Beware of Disability Insurance

US Pharm. 2008;33(2):46-48.

Many pharmacists work for employers who offer disability insurance. Pharmacists who take comfort in the knowledge that they may receive full salary benefits while disabled should consider that the insurance company could well be averse to making payments if there is any doubt as to a claim's legitimacy. A recent case illustrates this point.¹

Facts of the Case
The pharmacist in this case worked for a pharmacy chain for 36 years. In June 2003, he submitted a claim to his disability insurance company for short-term benefits based on chronic back pain, which was approved. In October 2003, he underwent back surgery and then applied for long-term disability benefits. The insurer approved for the period between December 7, 2003, and March 6, 2004. The company also indicated that the long-term benefits would be available for 24 months if the pharmacist were totally disabled from his "own occupation" and that the benefits would continue an additional 24 months if he was totally disabled from any occupation for which he was or became qualified for by education, training, or experience.

In February 2004, the pharmacist continued to experience tingling and numbness in his feet. The surgeon who operated on his back conducted additional tests including an electromyography (EMG) that indicated no evidence of active or chronic lumbosacral radiculopathy, as well as a nerve study that showed evidence of peripheral neuropathy. The doctor advised the pharmacist to continue taking Neurontin (gabapentin) and suggested that he pursue a claim for total disability from his employer.

The disability insurance company sent a disability specialist to interview the pharmacist on !=February 24, 2004. The pharmacist indicated that he could perform chores such as light sweeping, engage in mild exercise, drive short distances, and walk up and down the stairs in his home. The following month the insurance company had a nurse case manager examine the pharmacist's disability status. She reviewed doctors' notes from the office visits, the EMG test, and nerve study results and concluded that the pharmacist's condition did not appear to be sufficiently acute or severe to preclude him from standing or walking. She also determined that he should be capable of functioning without any restrictions or limitations.

In September 2005, the company hired a medical doctor specializing in physical medicine, rehabilitation, and pain management to review the pharmacist's file. This physician determined that the pharmacist was capable of performing full-time work that was primarily sedentary in nature and required occasional lifting up to 10 lb, and maximal lifting of up to 20 lb. He also opined that the pharmacist had permanent restrictions of no significant kneeling, squatting, crouching, or stooping activities. This physician also spoke with the surgeon who performed the back surgery. The surgeon did not say that the pharmacist was incapable of full-time work and, in fact, stated, "It would be a stretch to say that he was incapable of working as a pharmacist." The specialist working for the insurance company concluded that the surgeon's previous opinion that the pharmacist was incapable of full-time work was not reasonable or supported by medical evidence.

The insurer retained a rehabilitation specialist in October 2005 to conduct a labor market survey related to the pharmacist's long-term disability claim. This individual reviewed the file, contacted 15 prospective employers, and identified several positions in the geographic area for which the pharmacist would be qualified, including three pharmacist positions that would accommodate his physical restrictions. The insurer determined that the pharmacist could perform various occupations that were available in his geographic area based on the pharmacist's age, level of education, work history, geographic location, level of function, and predisability salary. Therefore, the company denied the pharmacist's request for continuing long-term benefits under the "own occupation" standard of the policy as of December 6, 2005.

In March 2006, the pharmacist asked the insurer to reconsider its denial of his request for benefits. He informed the company that he was taking Neurontin, which caused grogginess and impaired judgment and prevented him from driving and dispensing medication as a pharmacist. In support of this request, he also submitted letters from three separate physicians. Each opined that he could not work as a pharmacist.

The insurer contacted an independent orthopedist to review the pharmacist's claim and appeal. The orthopedist reviewed the medical records and test results and spoke with one of the pharmacist's physicians, who stated that he believed the pharmacist could reasonably sit for eight hours a day and perform sedentary work. The orthopedist submitted his report in July 2006, concluding that the pharmacist could perform "at least" sedentary work. On July 27, 2006, the insurer upheld its denial of the pharmacist's request for long-!=term disability benefits beyond December 6, 2005.

Lawsuit
In a complaint filed in a federal district court, the pharmacist alleged that the insurance company violated 29 USC ß 1132(a)(1)(B) by wrongfully denying his claim for long-term permanent disability benefits under an insurance policy issued to him through his employer. This statute is part of the Employee Retirement Income Security Act of 1974 (ERISA) and empowers individuals to file claims to recover benefits due under the terms of the plan, to enforce rights under the terms of the plan, or to clarify rights to future benefits under the terms of the plan. The insurance company filed a motion for summary judgment asking the court to dismiss the complaint and terminate the pharmacist's claims for disability benefits. The company argued that the policy issued to the pharmacist grants it discretionary authority to determine eligibility for benefits. It also claimed it had the right to interpret the terms and provisions of the policy as set forth in the terms of the policy:

The plan administrator and other plan fiduciaries have discretionary authority to determine Your [sic] eligibility for and entitlement to benefits under the Policy. The plan administrator has delegated sole discretionary authority to [the insurance company] to determine Your [sic] eligibility for benefits and to interpret the terms and provisions of the plan and any policy issued in connection with it. ²

The company stated that its decision to deny the pharmacist's long-term disability benefit claim was based on overwhelming objective medical evidence including information and reports obtained from the pharmacist's own physicians, opinions of two independent physicians, and the pharmacist's self-reported abilities, all of which demonstrate that the pharmacist is able to perform sedentary work. For reasons not explained in the court's written opinion, the pharmacist did not oppose the summary judgment request.

Decision
After reviewing the complaint, the motion for summary judgment, and the available evidence, the federal district court judge hearing the case determined that the disability insurance policy language at issue grants discretionary authority to the insurer to interpret the policy's terms and provisions and determine eligibility for benefits. The judge indicated that the court could not overturn the insurer's decision to deny the pharmacist's claims for benefits unless the insurer acted in an arbitrary and capricious manner.³ Following the accepted precedence applicable in this jurisdiction, the judge stated that if the insurer "makes an informed judgment and articulates an explanation for it that is satisfactory in light of the relevant facts, i.e., one that makes a ërational connection' between the issue to be decided, the evidence in the case, the text under consideration, and the conclusion reached, then [the insurer's] decision is final" and that the insurer's decision will only be overturned if it is "downright unreasonable." ⁴

The judge noted that the pharmacist did not argue or present any evidence to establish that the insurance company's decision was arbitrary or capricious. The judge stated that the medical reports confirmed the pharmacist's back surgery, resulting pain, and problems standing for extended periods and that the insurer considered those restrictions when evaluating the claim for disability benefits. The absence of any evidence to suggest that the additional limitations should have been, but were not, considered by the insurer in its evaluation of his eligibility for continued disability benefits was also significant. Therefore, the judge concluded that the insurer's determination that the pharmacist was able to perform sedentary work was an informed decision, supported by the medical records and other information in his file and, thus, not arbitrary or capricious.

Analysis
One might think that after working 36 years as a pharmacist, standing for entire shifts of eight to 12 hours or more, bending, reaching, and lifting over a lifetime, and having objective evidence of back pain and a surgery to try to ease his discomfort, that this pharmacist should have caught a break and been entitled to long-term disability insurance benefits. Perhaps the employer might even agree that 36 years of loyal service should qualify a pharmacist for permanent benefits under the circumstances. While it might be reasonable for one to think so, reasonableness is not the standard of liability in such cases. However, the subjective belief of the pharmacist that he could no longer work and the objective fact of not one but three physicians stating he could no longer work as a pharmacist are of little import here. The company said it found at least three jobs that the pharmacist could work at as a pharmacist where his physical limitations could be accommodated. That is what matters.

Like it or not, the system set up to grant insurance benefits like this depends almost entirely on how the insurance company wants to handle certain claims. It gets to act as both the judge and jury, and if you do not like the decision the company makes, you have a right to appeal to the insurer--the same folks who denied your request the first time around!

Note, too, that once you have exhausted your remedies within the company, the courts are not going to be of much assistance. In this case, the judge would only overturn the insurer's decision to deny the pharmacist's long-term disability benefits on a finding that the company acted arbitrarily and capriciously. That is an awfully high standard. It is not a mere preponderance of the evidence. No, it is the "absence of a rational connection between the facts found and the choice made." ⁵ To put it another way, it is an action that is not based upon the consideration of relevant factors, an abuse of discretion, or lack of accordance with sound legal process.⁶ Although that might sound like an objective way to review decisions, there is, in fact, no set standard as to what counts as arbitrary or capricious. What appears to be arbitrary to one decision maker might be perfectly reasonable to another considering the same facts and circumstances.

What matters more is that the insurance company hired by the pharmacist's employer is a for-profit corporation that answers not so much to its clients as to its investors. It does not exist to do the right thing or even the reasonable thing. It exists to make money. That in and of itself is not a bad or evil thing. We all want to make money. That is why we go to work. That is why we have employers that need pharmacists to conduct the business of the pharmacy. But make no mistake--the insurance company is not some benign benefactor eagerly waiting to pay out on its policies. Remember to get your ducks in a row before making any insurance claim.

REFERENCES

1. Laramore v. Hartford Life Group
Insurance Co., Slip Op No. 3:06-CV-732
RM (December 18, 2007), 2007 US Dist. Lexis 93039.

2. Policy No. SR-83130668, p. 21.

3. Semien v. Life Ins. Co. of North America, 436 F3d 805, 810 (7th Cir 2006).

4. Exbom v. Central States SE & SW Areas Health & Welfare Fund, 900 F2d 1138, 1143 (7th Cir 1990); see also Tegtmeier v. Midwest Operating Engineers Pension Trust Fund, 390 F3d 1040, 1045 (7th Cir 2004).

5. Natural Resources v. U.S., 966 F2d 1292, 97 (9th Cir 1992).

6. 5 USC 706(2)(A) (1988). Available at: www.lectlaw.com/def/a064.htm. Accessed
January 13, 2008.

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