A woman worked as an online customer service representative at a bank. Her doctor discovered she had an enlarged thyroid and a large mass extending into her chest causing her to suffer chest pain and tracheal compression. While she was awaiting surgery, her husband died unexpectedly. This triggered a recurrence of depression and posttraumatic stress disorder (PTSD) related to the death of her mother and her children in a house fire a few years earlier. Her primary care physician doubled her dosage of antidepressants and referred her to a psychologist for additional treatment. She then underwent a bronchoscopy and a thyroidectomy.
The woman was unable to work and received short-term disability benefits under a plan offered by her employer. As part of her short-term disability benefits claim, she provided documentation and contact information for her primary care doctor; ear, nose, and throat doctor; and thoracic surgeon. One week after the thyroidectomy, the woman notified her employer that she was scheduled for another more serious procedure, a median sternotomy, where her thoracic surgeon would cut open her chest to remove the remaining tissue that could not be removed during the thyroidectomy.
Ten days after she told her employer of this future procedure, the employer found that she had fully recovered from her thyroidectomy, deemed her fit to continue to work, and discontinued her short-term disability benefits. The woman was denied benefits between her arguable recovery from the thyroidectomy and the later scheduled sternotomy.
The short term disability plan provided by the employer entitled employees to salary replacement benefits where a medically certified health condition rendered an employee unable to perform some or all of his or her job duties for more than seven consecutive days. The plan defined a medically certified health condition as a disabling injury or illness that was documented by clinical evidence provided and certified by an approved care provider. The plan was self-funded by the employer and was serviced by a claims administrator.
Following the claims administrator’s initial denial of short-term disability benefits, the woman administratively appealed. As part of her appeal, she provided additional documentation from her primary care physician regarding her emotional trauma from the death of her husband and contact information for her psychologist and her thoracic surgeon. A nurse case manager reviewed the file and the claims administrator upheld the denial of her claim.
As part of the second level appeal, the employer sought two independent peer reviews, one of the woman’s physical disability claims and another of her psychological disability claim. The independent peer reviewer of the psychological disability claim contacted the woman’s primary care provider regarding the woman’s mental health, but did not contact the woman’s psychologist. The reviewer concluded that while there was evidence in the record to suggest that the loss of her husband could have triggered PTSD caused by the death of her mother and children, in the absence of psychiatric or psychological records or a telephone conference with her psychologist, an opinion at as to whether her psychiatric status limited her functional capacity could not be provided. In part on the basis of the reviewer’s conclusions, the employer rendered a final decision upholding the denial.
The woman brought suit under 29 U.S.C.A. § 1132 of the Employee Retirement Income Security Act (ERISA) arguing that her employer abused its discretion in denying her short-term disability benefits between her surgical procedures, at a time when she continued to have pain and other complications from the mass in her chest. The United States District Court for the Eastern District of Virginia granted summary judgment for the employer and the claims administrator. The District Court found that there was insufficient evidence of disability under the short term disability plan and concluded that the employer had not abused its discretion in denying the woman’s claim.
The Fourth Circuit United States Court of Appeals reversed and remanded. The court held that the claims administrator did not satisfy ERISA's full and fair review requirements and the claims administrator breached its fiduciary duty.
The claims administrator did not satisfy ERISA's full and fair review requirements. The administrator neither sought readily available records from the woman’s treating psychologist that might have confirmed her theory of short-term disability nor informed the woman in clear terms that those records were necessary. Even though the record did not refute the woman's claim of disability, the independent peer reviewer commissioned by the claims administrator stated that the record was incomplete and, therefore, his opinion as to whether the woman’s psychiatric status limited her functional capacity could not be provided. The claims administrator was on notice that the woman sought treatment for mental health conditions and it had the psychologist's contact information, as well as properly signed release forms.
The court explained the non-adversarial duties of ERISA plan claims administrators generally. While the primary responsibility for providing medical proof of disability undoubtedly rests with the claimant, an ERISA claims administrator cannot be willfully blind to medical information that may confirm the beneficiary's theory of disability where there is no evidence in the record to refute that theory. ERISA does not envision that the claims process will mirror an adversarial proceeding where the claimant bears almost all of the responsibility for compiling the record and the fiduciary bears little or no responsibility to seek clarification when the evidence suggests the possibility of a legitimate claim. Rather, the law anticipates, where necessary, some back and forth between the administrator and the beneficiary. An ERISA claims administrator is required to use a deliberate, principled reasoning process and to support its decision with substantial evidence. A complete record is necessary to make a reasoned decision. A reasoned decision must rest on good evidence and sound reasoning and result from a fair and searching process. An ERISA claims administrator must notify a claimant of specific information material to the success of the claim that the administrator was aware was missing. A claims administrator of a short-term disability plan does not have an open-ended duty to look all over for a doctor whose testimony might contradict the medical reports from reliable physicians that have been submitted.
The claims administrator breached its fiduciary duty. It neither sought readily available records from the woman’s treating psychologist that might have confirmed her theory of disability nor informed the woman in clear terms that those records were necessary. The claims administrator had been put on notice that the woman was seeking treatment for psychological ailments in addition to thyroid disease and yet failed to undertake the same minimal effort to obtain records from the psychologist that it properly took with regard to records from other physicians. Instead, the claims administrator denied benefits on an incomplete record. An administrator of an ERISA short-term disability plan cannot decline to undertake the most nominal efforts to obtain readily available information that was made known to the plan, that was plainly material to the claim, and that could well have provided the proof crucial to a claimant's success.
The Fourth Circuit United States Court of Appeals reversed the trial court’s grant of summary judgment for the employer and claims administrator.
See: Harrison v. Wells Fargo Bank, N.A., 2014 WL 6845461 (4th Cir.(Va.), December 5, 2014) (not designated for publication).
See also Medical Law Perspectives, December 2014 Report: Beyond the Holiday Blues: When Depression Leads to Liability
See also Medical Law Perspectives, June 2013 Report: Independent Medical Evaluations: Legal Risks and Responsibilities