The recent Good Morning America November 11, 2009 expose on Hartford’s abusive use of video surveillance of its disabled policyholders is just a sample of the rampant use of video as a way to trap insureds and deny claims. Chris Cuomo reported that Jack Whitten, who suffers from a broken neck from a fall, pain and memory loss was captured on videotape reading a magazine, getting into a car and eating taco chips, which formed the basis of Hartford Insurance Company terminating his disability benefits. His doctors assured Hartford that Whitten has severe headaches, short term memory problems and cannot work at his prior job with Walmart. Hartford denied benefits anyway. Fortunately for Mr. Whitten, once the GMA story ran, his benefits were reinstated.

Other disabled people who are surveilled are not so fortunate. Some examples of Hartford’s misuse of Video surveillance include Montour v. Hartford Life &Accident Ins. Co., 2009 WL 2914516 (9th Cir.)The 9th Circuit found that Hartford relied on surveillance which did not represent Montour’s ability to engage in full time work.

Recently, in Finley v. Hartford, 2009 U.S. Dist. LEXIS 105516 (N.D.Cal. Oct. 26, 2009), Hartford was again admonished for shoddy surveillance. Hartford relied on three doctors who only reviewed medical records and did not examine Mr. Finley The court noted that the activity shown on the video did not prove that Finley can work full time.

In the third of recent decisions in New Jersey District Court regarding Long Term Disability claims, “Dunn v. Reed Group, Inc and Johnson & Johnson” 2009 U.S.Dist. LEXIS 78857 (D.N.J. Sept. 2, 2009), the Court noted that deference should be given in the “lions share” of ERISA claims and that a conflict of interest should be simply one factor for the courts’ consideration.

Here, Dunn pointed out that since Johnson & Johnson stopped all benefits such as medical and life insurance when they denied her disability claim, they benefited financially from their own decision. But the court noted that Johnson & Johnson did not pay for such benefits since the insurance benefits are funded through a trust. Further, the court held the Johnson & Johnson Pension Committee, the claims administrator is walled off from any conflict of interest since a trust funds the LTD program.

The court next considered whether a procedural irregularity, bias or unfairness in the processing of the claim exists. The court found that requesting an IME when all evidence in the record supported disability was a procedural irregularity. Deciding that Dunn could perform a sedentary job without a discussion of her skills or capacity and how these skills transferable to sedentary job was also not based upon substantial evidence. The court reasoned “Defendant has failed to connect the medical evidence to Dunn’s actual physical capacity.” The court remanded the case for further review by Johnson & Johnson.

The second case, Kao v. Aetna and Towers Perrin Forster & Crosby, Inc. 2009 U.S.Dist LEXIS 75181 (D.N.J.August 25, 2009) involves a 59 year old woman disabled by the after affects of breast cancer. Her disability involved her cognitive problems which are caused by the chemotherapy, fatigue and arthralgias related to her disease process and treatment regimen, including medication. Her doctors viewed her as a credible historian and not malingering.

Aetna’s peer reviewers denounced the disability without ever evaluating her, basing their opinions, in part, on Kao’s ability to perform home chores such as laundry and her ADL’s. The medical reviewers challenged Kao’s claims of her cognitive impairment, claiming that there were no valid tests of her cognitive ability. The court upheld the denial on many bases.

The court rejected Kao’s assertion that only in the final denial did Aetna disclose what type of clinical evidence Kao should have collected to refute the denial. Although Kao proved that Aetna’s doctors had not reviewed a crucial medical form completed by her doctor, the Court found that to be inconsequential. The court rejected Kao’s expert vocational analysis since it was based on the “platform of subjective data that Aetna rejected as untenable.” The court rejected Kao’s claim that she was entitled to review the medical reviews before the final decision was made so that she could rebut the evidence since there was no new evidence relied upon, only medical reviews conducted of the evidence in existence.

Three recent New Jersey District Court Decisions threaten to undo years of progress in the growing body of law pertaining to long term disability cases in New Jersey. In the aftermath of MetLife v. Glenn, 128 S.Ct. 2343 (2008), we expected that more, not less judicial scrutiny of the acts of claims administrators would occur. The closer the courts inspect the procedures utilized to decide disability claims, the better chance our disabled clients have for a full and fair review of their claim.
New Jersey has unfortunately been moving against this tide. The first case, Scotti v. The Prudential Welfare Benefits Plan, 2009 U.S.Dist LEXIS 64559 (D.N.J.July 23, 2009) involves a man disabled by depression, pseudodementia and cognitive impairments. All of Mr. Scotti’s treating and examining physicians confirmed the diagnoses and the functional impairments. The court limited its review to whether Prudential abused its discretion, which means that Scotti carried the burden of proving that the administrative record did not contain substantial evidence to support Prudential’s denial. The court found that Prudential had enacted sufficient safeguards to minimize the chance that its decision was tainted by its own self interest to promote its financial interests. The court denied summary judgment for each party, finding that whether Scott’s impairments can be validly diagnosed by personal examination is a genuine issue of material fact.
RAFEL COMMENTARY: The Court accepted the opinions of the medical consultants hired by Prudential’s captive third party without evaluating their credibility. In other circuits, the courts recognize that these doctors could be “doctors for hire”, and their opinions far less than independent. See, for example the evidence discovered in Soloman v. MetLife, 2009 U.S.Dist. LEXIS 51507 (S.D.N.Y. June 18, 2009), showing that the reviewing doctors derived 90% of their income from paper medical reviews for third parties. We can learn alot from our neighbors across the Hudson River. BGRafel

In this New Jersey disability claim based on a back condition including disc herniations, the Court affirmed the District Court’s opinion and outlines some important pointers to keep in mind when proving in an ERISA case that the insurer’s procedural irregularities require the denial to be overturned.

The Court faulted Liberty who was acting under a conflict of interest {pursuant to Glenn v. MetLife} for its “decisions that disfavored the employee at each crossroads and reliance on experts who merely reviewed incomplete medical records.”

Interestingly the peer reviewer suggested that Liberty undertake surveillance of its insured to check her functionality,which Liberty declined to do, noting “surveillance is an aggressive tactic” that itself may constitute procedural irregularity.” How can Liberty then, in other cases rush to surveil our clients who have confirmed, significant medical problems which cause functional limitations and restrictions?

The New Jersey Supreme Court recently issued a disappointing decision in Shore Orthopedic Group, LLC v. The Equitable Life Assurance Society of the United States, 972 A. 2d 381 (NJ 2009) with regard to the payment of counsel fees in insurance disputes. Shore Orthopedic had purchased a disability policy to cover some of the expenses of the practice, if their associate orthopedist became disabled.

When the time came to pay on the policy, Equitable denied coverage, claiming the disabled doctor had not revealed a medical condition that had become apparent between the initial application for coverage and the payment of the first premium.

In litigation The Equitable failed to produce its own claim handling guidelines. In the lower court proceeding Shore Orthopedic obtained a court order requiring Equitable to produce its claims manual and awarded Shore Orthopedic $50,000 as a sanction against Equitable’s improper conduct in intentionally misrepresenting that such a manual did not exist. However, the court denied plaintiff’s counsel’s motions for counsel fees.