Legal Summary: Cooper v. Life Insurance Company of North America

486 F.3d 157 (6th Cir. 2007)

Our client, an insurance claims adjuster for ACE Insurance, became disabled after working for ACE for twenty-one years.  Cooper v. Life Ins. Co. of North America, 486 F.3d 157, 159 (6th Cir. 2007).  Throughout the administrative appeals process, Life Insurance Company of America (LINA), ACE’s claims administrator, denied the claim on the basis that her medical records did not contain sufficient evidence of her functional limitations to meet the definition of “disability” in the long-term disability plan.

The Court of Appeals for the Sixth Circuit overturned LINA’s denial, holding that LINA had acted arbitrarily and capriciously by improperly rejecting the records and opinions from her treating physicians that did limit her functional abilities.   LINA also improperly ignored the doctor hired by the Social Security Administration, who also supported her disability.

LINA improperly relied on their own doctors who a) did not examine the claimant, b) failed to talk to her treating doctors (despite LINA instructing them to do so), and, c) in the case of one of them, gave contradictory findings and misstated the exertional level of the claimant’s job.   The contradictory findings were that her limitations to only working two to three hours a day “appear reasonable,” but also that the medical documentation does not support the inability to work in a full-time sedentary position. Id., at 168-169.   The court found that LINA acted arbitrarily and capriciously in relying on the contradictory report.  As to the second doctor LINA hired, the court explained that doctor “failed to provide a reasonable basis for denying Cooper’s claim and, in fact, compounded the errors in” the first doctor’s report. Id., at 169.

After finding LINA acted arbitrarily and capriciously and overturning LINA’s decision, the court then addressed the recurring issue about what the proper “next step” is. Sometimes courts remand the case back to the insurance company, ordering the insurance company to properly reconsider the evidence, giving the insurance company a second chance to get it right (or, some argue, to write a better denial).  In other cases, the court orders benefits paid through the date of the court decision without a remand.  This case sets out the standard in the Sixth Circuit when courts should order benefits paid:

Plan administrators [referring to the insurance company, LINA, in this case] should not be given two bites at the proverbial apple where the claimant is clearly entitled to disability benefits. They need to properly and fairly evaluate the claim the first time around; otherwise, they take the risk of not getting a second chance, except in cases where the adequacy of claimant’s proof is reasonably debatable.

Cooper v. Life Ins. Co. of N. Am., 486 F.3d 157, 172 (6th Cir. 2007).  In this case, the court found that the claimant’s “physicians never released her to work for more than two to three hours per day.” Id., at 172-173.   The Court of Appeals also found there was “no dispute” that only being able to work two to three hours a day “was insufficient” to allow her to perform the “material duties” of her job as a claims adjuster.  Id., at 173.  The Court of Appeals then explained that, “Given the Plan’s definition of disability, the unequivocal treatment notes from [the claimant’s] treating physicians and from Dr. Johnson regarding Cooper’s extensive physical limitations, and the deficient reports from LINA’s file examiners,” this was a case where benefits should be awarded.

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