Case Story: Our Client v. Greater Georgia Life Insurance Company
United States District Court for the Eastern District of Tennessee (2009)
Our client was the Chief Operating Officer for a non-profit ministry organization. He was insured through Greater Georgia Life Insurance Company (“GGLC”) which included a long-term disability (“LTD”) policy. His policy included a pre-existing condition exception, which provided a limitation to coverage. The exception applied to claims where a pre-existing condition caused, contributed to, or resulted in the disability within a year of the effective date of coverage.
Our client was taken to the emergency room after falling several times and hitting his head. After surgery, his doctor concluded that he had suffered from a subdural hematoma, which is internal bleeding surrounding the brain that is typically associated with traumatic brain injuries. In the past, our client had received treatment for seizures, alcohol use, and hypertension. He also sought treatment for alcohol use for about two months after his accident.
Following his surgery, our client filed for LTD benefits under his policy with GGLC. While there was no dispute that our client was disabled, GGLC informed him that a medical review would be conducted because his disability occurred within 12 months of the effective date of his policy. Claims within 12 months of the effective date of the policy were automatically reviewed for pre-existing conditions.
After reviewing his claim, GGLC determined that our client had pre-existing “chronic alcoholism” that caused his disability, and therefore denied him LTD benefits under his policy. In reaching this decision, GGLC relied on the opinion of an internal nurse’s review of the file. The nurse concluded that our client’s subderal hematoma “could have been caused by, contributed to by, or the result of” his alcoholism if it could be shown that he was drinking at the time of the accident. However, an email sent by one of GGLC’s claims managers said there was no evidence of alcohol use during the pre-existing period before the effective date of the policy. Despite this evidence, GGLC denied our client’s claim because there were medical documents that allegedly demonstrated he had a “history of chronic alcohol abuse with prior episodes of withdrawal including seizure activity.” Furthermore, GGLC claimed that our client’s disability was “caused or contributed to [his] subdural hematoma, as [he] had sustained multiple falls striking [his] head, which is most likely related to alcohol intoxication.”
Before determining the merits of the case, the court engaged in an extensive analysis to determine the appropriate standard of review. The question was whether the court should review the case de novo, meaning it would determine whether GGLC made the right decision concerning benefits, or arbitrary and capricious, meaning it would determine whether GGLC was unreasonable in its decision. The court ultimately determined that it should use the arbitrary and capricious standard, which is a tougher standard because it allows the court to give deference to the insurance company’s decision to deny benefits. Despite this tougher standard, the court nonetheless ruled in our client’s favor, holding that GGLC’s decision to deny benefits was arbitrary and capricious, or unreasonable.
The question presented to the court was whether our client’s alleged pre-existing condition of chronic alcoholism caused, contributed to, or resulted in his disability. The court recognized that there were several different definitions for “cause” and “contribute” used by insurance companies and courts, and ascertaining the meaning intended by the parties was necessary. The court used the word “cause” to mean “something that produces an effect, result, or consequence,” and ruled that any pre-existing condition that our client may have had did not “cause” his disability.
GGLC made vague assertions that our client had a problem with “chronic alcoholism” without ever defining it or providing evidence that our client suffered from such a condition. Additionally, the court said there were too many causal inferences that needed to be made in order to connect our client’s alleged alcoholism with his injury. Specifically, the court held that GGLC’s denial of benefits was not “supported by substantial evidence linking Plaintiff’s consultations for alcoholism to medical treatment of the subsequent subdural hematoma” according to our client’s LTD policy.
The court held that for these reasons, the decision by GGLC to deny benefits was arbitrary and capricious. In determining whether to remand the case back to GGLC for a full and fair review, the court noted that when there is a flaw in the decision-making process of the insurer, the appropriate remedy is to remand the case back to the insurer in order to conduct a more fair review. However, in this case, the court ruled that the appropriate remedy was an outright awarding of benefits for our client.