Legal Summary: Molodetskiy v. Nortel Networks Short-Term & Long-Term Disability Plan
594 F. Supp. 2d 870 (M.D. Tenn. 2009)
Our client had disability coverage through his employer, and after almost three years of employment, he had to stop working due to multiple disabling conditions. Molodetskiy v. Nortel Networks Short-Term & Long-Term Disability Plan, 594 F. Supp. 2d 870, 872-75 (M.D. Tenn. 2009). He applied for short term disability benefits and received payments for twenty-six weeks from his employer’s plan. Id. at 874.
When his short-term benefits expired, our client’s employer started paying him long-term disability benefits. Id. at 875. But the insurance plan used one standard of disability for before and after the first 18-months of paying disability benefits, id. at 872-73, so when the first 18-months were almost over, the employer reassessed our client’s claim, employing its own reviewer to decide if it thought our client was still sufficiently disabled, id. at 876-77.
The plan decided, relying upon only certain portions of its reviewer’s report, that our client was no longer sufficiently disabled, and so it terminated our client’s benefits. Id. at 877. The plan made that decision even though all throughout its evaluations of our client’s claim, he was undergoing treatment after treatment, including surgery, therapy, injections, and testing by multiple doctors. See id. at 874-79. Given that situation, we challenged the plan administrator’s explanations and final decision against our client, requesting that the plan reconsider. Id. at 880.
The plan denied our request, because it believed that its reviewers’ reports suggested that our client could still work. Id. at 882-83. We appealed the denial decision again, and this time, per the structure of the plan’s appeal process, our appeal went to the employer’s review committee. Id. at 873, 883-84. In our appeal materials, we pointed out that the denial decision ignored substantial evidence of our client’s disability, but the review committee reaffirmed the denial decision. Id. at 884.
As a result, we sued in court under the Employee Retirement Income Security Act (ERISA), arguing that the decision to deny our client long-term disability benefits was arbitrary and capricious. Id. The reviewing court ultimately agreed with us and accordingly, ordered the employer to provide our client with another review process. Id. at 889.
In its analysis, the reviewing court first highlighted the existence of multiple conflicts of interest on the part of our client’s employer and the plan. Id. at 855. The first conflict was that our client’s employer funded the plan while also making final appeal decisions, thus introducing the risk that it would be biased against paying claims since it funds the plan itself. Id. The second conflict was that the plan administrator “retained and paid” consulting medical reviewers, thus raising the risk that it selected reviewers who would be biased against claimants. Id. On top of these conflicts, the court pointed out that because our client was in his thirties, the employer would be incentivized not to approve a claim for benefits since it could last for many years. Id.
Next, the court explained why the denial decision was arbitrary and capricious by providing multiple examples of how the decision “was not the result of a principled reasoning process, nor was it supported by substantial evidence.” Id. at 885-86. First, our client provided “an anatomical explanation for at least part of his subjective complaints of pain,” including statements from his treating pain management doctor that described our client’s significant limitations based on objective testing. See id. at 886. The court noted that the plan administrator initially believed our client’s treating pain management doctor when it approved benefits, but then later when it decided to terminate his benefits, the plan administrator arbitrarily refused to consider the entirety of our client’s doctor’s form supporting his disability. See id. at 886-87.
More problems occurred during the plan administrator’s appeal process. Id. at 887. The plan administrator relied upon a reviewing physician to give an opinion regarding our client’s disability status. Id. When rendering his opinion, their reviewer claimed that he had reviewed documents from our client’s treating pain management doctor, which included documents clearly describing limitations to our client’s ability to sit, stand, and walk. See id. Despite this, the reviewer concluded that our client had “no restrictions to his ability to sit, stand, walk, lift, reach, or carry” and could thus perform his prior job. Id. That conclusion, according to the court, “was not consistent with the medical evidence.” Id. The employer’s review committee also relied upon this reviewing physician, so like the plan administrator, its denial decision was also arbitrary and capricious. Id. at 888.
Furthermore, this same reviewer “questioned the credibility of [our client’s] complaints of pain without the benefit of an examination.” Id. The court found this troubling because the plan had the right to get an independent medical examination of our client, but did not exercise that right even though the exam could have “provided information to [the plan administrator] about the extent of [our client’s] pain.” Id. at 887-88.
For these reasons, the court had concerns with “the integrity of the decision-making process utilized to terminate long-term disability benefits,” and thus concluded that “the decision to terminate benefits was not the result of a deliberative, principled reasoning process.” Id. at 888-89. Rather, the decision “ignored relevant medical information in [our client’s] favor without explaining rationally why that information must be discounted.” Id. at 889. Thus, the court concluded that the employer had to provide our client another review process, but this time, using fair and reasoned decision-making. See id.