell “may consider the lack of objective medical evidence in making a benefits determination, ‘reliance on objective evidence can be problematic for medical conditions that are not amenable to objective verification.’”

Lastly, Dimry insisted Bert Bell abused its discretion when it failed to acknowledge Mr. Dimry’s social security award. In response, Bert Bell attempted to assert the following justifications for disregarding the SSA’s award decision: First, the SSA was somehow incomplete as it did not have and/or consider the Plan’s physician’s reports when it made its determination. However, the court did not find this argument convincing. Instead the court found Bert Bell “acted as an adversary, not a fiduciary,” and stated Bert Bell’s rejection of the SSA “is particularly striking where, as here, [Bert Bell’s] non-disability finding was based on the absence of objective evidence, and the [SSA] discussed the objective evidence in Mr. Dimry’s Social Security file at length – none of which Dr. Jackson reviewed.” Second, Bert Bell contended that since Mr. Dimry’s social security was rejected twice before it was granted, this constitutes evidence that reasonable minds could differ as to whether Dimry was disabled and precludes a finding that Bert Bell’s finding of no disability was arbitrary. The court again disagreed and explained, “[w]hile [Bert Bell] was not required to accept the [SSA’s] opinion, it had to consider it and explain why it was not persuasive.” Third, Bert Bell claimed that “[t]he Social Security decision turned on factors that are irrelevant to a finding of total and permanent disability under the Plan, such as [Mr. Dimry’s] education and work experience.” The court also rejected this argument stating that based on the relevant medical evidence, Mr. Dimry’s education and/or work experience had “nothing to do [with] whether the medical evidence fully supported Mr. Dimry’s pain complaints.” Finally, Bert Bell argued that it, unlike the SSA, was not required to give substantial weight to Mr. Dimry’s treating physician. While the court agreed that Bert Bell was not bound by the SSA’s treating physician rule, Bert Bell was also not allowed to simply discount the SSA’s ruling.

The lawsuit eventually resulted with the Court’s finding that Bert Bell had abused its discretion and remanded Mr. Dimry’s case back to Bert Bell for a renewed evaluation of his claim. The Court also stated that it “expects that once [Bert Bell] gives Dimry the full and final review ERISA requires, and eliminates the mandate of objective evidence – a mandate not in the Plan and not in Dr. Jackson’s reports – that Dimry will be found disabled under the Plan.

We often see LTD claims denied without a full and fair review provided to our clients. We often see plan administrators/insurers who use biased physicians who conduct cursory paper reviews, who wrongfully rely on the lack of objective evidence to deny LTD claims and who do not meaningfully address favorable SSA determinations. If you believe your LTD claim was denied without a full and fair review for any of the reasons discussed above, please contact us for a free consultation by calling our office at 949-387-9595 or completing the contact form on our website.

When Can a Disability Claimant Obtain Discovery in an ERISA Suit When the De Novo Review Standard Applies?

When it Goes to the Bias of an Insurer’s Consultants, that’s When a claimant who challenges a denial of disability or life insurance benefits by filing a court action under ERISA is generally not able to present evidence to the court that is not in the administrative record. The administrative record consists of all the medical records, documents and other information obtained by and submitted to the plan administrator during the initial stages of the claim and through the appeal process. Because courts are generally unwilling to consider any evidence which is not in the administrative record, plaintiffs are normally not entitled to legal discovery from the insurance company.

However, courts in the Ninth Circuit have carved out exceptions to the above discovery rule in de novo review cases. “[T]he district court should exercise its discretion to consider evidence outside of the administrative record ‘only when the circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision.’” Opeta v. Nw. Airlines Pension Plan for Contract Emp., 484 F.3d 1211, 1217 (9^th Cir 2007) (emphasis added.).

In a recent decision by the U.S. District Court of Arizona, Coffou v. Life Insurance Company of North America, 2020 WL 1502104 (D. Arizona 2020), the court allowed discovery in an ERISA case relating to the plan administrator’s alleged use of biased experts when it denied a claim for waiver of premium benefits under a life insurance policy. In Coffou, the Plaintiff, Mary Coffou, filed a lawsuit against Life Insurance Company of North America (“LINA”) after it determined Ms. Coffou did not meet its definition of “disabled” and as a result, denied her a waiver of life insurance policy premiums. Ms. Coffou alleged that LINA intentionally denied her claim by hiring third-party vendors to supply a biased vocational expert and biased medical experts who had a history of providing findings to support LINA’s denial of claims.

While the court stated that compensating experts for work done is not in itself proof of bias, evidence such as a long-standing relationship or substantial compensation may be important to access an expert’s bias and credibility. In Coffou, the Court held as follows:

For several reasons, this case meets the exceptional circumstances test set out by Opeta. This is a case in which the carrier has an admitted structural conflict and a history of self-dealing, resulting in its claims practices being subject to an extensive national “market conduct study,” a 2013 Regulatory Settlement Agreement (“RSA”), and continued monitoring. In addition, Plaintiff’s claims would have been insurance contract claims prior to ERISA. Further, Plaintiff has pointed out that some of LINA’s experts, Drs. Grattan and Mobo, rendered opinions outside their area of expertise. And, Plaintiff has indicated that LINA provided its vocational consultant, Glenna Taylor, with the reports and limitations by its own experts, Drs. Mobo and Grattan, but did not provide all the medical records and report that Plaintiff used to support her claim. Also, LINA did not provide the SSA ALJ’s decision, the SSA claims file, or Plaintiff’s medical, vocational, and lay witness evidence.

LINA’s conduct puts this case outside the garden-variety “structural conflict of interest” scenario. Rather, LINA’s history and the unchallenged representations of Plaintiff that LINA provided its experts with its other experts’ reports, but not the entire record, raises concerns whether LINA’s structural incentive to minimize benefit payments distorts its obligation to fairly handle benefits claims. This warrants discovery into LINA’s relationships with its vendors and experts and into whether it was employing vendors and experts who would reliably do LINA’s bidding.

The Court concluded that discovery beyond the administrative record would be helpful to determine the credibility of LINA’s experts. LINA was ordered to respond to interrogatories relating to its relationship history with the subject third-party vendors and experts used to determine Ms. Coffou’s claim. Specially, LINA was required to respond to discovery that delved into the number of times it retained the subject third-party vendors and experts and what amount of money was paid to them, as well as the number of times its internal vocational expert has conducted assessments and concluded the claimant could perform work.

As Coffou demonstrates, while discovery in ERISA de novo review cases is limited, under the right circumstances the courts will allow discovery that will expose insurance company bias in the denial of ERISA life and disability insurance claims to protect insureds from having their claims improperly denied.

Have “Quack” Medical Reviewers Caused Denial of Your Long-Term Disability Claim? California Court of Appeal Berates Insurance Company for Controlling Medical Peer Reviews

During their Presidential election campaigns, Donald Trump and Hillary Clinton spotlighted for America flaws in our criminal justice system. They raised questions about whether the criminal probe into Ms. Clinton’s private email server was handled honestly or politically. Conservatives bitterly complained that FBI director Jim Comey’s recommendation not to prosecute Ms. Clinton was inconsistent with the FBI’s fact findings (that she carelessly mishandled classified emails) and influenced by the left-leaning Justice Department rather than justice. On the flip side, Liberals vehemently complained that on the eve of the election Director Comey made an unprecedented announcement that the FBI had reopened its criminal investigation into Ms. Clinton’s private emails, attempting to influence the election.

Whatever your political leanings are, most Americans would probably agree that politics has no business in a court of law, where a person’s freedom or livelihood is at stake. Lady Justice is supposed to be blind.

Like politics, “quack” physicians have inappropriately crept into our judicial process through the insurance industry. This has endangered blind justice for indigent policyholders. Wealthy life, health and disability insurers appear adept at getting a doctor to say just about anything for the right price. Some doctors are willing to sell the truth and abandon science for a steady stream of business from an insurance company. They have increasingly become willing to allow their high-paying insurance company clients to dictate what they can and cannot consider in reaching their professional medical opinions, often limiting them to a review of the insured’s medical records without the opportunity to examine or speak with the insured or his treating physicians. Some insurers seemingly have made this part of their business model to help them deny even legitimate claims made by their disabled or sick policyholders.

The California Court of Appeal recently criticized one such insurance company’s practice in the case of Nickerson v. Stonebridge Life Insurance Company, 5 Cal. App. 5th 1 (2016). While the bulk of the lengthy opinion focuses on the constitutionality of punitive damage awards – it held that a 10:1 ratio of punitive to compensatory damages in an insurance bad faith case passes muster – we have blogged on that topic and the Nickerson case before. See https://mslawllp.com/california-court-of-appeal-finds-that-a-101-ratio-between-punitive-damages-and-compensatory-damages/ (discussing Nickerson v. Stonebridge Life Insurance Company, 219 Cal. App. 4th 188 (2013)) and https://mslawllp.com/in-an-insurance-bad-faith-case-attorneys-fees-are-compensatory-damages-that-can-increase-a-punitive-damages-award/ (discussing Nickerson v. Stonebridge Life Insurance Company, 63 Cal. 4th 363 (2016). What is more interesting as it relates to ERISA and bad faith long-term disability insurance and health claims is that the Nickerson court berates the practice, systemic to the health and disability insurance industry, of hiring doctors to perform “pure paper reviews” of the insured’s medical records and, more accurately, of controlling the process to dictate results favorable to the insurance company.

The Nickerson case concerned a disabled veteran, Tom Nickerson, paralyzed from the chest down with no income other than a very small military pension. He bought a policy from Stonebridge providing coverage for hospital confinement. After suffering a broken leg from falling out of his wheelchair onto the asphalt, Nickerson was hospitalized for 109 days on the advice of his attending primary care physician. He submitted a claim to Stonebridge for his hospital stay. Stonebridge contended only 18 days was “Necessary Treatment” under its policy. On that basis, it denied him policy benefits for the rest of the time he was hospitalized. Nickerson sued Stonebridge for breach of the insurance contract and the implied covenant of good faith and fair dealing (i.e. “bad faith”) seeking his unpaid policy benefits, emotional distress, attorneys’ fees and punitive damages.

As health and disability insurers often to, Stonebridge had hired a medical consultant during the claim to review Nickerson’s medical records and render an opinion on whether 109 days of hospitalization was medically necessary. The insurance company’s doctor:

never spoke with the insured, Nickerson;
never spoke with Nickerson’s attending physicians; and
never examined Nickerson.

Based purely on a “paper review” of his medical records, Stonebridge’s doctor concluded that Nickerson should have been released from the hospital after eighteen days (which became the rationale for Stonebridge denying the claim).

Nickerson’s primary care physician disagreed and even wrote a three-paragraph letter to Stonebridge explaining in detail why hospitalization was required for 109 days, including that “the fracture was complicated by extensive swelling, infection, blistering, and muscle damage that required acute hospitalization, intravenous fluids and antibiotics, and full staff support including consultation with an orthopedic surgeon.” He further explained that because Nickerson was paraplegic and confined to a wheelchair, he could not have managed at home any earlier. Stonebridge never gave that information to its “paper reviewing” physician consultant and never asked him to speak with Nickerson’s treating doctor about his conflicting opinion. It withheld the obviously pertinent information and maintained its claim denial.

The court berated Stonebridge for what it found was a systemic company-wide practice: “Stonebridge’s practice was never to authorize peer reviewers to communicate with treating physicians, thus intentionally concealing material information from the claims’ functional decision-maker so as to limit the amount Stonebridge would have to pay out on its policies.” It held Stonebridge’s conduct in ignoring the opinion of the insured’s treating physician and withholding it from its peer reviewer essentially controlled the peer reviewer’s opinion and supported a finding that the insurer committed fraud warranting punitive damages, not just bad faith. The court held that the insurer’s conduct was “particularly reprehensible” warranting a higher constitutional ratio of compensatory to punitive damages. Finally, the court stated that, “Insurers may not ignore the opinion of treating physicians absent a showing the physician’s judgment is either ‘plainly unreasonable, or contrary to good medical practice.’ ”

Our take: Unfortunately, as the Nickerson case and our recent Presidential Election illustrate, Lady Justice is not always blind. It certainly isn’t for poor, out-of-work claimants fighting against billion-dollar life, health and long-term disability insurers with systemic corporate practices to the highest level of management aimed at denying even legitimate claims to line their own pockets with your hard-earned policy premiums. Justice is not blind for indigent claimants struggling against insurers’ handsomely paid “paper-reviewing” physicians complicit in the insurance industry’s often unfair claims handling practices.

If you have a long-term disability, life or health insurance claim, to equal the scales of justice, you need an experienced attorney to fight hard for you. At McKennon Law Group PC, our lawyers have decades of experience litigating these types of claims, both under ERISA and state insurance bad faith laws. Most of our lawyers previously spent years defending insurance companies against long-term disability, life and health insurance claims. That will give you a distinct advantage because our lawyers know how insurance companies operate and the arguments they are likely to raise from first-hand experience. We will review your claim free of charge. Your matter will be handled on a contingency basis, which means you pay nothing and we receive nothing unless you win a recovery by way of a settlement, claim reinstatement, verdict or award. Let us try to equal the scales of justice for you.

Expert Testimony Can Help Policyholders Establish Property Damage and Survive Summary Judgment

Policyholders often face a formidable challenge proving causation on property damage claims, particularly when insurance companies insist on deferring to their own experts and adjustors. Of course, insurance companies must conduct reasonable investigations and review and evaluate all of the evidence before making a claim decision. The Ninth Circuit Court of Appeals held in an insurance action where the policyholder provides admissible evidence showing a genuine dispute as to coverage, the evidence should be evaluated by a trier of fact. Pyramid Technologies Inc. v. Hartford Casualty Insurance Co., 2015 DJDAR 6205 (Cal. App. May 19, 2014).

Pyramid involved a policy issued by Hartford Casualty Insurance Company (“Hartford”) to Pyramid Technologies (“Pyramid”) for business personal property replacement costs, lost business income and additional expenses. In 2005, Pyramid’s warehouse flooded, but the water did not come into contact with inventory. After discovering the flood, Pyramid was concerned about the humidity level in the warehouse and asked Hartford to test the inventory. Hartford refused to test for damage, after its expert, Peter Helms, performed a humidity test following removal of most of the water and concluded the flood did not reach a level to damage the inventory. Pyramid’s expert, David Spiegel, opined the humidity levels rose to over 90% during the flood and exceeded the levels of the moisture-proof packaging. Pyramid employees conducting inventory after the flood quarantined over 250,000 items with corrosion, tarnish or discoloration damage. Hartford retained Dr. Arum Kumar to conduct limited tests of the quarantined items and he found less than half the items tested were damaged, two failed “suitability standards” and concluded the damage was caused by moisture, but not by the flood. Pyramid’s expert, Ken Pytlewski, challenged Dr. Kumar’s opinion that corrosion caused by the flood would be uniform, and concluded the damaging corrosion was caused by the high humidity attributed to the flood. However, Hartford still refused coverage based on its own experts’ determinations that flood did not damage inventory in the warehouse.

Subsequently, Pyramid filed a civil action for breach of contract and the breach of the implied covenant of good faith and fair dealing. The district court granted summary judgment for Hartford without holding Daubert hearings to evaluate Pyramids’ expert testimony, and Pyramid appealed.

The Court of Appeals reversed and remanded, holding summary judgment was improper as there was a genuine dispute as to whether the flood damaged Pyramid’s inventory. First, the Court held evidence from Pyramid’s experts showing the flood caused the damage triggering coverage was admissible, and its exclusion constituted an abuse of discretion. Spiegel’s report provided evidence that Helms’ report relied on improper data regarding humidity, that humidity exceeded 90% during the flood and the 90% humidity likely compromised the moisture-proof packaging of Pyramid’s products. Pytlewski’s report contradicted Dr. Kumar’s statement that a flood would have caused uniform corrosion damage, an assumption underlying his determination. These reports permitted a trier to fact to infer the flood could have caused the damage to the inventory. The court stated:

After an expert establishes admissibility to the judge’s satisfaction, challenges that go to the weight of the evidence are within the province of a fact finder, not a trial court judge. A district court should not make credibility determinations that are reserved for the jury.

Secondly, the court stated there were triable issues of fact as to whether Hartford breached the insurance contract or acted in bad faith by failing to investigate and pay Pyramid’s claims for loss of inventory. Hartford argued Pyramid did not show the flood caused the claimed damages, as opposed to other factors. However, the court noted that evidence of condensation on the packaging and high humidity levels permitted a reasonable inference of causation. Accordingly, summary judgment was inappropriate. Next, the court held that there existed a triable issue of fact regarding Pyramid’s claim for breach of the implied covenant of good faith and fair dealing claim in light of evidence that Hartford and its experts discouraged Pyramid’s claim, refused to test inventory, conducted inadequate testing, denied coverage and extended a “low-ball” offer. The court held that if viewed in the light most favorable to Pyramid, these facts permit an inference such that a reasonable trier of fact could have found for Pyramid. Finally, the Court of Appeals affirmed summary judgment as to Pyramid’s business interruption claim, as Pyramid failed to show it lost customers due to the flood.

Pyramid is mostly a policyholder-friendly decision as it sets standards for policyholders to utilize, especially regarding expert testimony, that allow them to defeat summary judgment motions. In litigation, the policyholder’s credible expert evidence should be admitted to support an inference in favor of coverage, and will be viewed in a light most favorable to the policyholder if the insurer moves for summary judgment.

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