In this case, the claimant won a reinstatement of his long term disability insurance benefits in the United States District Court for the District of Colorado.
The Plaintiff’s Medical History and Claim History:
Mr. Paquin worked for Transistor Devices, Inc. as a Business Development Director. In 2003, Mr. Paquin contracted encephalitis from a mosquito infected by the West Nile virus. He sustained brain damage and cognitive difficulties. These medical conditions interfered with Mr. Paquin’s ability to continue his employment. As part of his employee benefits plan benefits, Mr. Paquin was insured for long-term disability (LTD) benefits by The Prudential.
The LTD plan states, in relevant part:
“You are disabled when Prudential determines that:
- you are unable to perform the material and substantial duties of your regular occupation due to your sickness or injury; and
- you have a 20% or more loss in your indexed monthly earnings due to that sickness or injury.
After 24 months of payments, you are disabled when Prudential determines that due to the same sickness or injury, you are unable to perform the duties of any gainful occupation for which you are reasonably fitted by education, training, or experience . . .
Material and substantial duties means duties that:
- are normally required for the performance of your regular occupation; and
- cannot be reasonably omitted or modified, except that if you are required to work on average in excess of 40 hours per week, Prudential will consider you able to perform that requirement if you are working or have the capacity to work 40 hours per week.
- gainful occupation means an occupation, including self-employment, that is or can be expected to provide you with an income equal to at least 60% of your indexed monthly earnings within 12 months of your return to work.”
Prudential approved Mr. Paquin’s LTD benefits from April 2004 to January 7, 2015 – almost 11 years!! Prudential routinely reviewed Mr. Paquin’s file to determine his continued eligibility for benefits, and each time (until January 2015) Prudential determined that Mr. Paquin remained eligible for long term disability insurance benefits.
Prudential terminated Mr. Pacquin’s claim on January 8, 2015, due “in large part” to one independent neuropsychological test (NPT) and Prudential’s conclusion that there was purportedly insufficient evidence of a continuing impairment that would prevent Mr. Paquin from performing the duties of his regular occupation. After two internal appeals directly with the insurance company, Mr. Paquin brought a lawsuit against Prudential in federal court under the Employee Retirement Income Security Act of 1974, or ERISA for short.
The Standard of Review: The standard of review focuses on the deference the court affords to the decisions of an insurance company in long-term disability insurance claims.
When an LTD benefits plan governed by ERISA gives the administrator discretionary authority to determine eligibility for benefits, a district court reviews denials using an abuse of discretion standard. Under this standard, the USDC for the District of Colorado considered whether the denial of a claim for benefits The court assessed whether the administrator’s decision was reasonable and made in good faith. As the Court stated, “An administrator’s decision is reasonable if the administrator based the decision on substantial evidence in the administrative record before it, i.e., that evidence which a reasonable mind might accept as adequate to support the conclusion reached.”
Note: Past Payments Do Not Guarantee Future Payments
The Court was careful to point out that an administrator is not prevented from denying a claimant benefits by virtue of the fact that it previously paid benefits. If the administrator becomes aware of new information about the claimant’s eligibility for benefits, then the administrator may terminate benefits. However, “unless information available to an insurer alters in some significant way, the previous payment of benefits is a circumstance that must weigh against the propriety of an insurer’s decision to discontinue those payments.”
The Claimant’s Position: Mr. Paquin argued that Prudential ignored the clear weight of the evidence regarding his disability in terminating his LTD benefits.
Prudential’s Position: Prudential argued that the decision was reasonable and supported by substantial evidence. The insurance company argued that its decision was based on the opinions of a supposedly “independent” examining neuropsychologist and two other supposedly “independent” professionals who simply reviewed Mr. Paquin’s records.
The Court’s Findings: The Court found that the evidence in the administrative record overwhelmingly supported the conclusion that Mr. Paquin’s cognitive ailments caused by West Nile virus are permanent and disabling under the terms of the insurance policy. The Court reviewed the “evidentiary scoreboard”: 16 healthcare professionals (all doctors of medicine or neuropsychology, aside from one occupational therapist and one speech language pathologist, and including one doctor who was hired by Prudential) support a finding that Mr. Paquin is disabled; three doctors hired by Prudential found that Mr. Paquin is not disabled under the terms of the policy.
The Court also found it persuasive that Prudential paid Mr. Paquin LTD benefits for 11 years while conducting regular reviews. The Court further found it persuasive that “As recently as February 2014 Prudential Claim Manager Mary Stratton noted in Mr. Paquin’s file that his cognitive issues were not likely to improve, and that there were no gainful employment options for Mr. Paquin based on the evidence in Prudential’s record.”
“For these reasons, “the only way that Prudential can succeed under the applicable standard of review is if it can show that new, material medical evidence indicates that Mr. Paquin is no longer disabled under the terms of the Policy. I find that this has not been shown. Prudential relies on three medical opinions—those of Drs. Rippeth, Villanueva, and Grattan. However, Drs. Villanueva and Grattan only became involved in this case after Prudential decided to terminate Mr. Paquin’s LTD benefits. The only “new” piece of evidence that Prudential relied on to make its initial decision to terminate benefits was Dr. Rippeth’s opinion from January 2015. Dr. Rippeth apparently suspected, based upon her interpretation of neuropsychological test results, that Mr. Paquin intentionally underplayed his abilities, and that many of his prior records were therefore unreliable. Having thus dismissed or devalued test results that she found unreliable, she determined that Mr. Paquin’s cognitive abilities fell within the normal range and rendered him able to work. I am not persuaded.
In the first place, none of the other professionals who had evaluated and treated Mr. Paquin during the previous 11 years had thought that Mr. Paquin was malingering in any way. Moreover, in appealing the termination of his benefits, Mr. Paquin provided letters from three reputable doctors who reviewed Dr. Rippeth’s opinion and found her rationale to be flawed if not outright incorrect.”
In the Court’s own words: “In sum, I conclude that Prudential’s termination decision, in light of the vastly stronger body of evidence to the contrary, was an abuse of discretion.” The Court ruled in favor of the claimant, with reinstatement of all past due benefits. It is worth noting that the Judge even as much as invited “an appropriate motion for attorneys’ fees and costs” by Mr. Paquin.
Lessons Learned For Other Claimants:
- If the Claimant had been receiving benefits for a period of time, and assuming all else remains the same (for example, that there wasn’t a change in the definition of the term disability), then point out that the insurance company doctors did not become involved in the case until after the insurance company decided to terminate benefits.
- Highlight that the “independent” doctor’s findings are terribly inconsistent with most all other doctor’s findings.
- If no prior evidence of “malingering”, then point that out to the Judge.
- Find one or more reputable doctors to review the “independent” doctor’s report explain that the report is flawed if not outright incorrect.
- Supplement the record with opinions from doctor’s that support prior opinions as to disability.
Here is a PDF copy of the decision: Paquin v. Prudential