Legal Summary: Neaton v. Hartford Life & Accident Insurance Company

517 F. App’x 475 (6th Cir. 2013)

Our client received long term disability coverage through his employer, and Hartford served as the plan administrator. Neaton v. Hartford Life & Accident Ins. Co., 517 F. App’x 475, 477 (6th Cir. 2013). After 32 years of service to his employer, our client was forced to stop working due to the worsening of a progressive childhood condition. Id. at 476-77. He thus requested disability benefits under his Hartford policy. Id. at 477.

At the time, benefits were clearly warranted. Our client was regularly undergoing painful treatments and surgeries that required multiple days to multiple weeks of recovery. Id. at 477-78. The physician treating our client agreed that his condition rendered him unable to work in his current position and provided a letter to Hartford explaining why. Id. at 477. One of the main reasons was that our client’s physical work environment exacerbated his condition and also made recovery more difficult following treatments. Id.

Hartford initially recognized that our client qualified for benefits. Id. at 478. It approved his claim, specifically noting that our client’s inability to function in his current work environment was “reasonable” given his condition, and also, that our client’s treating physician’s “limitations and restrictions were ‘supported.’” Id.

A few months later, our client’s employer “informed Hartford it was willing to consider whether [our client] could return to work with appropriate accommodations,” so Hartford contacted our client and his treating physician to check his status. Id. Our client explained the progressing severity of his condition since stopping work and the increasing pain he was experiencing from having to undergo intensive surgeries more frequently. Id. at 478-79. Our client’s physician likewise described the increasing severity of his condition. The physician explained that he had been treating our client frequently due to the worsening of our client’s condition and that our client could do his job from home, but only if a work environment could be established that would not exacerbate the condition between treatments. Id. at 478.

Then, our client’s employer notified Hartford that it believed his job could be performed from home. Id. at 479. At about that time, Hartford also requested occupational reports and a peer review of our client’s doctor’s medical opinion. Id. The peer-reviewing physician concluded that the work environment was having only a minimal impact on our client’s condition and that he could continue to work in the environment with only minor precautionary measures. Id. Our client’s treating physician disagreed with this assessment, explaining that the peer-reviewing physician did not understand the specifics of our client’s exact condition and underestimated the impact of the work environment on his condition. Id. In response, the peer-reviewing physician stated that our client’s doctor was “factually correct,” but “practically incorrect” on his views regarding the work environment’s impact on our client. Id.

A Hartford employee decided to credit the opinion of the peer-reviewing physician, who had never examined our client in-person, over our client’s treating physician and thus terminated our client’s benefits. Id. at 480. Our client appealed, and then, Hartford submitted our client’s file to another physician for review. Id. This physician, unlike Hartford’s first physician, agreed with our client’s treating doctor. Id. Particularly, Hartford’s second physician agreed that our client would indeed require more surgeries and “a week off would be reasonable to enable adequate healing.” Id. Despite the apparent agreement between our client’s physician and Hartford’s second reviewing physician, Hartford decided to further question their second physician regarding recovery time, and she responded that if our client was working from home the recovery time could be reduced to three or four days. Id.

Based on this assessment and additional occupational research, Hartford upheld its denial decision. Id. Its decision was heavily based upon estimations of how much time off our client would need for recovery, which were calculated by experts who had never examined him in-person. See id. at 480-81. Hartford concluded, using those estimates, that our client’s projected absenteeism, in its view, would not render him unable to perform his job. Id.

We sued Hartford, claiming that its decision was arbitrary and capricious. Id. at 481. The district court agreed with Hartford, so we appealed. Id. at 476. We argued that the district court’s decision was flawed in multiple ways, and the court of appeals agreed with us. Id.

To begin, the court of appeals first noted that because it was reviewing a lower court’s decision, the appropriate legal standard of review was a de novo standard, which does not require deference to the lower court’s opinion. Id. at 481. Applying this standard, the court concluded that Hartford’s determinations regarding our client’s recovery time, the frequency of his surgeries, and his expected level of absenteeism, were all unreasonable. Id. at 482-88.

Regarding our client’s recovery time, Hartford’s decision appeared particularly unreasonable. It adopted the view of a reviewing physician who had never examined our client but who nevertheless concluded that recovery would only take three or four days if our client was working from home, which our client had never done. Id. at 482. This was unreasonable, according to the court, because our client and his treating physician both stated that it would generally take a week or more to recover, and Hartford’s second reviewing physician also initially stated that a week of recovery time was reasonable. Id.

Choosing to rely on a single non-examining physician’s estimate was unreasonable because recovery time depends upon a patient’s pain, which is difficult to assess without examining the patient and also requires “a credibility determination” regarding the source of the estimate. Id. (citing Smith v. Cont’l Cas. Co., 450 F.3d 253, 263-64 (6th Cir. 2006); Calvert v. Firstar Fin. Inc., 409 F.3d 286, 295 (6th Cir. 2005)). Hartford tried to argue that it did not disregard our client’s treating physician, because our client’s physician never gave an estimate of the number of recovery days that would be required if our client worked from home. Id. at 483. Although technically true, the court explained that Hartford’s decision was still unreasonable, because it should have gotten such an estimate from our client’s reviewing physician instead of relying solely on a non-examining physician’s opinion. Id.

Next, Hartford’s determination regarding the frequency of our client’s required surgeries was also unreasonable, because it was based on a flawed estimate provided by Hartford’s vocational expert. Id. at 483-85. The expert projected the frequency of our client’s required surgeries by using the average number of our client’s surgeries over the previous couple of years (including a period of time before he was disabled), which did not make sense because our client’s condition was worsening with time, thus requiring increasingly more surgeries. Id. The expert also did not count within the average a type of more minor surgery that our client frequently underwent but that was still quite painful and required multiple days of recovery. Id. at 484.

We explained, and the court acknowledged, that if the expert had done the calculations properly, our client’s likely rate of absenteeism would be much higher than Hartford claimed. Id. Hartford attempted to argue that its expert included the time period before our client was disabled in the average in order to capture a more complete picture of our client’s condition, but the court rejected this argument. Id. Our client requested benefits due to the worsening of his condition, which made him unable to continue work, so looking at the time before his condition worsened to the point of a disability was wrong, explained the court. See id.

Based on that factual analysis, the court applied the law that governs reliance upon vocational expert opinions: “A vocational expert’s opinion…is only substantial evidence to the extent that the vocational expert had a complete, accurate understanding of the claimant’s restrictions and limitations.” Id. at 485 (citing Felisky v. Bowen, 35 F.3d 1027, 1036 (6th Cir. 1994)). Therefore, given the insufficiency of the calculations in the expert’s report, the court held that the report could not provide the requisite support for Hartford’s denial decision. Id. at 485.

Lastly, Hartford’s reliance on “an in-house vocational specialist to determine whether [our client’s] rate of absenteeism could be accommodated” was unreasonable. Id. In ERISA cases, the insurance company is required, as a fiduciary, “to evaluate its hired expert’s opinion and to make certain that reliance on the expert’s advice is justified under the circumstances.” Id. (citing Gregg v. Transp. Workers of Am. Int’l, 343 F.3d 833, 841 (6th Cir. 2003)). The court found that Hartford failed in this regard, because its expert found that our client’s absenteeism could be accommodated by his employer without citing any evidence or data, yet Hartford relied upon this opinion to terminate our client’s benefits. Id. at 485-87. The court further faulted Hartford and its expert for neither contacting our client’s employer to inquire about acceptable rates of absenteeism, nor even taking the time to reference widely-available Bureau of Labor Statistics to try to support its denial decision. Id. at 486-87.

For those reasons, the court concluded that Hartford acted arbitrarily and capriciously when it terminated our client’s benefits. Id. at 487. As a result, the court had the power to either reward benefits or remand the case back to the insurance company for a second review, id. at 487 (citing Elliott v. Metro. Life Ins. Co., 473 F.3d 613, 621 (6th Cir. 2006)), and here, the court decided that reinstatement was warranted. Id. at 487. It referenced precedent stating that “retroactive award is usually proper when [the] claimant had benefits and lost them,” as happened here with our client. Id. at 488 (quoting Elliott, 473 F.3d at 622). Thus, Hartford was required to continue paying our client benefits and also to pay the amount of benefits “wrongfully withheld” while we litigated the case. Id. at 488.