The US District Court for the Eastern District of Michigan recently determined that LTD Insurer-MetLife wrongfully denied a claimant’s request for LTD benefits.

SMDA was retained by the claimant after her administrative remedies had been exhausted and suit had been filed. The client had been employed as an Audit Manager for Deloitte LLP when she developed a condition which caused orthostatic intolerance which resulted in unpredictable and intermittent dizziness and fainting spells. Her own doctors said that when these episodes occurred she must be able to lie down during the day.

MetLife obtained a paid paper review by an outside physician who determined that the Insured “may need to sit or lie down as needed.” Relying on this recommendation, MetLife’s in-house vocational reviewer then concluded that the claimant was capable of performing the duties of her own occupation because her employer would allow her to “sit as needed.”

SMDA recently convinced Long Term Disability Insurer Cigna to reverse its original claims denial decision by filing a comprehensive administrative appeal.

SMDA was retained by a very nice client who was having significant mental health problems that were significantly aggravated by stress. The client retained our firm after Cigna rejected her claim for LTD benefits but prior to the expiration of the 180 day period she had to complete her administrative appeal. The ability to appeal the claims denial decision within 180 days is required by the ERISA statute and regulations.

Upon consideration of the administrative appeal Cigna overturned the claims denial decision and retroactively reinstated the clients LTD benefits. The client received a lump sum for the past due benefits and will continue to receive monthly benefit checks so long as she continues to meet the policy’s definition of disability during the 24 month pay period for mental health problems.

SMDA recently convinced Long Term Disability Insurer, Lincoln Financial Group, to reverse its decision to deny Disability Benefit payments to a Physician.

Our client had developed a degenerative orthopedic condition that resulted in several joint replacement surgeries. Lincoln Financial voluntarily paid Total Disability benefits while the client was recovering from each of the surgeries.

However, when the doctor returned to work he was only able to resume a part time schedule. Lincoln Financial rejected the physicians claim for additional benefits asserting that he was no longer Totally Disabled. However, upon examination of the Plan document it became apparent that the policy provided for Partial Disability benefits. SMDA convinced Lincoln to reverse its claims denial decision by filing a comprehensive administrative appeal analyzing the Plan language as well as the clients ongoing restrictions and limitations.

SMDA recently convinced an LTD insurer to overturn its claims denial decision by filing a comprehensive administrative appeal on behalf of our client. SMDA’s client had filed a claim for disability benefits as a result of serious depression and anxiety. The LTD insurance company originally denied the claim contending that since the claimant was still able to care for her profoundly disabled teenager she was not entitled to disability benefits.

SMDA successfully pointed out the fallacy of this argument convincing the insurer to retroactively reinstate the disability benefit claim and put the client back on claim.

The Michigan Department of Insurance and Financial Services released its list of complaint ratios for 2013 recently. Leading the pack by a wide margin, with 101 complaints, State Farm Mutual Auto Insurance Company had more than twice the volume of complaints than its nearest competitor. Although, to be fair, if you added up all of the complaints against Allstate and related entities it is pretty close. By my count there were (14+27+7+46=94) complaints against Allstate and Esurance.

These results come as no surprise as our firm frequently sees claims denied by each of these companies.

Lincoln National Life recently overturned its decision to deny an SMDA client’s claim after we filed an administrative appeal of Lincoln’s claim’s denial decision.

Our client had worked for FoMoCo for more than a decade when the facility where she worked was sold as part of a corporate restructuring. She had ongoing health issues which had previously resulted in a leave of absence and a claim for LTD benefits which had been approved and paid by the prior LTD carrier.

After the sale occurred she returned to work for a period of time. During this time the new employer changed disability insurance carriers to Lincoln National Life. When the client experienced a recurrence of her prior problem she filed a claim for benefits with Lincoln National.

SMDA prepared a comprehensive administrative appeal on behalf of a gentleman who had been forced to stop working as a press operator as a result of ongoing orthopedic problems with his neck. He had underwent cervical discectomy surgery as a result of his serious neck pain and radiculopathy. The surgery was only partially successful leaving him with residual pain and problems.

Despite his ongoing problems he attempted to return to work. He was only able to work for a brief period of time before his activity significantly aggravated his pain. Cigna originally denied his claim for benefits after a paper review which determined that he could perform the duties of his medium demand occupation.

SMDA filed an administrative appeal of this denial decision explaining in detail the various flaws in the conclusions of the paper reviewer. Cigna agreed and overturned the claims denial decision. The clients LTD benefits will be retroactively reinstated and he will be placed on claim.

The 6th Circuit recently granted a request for en banc review of the Rochow v Life Insurance of North America case where a three judge panel determined that the claimant could recover for unjust enrichment the profits the insurance company had earned on the wrongfully denied LTD benefits.

As most ERISA practitioners recognize this case could be a significant positive development for many ERISA claimants as it would provide a significant additional incentive for LTD insurance companies to review claims fairly. By forcing an insurer to disgorge the profits it has earned from the retention of wrongfully denied benefits instead of just paying the benefits that should have been paid in the first place, the Court has potentially removed ERISA’s inherent incentive for disability insurer’s to deny otherwise meritorious claims with impugnity.

Plaintiff’s will however have to wait for the en banc decision of the circuit court as:

As a follow up to the last post, the US Supreme Court sided with the Hartford Life and Accident Insurance Company enforcing its contractual limitations period. In Heimeshoff v Hartford Life and Acc. Insur. Co., ______S.Ct. _______ (2013). the Court concluded that:

Because proof of loss is due before a plan’s administrative process can be completed, the administrative exhaustion requirement will, in practice, shorten the contractual limitations period. The question presented is whether the contractual limitations provision is enforceable. We hold that it is.

In other words, even though a claimant is precluded from filing suit before they have exhausted their administrative remedies, the clock starts ticking on the time they have to file a lawsuit. The practical effect of this ruling is that many LTD claimants will have a (sometimes markedly) shorter period of time to file a lawsuit after the claims denial decision is finally issued.

The US Supreme Court heard oral arguments yesterday in the Heimeshoff v Hartford Life case. The question considered by the Court was when does the statute of limitations start to run? Ms. Heimeshoff (and the Department of Labor who filed an amicus brief) argued that the limitations period should not commence until after her LTD claim was denied because she could not bring suit until she had exhausted her administrative remedies.

This case presents an interesting issue of whether an insurance company has the contractual right to require the statute of limitations to start running well before a claimant has the ability to bring a lawsuit. It would seem that issues of fundamental fairness would dictate that a limitations period cannot start to run before a claimant has the ability to seek court review.
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