Bailey v. United of Omaha Life Insurance Company

938 F. Supp. 2d 736 (W.D. Tenn. 2013).

After a year of increasing back pain, Mrs. Bailey had to leave her job as a legal assistant.  Bailey v. United of Omaha Life Ins. Co., 938 F. Supp. 2d 736, 739 (W.D. Tenn. 2013).  United of Omaha paid Mrs. Bailey short-term disability benefits for the maximum amount of time but denied her claim for long-term benefits. Id.  To qualify for short-term benefits, a claimant had to be unable to perform her “Regular Job”, the occupation the claimant was routinely performing when she became disabled. Id.  However, to qualify for long-term benefits, the claimant had to show that she could not perform her “Regular Occupation”.  “Regular Occupation” meant a similar position based on job description and requirements but not the exact job the claimant had before disability. Id.  Mrs. Bailey’s employer required her to lift files that weighed up to twenty-five pounds. Id. at 743.  Because Mrs. Bailey could lift no more than twenty pounds, she was unable to perform her Regular Job and thus qualified for short-term benefits. Id. This did not, however, automatically qualify Mrs. Bailey for long-term benefits, since Omaha enforced stricter requirements for long-term benefits.

After Mrs. Bailey first applied for long-term benefits, Omaha sent her file to Nurse Rosenstock for review. Id.  Rosenstock reported that the restrictions and limitations imposed by Mrs. Bailey’s treating physicians were unsupported and that Mrs. Bailey could perform the duties of her occupation.  Based on this report, Omaha denied Mrs. Bailey’s claim. Id.  After she appealed, Omaha sent Mrs. Bailey’s file to another case management nurse for review. Id. at 744.  This reviewer, Beumer-Anderson, found that Mrs. Bailey had only been disabled for a limited time period while she was recovering from back period.  Omaha then denied Mrs. Bailey’s appeal, claiming that her complaints of severe back pain were “inconsistent with the physical examinations and the medical evidence.” Id.

We then filed suit for the court to consider whether Mrs. Bailey was entitled to long-term benefits.  Since the plan gave Omaha discretion to interpret the plan requirements, the court reviewed Omaha’s actions under the arbitrary and capricious standard of review. Id. at 744-45 (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Perez v. Aetna Life Ins. Co., 150 F.3d 555 (6th Cir. 1998)).  However, since Omaha both determines eligibility and pays benefits, it has a conflict of interest such that its decision must be viewed “with some skepticism.” Id. at 745-46. (citing Helfman v. GE Grp. Life Assurance Co., 573 F.3d 383, 392 (6th Cir. 2009); Black & Decker Disability Plan v. Nord, 538 U.S. 822, 832 (2003); Moon v. Unum Provident Corp., 405 F.3d 373, 382 (6th Cir. 2005)).

The court held that Omaha’s reliance on file reviewers who did not physically exam Mrs. Bailey was arbitrary and capricious under the circumstances. Id. at 746-49.  Although there is nothing inherently improper about using file reviewing experts to evaluate claims, sole reliance on file reviews with no physical examinations can “raise questions about the thoroughness and accuracy of the benefits determination.” Id. at 747 (quoting Calvert v. Firstar Fin., Inc., 409 F.3d 2866, 295-96 (6th Cir. 2005); citing Helfman, 573 F.3d at 393)).  Here, the plan gave Omaha the right to conduct a physical examination, but Omaha did not do so. Id.  The court held that Omaha’s reliance on the file reviews alone was questionable considering Omaha’s conflict of interest. Id.

Reliance on these file reviews was additionally questionable given the content of the reviews. Id.  Dr. Kalen’s report included only conclusory remarks not supported by evidence. Id.  For instance, Dr. Kalen, who had performed a file review for Omaha’s consideration of Mrs. Bailey’s claim for short-term benefits, declared that Mrs. Bailey “did not have any physical or functional impairments that would have prevented” her from performing her occupation but provided no evidence or explanation of this conclusion. Id.  Similarly, Rosenstock asserted that there was insufficient evidence to support Mrs. Bailey’s restrictions and limitations but did not describe her reasoning for this conclusion or reconcile her report with the contradicting evidence from Mrs. Bailey’s treating physicians. Id. at 748.  Beumer-Anderson reported that Mrs. Bailey’s pain was “inconsistent with physical examinations” but in the same report acknowledged that neither she nor any of Omaha’s file reviewers had conducted physical examinations. Id.  The court held that reliance on these reports demonstrates that Omaha had not conducted a “deliberative and principled reasoning process”. Id.

Finally, the court remanded Mrs. Bailey’s claim to Omaha to conduct a proper evaluation of its merits. Id. at 749 (citing Elliot v. Metro. Life. Ins. Co., 473 F. 3d 613, 622 (6th Cir. 2006)(When “the problem is with the integrity of [the plan’s] decision-making process…the appropriate remedy generally is remand to the plan administrator.”)).