Legal Summary: Williams v. Reliance Standard Life Insurance Company

Williams v. Reliance Standard Life Insurance Company
No. 3:20-CV-4269 (E.D. Tenn. 2021) 

Our client worked as a dock supervisor for Old Dominion, which required him to “remain standing and/or walking for a minimum of 8 hours per day, five to seven days  per week,” “walk on non-forgiving surfaces such as concrete, wood, and metal and sometimes on wet and slippery surfaces,” “bend, twist, climb, and move about easily in small spaces,” “lift  objects weighing in excess of 100 lbs.,” and “load and unload full trailers of freight weighing as much as 50,000 lbs.” (Id. at 361.)

After suffering an injury, he stopped working for Old Dominion. He then applied for and received long-term disability benefits from Reliance Standard Life Insurance. Reliance terminated his benefits after four months, claiming that he did not qualify as disabled for “any occupation” under the policy.

He appealed the termination of his benefits and included an independent medical examination from an orthopedic surgeon, Dr. William E. Kennedy, who opined that he was not capable of full-time sedentary work. (Doc. 14-2, at 209–17.)

Reliance’s long term disability policy defines “Total Disability” to mean that, as a result of injury or sickness: (1) during the Elimination Period and for the first 36 months for which a Monthly Benefit is payable, an Insured cannot perform the material duties of his/her Regular Occupation; (2) After a Monthly Benefit has been paid for 36 months, an insured cannot  perform the material duties of Any Occupation. The insured is considered Totally Disabled if, due to an Injury or Sickness, he or she is capable of only performing the material duties on a part-time basis or part of the material duties on a full time basis.

Reliance upheld its denial, claiming that our client could perform full-time sedentary work. This conclusion was based on the opinion of a clinical consultant who reviewed his file. After an independent medical examination, Dr. Kennedy concluded that our client could perform “sedentary work only part time.”

After we appealed the termination of our client’s benefits, Reliance retained Dr. Arash Yaghoobian, a third-party vendor, to secure an independent medical review of our client’s file. Dr. Yaghoobian, agreed with Dr. Kennedy on most diagnoses, but disagreed that our client was capable of only performing part time. However, Dr. Yaghoobian provided only one sentence to explain his conclusion: “I respectfully disagree with part-time recommendation only, as the claimant has no indication to alter work hours.”

We argued that Reliance’s denial of long-term disability benefits was arbitrary and capricious because Reliance: (1) had a conflict of interest; (2) unreasonably ignored the opinions of our client’s treating physicians; (3) failed to explain why it credited the file-reviewing doctor, Dr.  Yaghoobian, over Dr. Kennedy; and (4) disregarded our client’s award of social security disability benefits.

Reliance had a conflict of interest due to its position as the administrator and payor of the policy in question. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 112–15 (2008). The Sixth Circuit has observed that plan administrators have a clear incentive to contract with individuals who are inclined to find in their favor, and that possible conflict of interest should be considered when determining whether a plan administrator’s decision is arbitrary and capricious. See Calvert v. Firstar Fin., Inc., 409 F.3d 286, 292 (6th Cir. 2005). The court determined that, because Reliance relied on the findings of its file-reviewing retained physician in denying our client’s benefits, this conflict of interest supported our argument that Reliance acted arbitrarily and capriciously.

In any given disability case on “arbitrary and capricious” review, the court must determine whether a plan can offer a reasoned explanation, based on the evidence provided, for its judgment that a claimant was not “disabled” within the plan’s terms. Elliott v. Metro. Life  Ins. Co., 473 F.3d 613, 617 (6th Cir. 2006).

The plan administrator must “give reasons for adopting an alternative opinion” from another physician. Shaw v. AT&T Ben. Umbrella Plan No. 1, 795 F.3d 538, 547 (6th Cir. 2015.) A plan administrator cannot “arbitrarily refuse to credit a claimant’s reliable evidence” in drawing its conclusion concerning rewarding benefits. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 825 (2003)

Reliance did not provide its reasons for crediting Dr. Yaghoobian and adopting his alternative opinion beyond saying that “there is no medical documentation to support” Dr. Kennedy’s conclusion. The court found this to support a finding that Reliance’s denial of benefits to our client was arbitrary and capricious.

The court also examined our client’s Social Security disability benefits. The Sixth Circuit has held that if the plan administrator (1) encourages the applicant to apply for Social Security  disability payments; (2) financially benefits from the applicant’s receipt of Social Security and then (3) fails to explain why it is taking a position different from the SSA on the question of disability, the reviewing court should weigh this in favor of a finding that the decision was arbitrary or capricious. Bennett v. Kemper Nat’l Servs., Inc., 514 F.3d 547, 554 (6th Cir. 2008) (citing Glenn v. MetLife, 461 F.3d 660, 669 (6th Cir. 2006)).

Reliance encouraged our client to apply for Social Security disability payments and undoubtedly benefited from his qualifying for Social Security disability benefits as it reduced the cost of his long term disability benefit payments from Reliance.

Our client was approved for Social Security benefits, but Reliance still denied his claim. However, Reliance never requested information from Social Security prior to terminating his benefits, so it did not see what was reviewed by the Social Security Administration (SSA), even though our client had authorized Reliance to do so. The court reasoned that Reliance could not possibly explain “why it is taking a position different from the SSA on the question of disability” if it did not know what the SSA reviewed in reaching its determination of disability. See Calhoun v. Life Ins. Co. of N. Am., 665 Fed. App’x 485, 493 (6th Cir. 2016) (citing Bennett, 514 F.3d at 533 n.2)

After reviewing these factors, the court ruled that Reliance acted arbitrarily and capriciously in denying our client benefits. The court remanded the matter to Reliance for a “full and fair review” of his claim.