Withholding Doctor’s Reports Until the Date of Denial Violates an Insured’s Right to a Full and Fair Review

ERISA requires that an administrator provide a claimant with a “full and fair” review if a denial decision is made.  It has long been held that an administrator must provide a claimant with copies of internal medical reports it generated and relied upon when making its decision to deny a claim, but when do these internal medical reports need to be disclosed?  This question was addressed in the recent decision, Wagenstein v. Cigna Life Insurance Co., 2020 WL 68394 (9th Cir. Jan. 7, 2020) (“Wagenstein”).  The Ninth Circuit held in Wagenstein that when an administrator “has engaged in a procedural irregularity, it must provide the claimant a fair opportunity to submit additional evidence.”

Lea Wagenstein (“Ms. Wagenstein”) filed a lawsuit against Cigna Life Insurance Company (“Cigna”) after Cigna terminated her long-term disability benefits under an ERISA governed insurance policy.  The district upheld the termination of benefits.

The Ninth Circuit reversed the district court.  The court explained that in response to Ms. Wagenstein’s initial appeal, Cigna provided her with an examining physician’s report that stated she could sit for up to 2.5 hours per workday and perform two sedentary occupations with that limitation.  As the Ninth Circuit has created a bright-line rule that an employee who cannot sit for more than four hours in an eight-hour day workday cannot perform sedentary work that requires sitting most of the time, this initial report confirmed Ms. Wagenstein could not perform her sedentary job.  See Armani v. Nw. Mut. Life Ins. Co., 840 F.3d 1159, 1163 (9th Cir. 2016).  However, in Cigna’s formal denial letter of Ms. Wagenstein’s second, and final, appeal, Cigna for the first time cited a physician’s report that Ms. Wagenstein could sit for up to eight hours per workday and perform two sedentary jobs.  Cigna had hidden this report from Ms. Wagenstein until Cigna’s final denial of her appeal of the termination of her benefits.  The Court held that by withholding this second report, Cigna deprived Ms. Wagenstein of a fair opportunity to provide a response from her treating physicians, who agreed that Ms. Wagenstein was disabled.  By failing to provide Ms. Wagenstein with the second doctor’s report and a fair opportunity to comment on it, Cigna violated ERISA’s rules requiring a full and fair review of her disability claim.

The Court ruled that the district court erred by declining to consider letters from  Ms. Wagenstein’s treating physicians rebutting the second physician’s conclusions and vacated and remanded for consideration of the employee’s supplemental evidence.  We often see long-term disability claims denied without a full and fair review provided.  If you believe your long-term disability claim was denied without a full and fair review, please contact us.

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