Insurance companies often seek to exclude insureds from coverage through their long-term disability (“LTD”) plans by asserting the pre-existing condition exclusion.  If an applicant for LTD benefits has a non-disabling condition or becomes disabled as a result of a condition that developed after corrective surgery for an unrelated condition, is the applicant excluded from receiving benefits?  In a plaintiff-friendly decision, Hines v. Unum Life Ins. Co. of Am., 2018 WL 6599404 (N.D. Ohio Dec. 17, 2018), the court held that the plaintiff-disability claimant could not be excluded from coverage due to a vision disability on either the basis that she had received a diagnosis for a non-disabling condition before she became disabled or that she had developed a new condition after corrective surgery for an unrelated condition.  The court held that the insurer, Unum Life Insurance Co. of America (“Unum”), had incorrectly denied LTD benefits to the plaintiff and had done so in bad faith, entitling the plaintiff to an award of attorneys’ fees.

Linda M. Hines had a slowly developing cataract condition.  Ms. Hines underwent a September 2013 surgery to remove the cataract right-eye lens and replace it with a monovision intraocular lens.  Her left eye remained uncorrected for reading and was able to be used for distance vision.  After unremarkable and temporary post-surgical issues, Ms. Hines returned to work.  Eight months after her surgery, Ms. Hines first complained about blurred vision and difficulty fusing the images from her two eyes.  Her doctor diagnosed her with anisometropia (a neurological condition where the brain becomes unable to mesh the separate images given by each eye) in May 2014.  Ms. Hines’ condition worsened and she applied for LTD benefits subsequent to her diagnosis.

Defendant Unum issued and administered an LTD group policy for Ms. Hines’ former employer (the “Plan”).  Unum denied her benefits application and her subsequent appeal of their denial based on its finding that Ms. Hines was disabled from a left-eye cataract and anisometropia.  Unum found that the Plan coverage excluded her left-eye cataract as a pre-existing condition because she received consultation or diagnostic services for it during the look-back period.  See id. at *2.

The Plan, which is governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), provided that it “does not cover any disabilities caused by, contributed to by, or resulting from [the insured’s] . . . pre-existing condition.” Hines, at *1.  The Plan excluded coverage for pre-existing conditions that met two criteria: (1) “[the insured] received medical treatment, consultation, or services . . . in the 3 months just prior to [the insured’s] effective date of coverage,” and (2) “the disability begins in the first 12 months after [the insured’s] effective date of coverage.”  Unum’s denial stated that anisometropia was a pre-existing condition because “[t]he results of the [right-eye cataract surgery with monovision intraocular lens implantation] produced monovision resulting in the diagnosis of anisometropia.”  Id. at *3.

The court reversed Unum’s denial of benefits to Ms. Hines on three distinct bases.  Firstly, the court held that there was no evidence that Ms. Hines’s left-eye cataract diagnosis had ever been or was currently a disabling condition.  Because Ms. Hines’s left-eye cataract did not disable her, it could not meet the terminology of “the disability” used in the second condition for the exclusion of coverage due to a pre-existing condition.

Secondly, the court ruled that Ms. Hines’s anisometropia, as the diagnostic terminology is used in the medical profession, was not diagnosed during the look-back period.  Ms. Hines’s medical records showed that, during the look-back period, she had anisometropia-refractive differences between one’s eyes-in the literal sense, the definition which the Unum reviewer applied.  However, the medical profession generally applies the “anisometropia” diagnosis only to those who have symptomatic anisometropia, where a patient’s brain cannot fuse the dissimilar images generated by the differently refractive eyes, and Ms. Hines did not report symptomatic anisometropia until well after the look-back period.  After considering the literal and medical usage of “anisometropia,” the court held that Unum could not properly rely on the literal definition of anisometropia, but rather, Unum should have recognized the medical usage of the term which is only applied to symptomatic anisometropia.  Thus, the court found that Unum could not exclude her from coverage based on the presence of anisometropia because there was no such diagnosis during that period.

Thirdly, the court held that the Unum was incorrect in finding that Ms. Hines’s “right-eye cataract surgery during the look-back period produced monovision that resulted in [her] anisometropia, and thus that the Plan excluded her anisometropia as a pre-existing condition.”  Id. at 5.  The court found that Unum could not provide a logical explanation for what pre-existing condition caused Ms. Hines’s anisometropia.  As her right-eye cataract was successfully removed, it could not be a pre-existing condition that caused her anisometropia because her right-eye cataract condition had been properly remedied.  The court recognized that Unum sought to argue that the right-eye cataract surgery was the pre-existing condition precipitating Ms. Hines’s anisometropia, but the court rejected the characterization of surgery itself as a “pre-existing condition,” since it was “at most a necessary consequence of the right-eye cataract pre-existing condition.”  Id.

Moreover, the court distinguished the right-eye cataract surgery from the simultaneous lens replacement surgery that produced the refractive difference in her eyes leading to symptomatic anisometropia: “Replacing the bad lens with a monovision lens . . . was not . . . a necessary component of that [cataract] surgery.”  Id. In so finding, the court held that there are limits to the chain of causation, and that the substantial evidence showed that the causal relationship between the right eye cataract (pre-existing condition) and the anisometropia (disabling condition) was too attenuated.  Id.

The court also emphasized that “reasonably foreseeable consequence[s]” are significant to assessing whether a disability is caused by, contributed to by, or resulted from a pre-existing condition.  Id. at *6.  Since the anisometropia was not reasonably foreseeable from the pre-existing condition of her right-eye cataract because the right-eye cataract and the cataract surgery were unrelated to the lens replacement except for timing, those conditions could not be paired to justify Unum’s denial of benefits to Ms. Hines.

For these reasons, the court held that Unum had incorrectly denied Ms. Hines’s application for LTD benefits.  The court also considered Ms. Hines’s request for attorney’s fees and costs and awarded them based on a finding that the insurer had acted in bad faith. The court wrote:

The record does not offer a smoking gun revealing Unum’s bad faith, but several factors add up to reveal Unum’s duty to pay fees.  Unum inaccurately represented physician statements, omitted potentially relevant medical information, and followed up with reviewers in such a way as to suggest that they “try again.”  The Unum reviewers’ ambiguous evaluation responses generate even more concern.  They largely dance around the questions without providing a principled, reasonable answer and explanation.  And yet Unum was still able to cherry-pick language and carry on with its preferred course of action.

Id.  The court, concerned about such improper conduct by Unum and other insurance companies, held that Unum’s bad-faith behavior and other considerations merited attorney’s fees to be paid to Ms. Hines.

Conclusion

When insurance companies deny LTD benefits, they often resort to connecting an insured’s disabling condition with some other, unrelated condition.  As Hines shows, there must be substantial evidence linking the causal relationship between pre-existing conditions and disabling conditions.  Further, when insurers deny coverage due to pre-existing conditions, they must do so in good faith and provide cogent, reasonable explanations.  Unequivocally inaccurate findings and manipulation of language and rationales by insurance companies will likely result in reversal of the benefits denial and awarding of attorney’s fees and costs to the insured.