Case Name: Maiden v. Aetna Life Insurance Company and Evonik Corporation Long Term Disability Group Policy
Court: United States District Court for the Northern District of Indiana, South Bend Division
Type of Claim: Long Term Disability
Insurance Company: Aetna Life Insurance Company (hereinafter “Aetna”)
Claimant’s Employer: Evonik Corporation
Claimant’s Occupation / Job Position: Lab Technician
Disabilities: Spinal stenosis, chronic obstructive pulmonary disease, arthritis, diabetes, sleep apnea, and a bipolar disorder.
Definition of Disability: The long term disability plan provides the following test of disability:
“In the first 24 months of your disability you meet the test of disability on any day that:
• You cannot perform the material duties of your own occupation solely because of an illness, injury or disabling pregnancy-related [sic]; and
• Your work earnings are 80% or less of your adjusted predisability earnings.”
Benefits Paid? Aetna denied the plaintiff’s initial application and appeal.
Procedural history: After exhausting the administrative appeals, the claimant had to file an ERISA lawsuit against Aetna.
Standard of Review: Aetna had the discretionary authority to determine whether and to what extent eligible employees and beneficiaries are entitled to benefits. As a result, the Court’s review of Aetna’s denial of LTD and LWOP benefits was under the arbitrary and capricious standard.”
Issues: (1) Whether the “independent” medical consultants hired by Aetna were really “independent”. (2) Whether Aetna sufficiently explained why it ignored or discounted medical evidence the claimant submitted in support of his claim. (3) Aetna’s failure to consider the compound effect of Maiden’s physical and psychological problems on his ability to work. (4) “Because both of Aetna’s consultants essentially rejected the opinions of Maiden’s treating physicians, the question is whether they provided “a reasoned basis” for doing so. (5) The timing of Aetna’s notice of what evidence it viewed as needed but missing from the record. (6) The weight given to Aetna’s own physician reviewers as opposed to the claimant’s treating physicians. (7) The appropriate review of subjective complaints, such as back pain.
Holdings: (1)The Court acknowledged the reality that many medical consultants hired by insurance companies are not really independent at all:
In response [to the claimant’s submission of evidence in support of the claim], Aetna provided Maiden’s file to two “independent” consultants. I put quotations marks around the word “independent” because one might reasonably wonder just how independent the reviewers— Dr. Malcolm McPhee and Dr. Leonard Schnur—really are. Their bread has been buttered by Aetna before; each of them has been hired by Aetna multiple times to conduct these kinds of disability reviews.”
(2) Under ERISA, administrators must notify participants of claim denials in writing and “in a manner calculated to be understood by the participant” and give those whose claims have been denied “a reasonable opportunity . . . for a full and fair review.” 29 U.S.C. § 1133. In the Seventh Circuit, the initial claim denial must: (1) include the specific reasons for the denial; (2) specifically refer to the pertinent plan provisions on which the denial was based; (3) describe additional materials or information needed to perfect the claim and explain why such information is necessary; and (4) provide the internal appeal procedures and state that the participant has a right to bring a civil action if the denial is affirmed after internal review. In this claim, the Court found that Aetna’s notices to the claimant did not substantially comply with ERISA’s disclosure requirements: “To begin with, the letter did not include the required reference to the provisions of the plan requiring claimants to be under a doctor’s care. … What’s more, the initial letter failed to substantially comply with the regulations because it did not describe additional information needed to perfect the claim and explain why that information was necessary.” The Court held:
“Aetna was required to give Maiden adequate information about what Aetna had reviewed and what evidence it viewed as needed but missing in writing. While Aetna’s April 2014 letter laid out in more detail than ever the reasons for Aetna’s denial of the claim, it came too late in the game to afford Maiden a full and fair opportunity for review. (citations omitted). And that’s what the regulations require: that claimants have an opportunity for a full and fair review of claim denials by “an appropriate named fiduciary of the plan.” See 29 C.F.R. § 2560.503-1(h). The problem in this case is that the letter was issued after Aetna had completed its internal review, and Maiden was not given an opportunity to address it prior to Aetna’s final denial. (citation omitted). Aetna’s failure to provide Maiden with adequate information about why his claim had been denied before Aetna’s internal review prevented Maiden from receiving a full and fair opportunity for review by Aetna. For this reason alone, Maiden is entitled to summary judgment.”
(3) “Aetna should have reviewed the compound effect of Maiden’s physical impairments and his psychiatric issues, and its failure to do so was an arbitrary and capricious exercise of Aetna’s discretion.”
(4) “In summary, the problems in Aetna’s review of Maiden’s evidence—inexplicably disregarding the opinions of treating physicians and ignoring evidence supporting disability while cherry-picking evidence to support a denial—lend an unmistakable hue of capriciousness to Aetna’s review. When you add to the pile the fact that Aetna used consultants with an incentive to affirm and itself had a structural conflict of interest and would have to pay Maiden any LTD benefits awarded, it’s clear that Aetna abused its discretion, and Maiden must be given another opportunity to prove his claim.”
(5) “Aetna was required to give Maiden adequate information about what Aetna had reviewed and what evidence it viewed as needed but missing in writing. While Aetna’s April 2014 letter laid out in more detail than ever the reasons for Aetna’s denial of the claim, it came too late in the game to afford Maiden a full and fair opportunity for review. And that’s what the regulations require: that claimants have an opportunity for a full and fair review of claim denials by “an appropriate named fiduciary of the plan.” See 29 C.F.R. § 2560.503-1(h). The problem in this case is that the letter was issued after Aetna had completed its internal review, and Maiden was not given an opportunity to address it prior to Aetna’s final denial. See Halpin, 962 F.2d at 694 (affirming entry of summary judgment for claimant where administrator’s correspondence contained “nothing . . . which in any adequate way identified the items considered by the administrator” and did not provide “adequate disclosure of reasons for the initial denial”). Aetna’s failure to provide Maiden with adequate information about why his claim had been denied before Aetna’s internal review prevented Maiden from receiving a full and fair opportunity for review by Aetna. For this reason alone, Maiden is entitled to summary judgment.”
(6) “Aetna argues that there was substantial evidence upon which to base its denial and cites to the written reports of its consulting reviewers. Maiden disagrees and claims that Aetna improperly gave more weight to its own reviewers, unfairly discredited Maiden’s supporting evidence, and cherry-picked evidence to support its denial of Maiden’s claim. Because both of Aetna’s consultants essentially rejected the opinions of Maiden’s treating physicians, the question is whether they provided “a reasoned basis” for doing so. See Holmstrom, 615 F.3d at 775 (“Administrators may not arbitrarily refuse to credit [the] opinions of a treating physician” but are entitled to disagree with such opinions “if there [is] evidence in the record providing a reasoned basis for doing so.”); Love v. Nat’l City Corp. Welfare Benefits Plan, 574 F.3d 392, 398 (7th Cir. 2009) (“While plan administrators do not owe any special deference to the opinions of treating physicians, they may not simply ignore their medical conclusions or dismiss those conclusions without explanation.”).”
(7) “And then, of course, there are Maiden’s repeated claims of significant back pain made to many providers and his willingness to undergo painful procedures to diagnose and/or relieve his pain. It is not appropriate to disregard subjective evidence just because some or all of the evidence is self-reported. See, e.g., Majeski, 590 F.3d at 485 (“[A] plan may not deny benefits solely on the basis that the symptoms of the disability are subjective[.]”) (citing Hawkins, 326 F.3d at 919); see also Schwarzwaelder v. Merrill Lynch & Co., 606 F.Supp. 2d 546, 563 (W.D.Penn.2009) (surveying cases); see also Pierzynski v. Liberty Life Assurance Co., No. 10–14369, 2012 WL 3248238, at *4 (E.D.Mich. Aug. 8, 2012) (concluding that the plan obligated the administrator “to take into account Plaintiff’s subjective complaints of pain . . . something that it did not do when it chose a file review over a physical examination of Plaintiff”). Maiden made numerous trips to his regular doctor and to several specialists in apparent attempts to get relief from his pain. … Aetna was not required to find that Maiden’s subjective evidence proved a disability, but, at a minimum, this evidence “supports an inference that his pain . . . was disabling.” Diaz v. Prud. Ins. Co., 499 F.3d 640, 646 (7th Cir. 2007).”
Summary: ”In summary, the problems in Aetna’s review of Maiden’s evidence—inexplicably disregarding the opinions of treating physicians and ignoring evidence supporting disability while cherry-picking evidence to support a denial—lend an unmistakable hue of capriciousness to Aetna’s review. When you add to the pile the fact that Aetna used consultants with an incentive to affirm and itself had a structural conflict of interest and would have to pay Maiden any LTD benefits awarded, it’s clear that Aetna abused its discretion, and Maiden must be given another opportunity to prove his claim. See Holmstrom, 615 F.3d at 777 (“A structural conflict is one factor among many that are relevant in the abuse-of-discretion analysis . . and will act as a tiebreaker when the other factors are closely balanced.”) (citation and quotation omitted).”
The Court granted Plaintiff’s Motion for Summary Judgment, denied Defendant’s Motion for Summary Judgment and to Dismiss, and remanded the claim to Aetna for further proceedings.