Disability Cases

Disability law is always changing and the attorneys of the Law Offices of Steven M. Ziegler are diligently staying on top of changes in the law to minimize the risk to our clients.  Listed below are recent disability decisions as reported in Health Law Digest, a publication of the American Health Lawyers Association:

Second Circuit Reverses Summary Judgment For Anesthesia Group In Physician's ADA Action

Genuine issues of material fact precluded summary judgment in an action by a physician suffering from cancer who alleged disability discrimination by the practice group he worked for after it supposedly refused to modify his hours, the Second Circuit ruled May 24. The appeals court noted, however, that a threshold issue existed as to whether the physician, who was a stakeholder in the practice group, was an employee under the Americans with Disabilities Act (ADA).

Dr. Stewart J. Rodal is a board-certified anesthesiologist and a shareholder in the Anesthesia Group of Onondaga, P.C. (Anesthesia Group). Rodal suffered from a rare form of cancer and claimed he requested a no-nights, no-weekends schedule. After the Anesthesia Group allegedly failed to respond to his request, Rodal took disability leave. Rodal subsequently filed a disability discrimination charge against the Anesthesia Group with the Equal Employment Opportunity Commission (EEOC). The EEOC dismissed the complaint, finding no jurisdiction because Rodal was a shareholder and director of the Anesthesia Group rather than an employee and that the evidence failed to indicate a violation of law.

Rodal then sued the Anesthesia Group for disability discrimination under the ADA and the New York Human Rights Law, asserting a claim for failure to accommodate his disability. The Anesthesia Group moved for summary judgment on the ground Rodal could not establish that he was qualified to perform the essential functions of his job. The Anesthesia Group also argued that Rodal had not sought any accommodation and therefore could not establish he sustained an adverse employment action. The court granted the Group's motion for summary judgment, holding that Rodal's request to be relieved from night and weekend duty was not a reasonable accommodation because such duties were essential functions of his position and that granting the accommodation would cause undue harm to the other physicians in the Group who would have to take on added responsibility. Rodal appealed.

The Second Circuit reversed, holding genuine issues of material fact existed as to whether Rodal sought an accommodation, whether the accommodation was reasonable, and whether implementing the accommodation would result in undue hardship on the Group. The appeals court also noted that the Supreme Court's recent ruling in Clackamus Gastroenterology Assocs., P.C. v. Wells, 528 U.S. 440, which was reached after the district court's decision, had bearing on the threshold issue of whether Rodal was an employee of the Group entitled to pursue ADA relief.

First, the appeals court concluded that Rodal should not be judicially estopped from claiming he was qualified to perform his job despite his affidavit in a prior court proceeding stating that he was "unable to perform substantially all of my duties due to illness." The appeals court found no irreconcilable direct conflict because in the instant action, Rodal argued he could have performed the essential functions of his job had he been granted the accommodation of reduced hours; whereas in the previous action he admitted he found it necessary to take disability leave because no accommodation had been made.

Next, the appeals court noted a genuine factual dispute as to whether Rodal requested an accommodation. Because issues of fact existed, summary judgment is improper, the appeals court concluded.

Assuming Rodal requested an accommodation, the appeals court disagreed with the district court's conclusion that the requested accommodation--no night or weekend duties--was unreasonable as a matter of law. The question of whether a task is an essential function of a particular job depends on the totality of the circumstances, the appeals court observed. Based on the evidence, the appeals court noted that the Anesthesia Group had allowed Rodal to work a modified schedule in the past. Moreover, the appeals court said the Group's own evidence indicated that it did not consider the request unreasonable but was more concerned about making an adjustment to Rodal's compensation.

The appeals court also found summary judgment was improper on the ground that the alleged accommodation would cause an "undue hardship" on the other physicians in the Anesthesia Group. "Undue hardship" is an employer's affirmative defense requiring detailed proof. Here, the Group did not provide scheduling information or the likely effect of Rodal's accommodation on those schedules. Nor did it provide evidence of the financial impact of the accommodation. "[W]ithout concrete information, we cannot conclude as a matter of law that the burden was so disproportionately heavy as to absolve the Group from its reasonable accommodation obligations under the ADA," the appeals court wrote.

Finally, the appeals court noted that the threshold issue of whether Rodal was an employee had to be determined under the Supreme Court's analysis in Clackamas, which emphasized the "common-law element of control" in evaluating whether a shareholder in a professional corporation is an employee. On remand, the appeals court directed the district court to consider this threshold issue.

Rodal v. Anesthesia Group of Onondaga, P.C., No. 02-7341 (2d Cir. May 24, 2004)

U.S. Court In Pennsylvania Holds Insurer's Denial Of Long Term Disability Benefits Not Arbitrary And Capricious

Plaintiff Nancy Dinote was covered under her employer's group disability policy issued by defendant United of Omaha Life Insurance Company. While covered under the policy, plaintiff went on disability leave pursuant to a visit with her primary care physician who noted several allegedly disabling conditions. Defendant awarded plaintiff short term disability benefits for sixty days. Plaintiff later applied for long term disability benefits. Defendant requested a list of all physicians Dinote had seen and her accompanying medical records. After performing a disability claim review with an in-house consultant, defendant denied Dinote's application for long term disability benefits because she failed to demonstrate an inability to perform her occupation and therefore did not meet the definition of "total disability" under the policy. Plaintiff requested further review of her claim on several occasions but defendant upheld its original denial. Plaintiff sued, claiming defendant's refusal to offer her benefits violated the Employee Retirement Income Security Act (ERISA). Defendant moved for summary judgment because plaintiff failed to show any genuine issues of material fact.

The U.S. District Court for the Eastern District of Pennsylvania granted defendant's summary judgment motion. The court first turned to plaintiff's claim that the defendant's failure to give deference to her treating physician's opinion rendered its denial of benefits arbitrary and capricious. In the course of her claim for long term disability benefits, plaintiff had seen numerous doctors with conflicting diagnoses, the court noted. However, nothing in ERISA requires plan administrators to defer to the opinions of treating physicians, said the court, nor does ERISA require a heightened burden of explanation of plan administrators if they reject the opinions of treating physicians.

Next, the court rejected plaintiff's argument that defendant required unnecessary objective clinical evidence when her disability was based on subjective symptoms. According to the court, Mitchell v. Eastman Kodak Co., 113 F.3d 377 (3d Cir. 1997), which found that an administrator's decision to deny disability benefits based on a lack of objective medical evidence for chronic fatigue syndrome was arbitrary and capricious, did not apply in this case because the conditions from which plaintiff claims to suffer have known etiologies, unlike chronic fatigue syndrome. Because several specialists examined plaintiff and did not find any evidence that supported plaintiff's claim of total disability, it was not unreasonable for defendant to require additional objective evidence before agreeing to provide benefits.

Therefore, the court granted defendant's summary judgment motion.

Dinote v. United of Omaha Life Ins. Co., No. Civ.A. 03-06474, 2004 WL 1737500 (E.D. Pa. Aug. 2, 2004)

Jury finds Unum committed fraud in some cases.

The New York Times (10/24, B2, Walsh) reports, "A federal jury in Boston found that Unum, the nation's largest disability insurer, had committed fraud in some cases by requiring customers to apply for Social Security benefits even though it knew they were not eligible. But the verdict...contained enough ambiguity to leave both sides declaring victory in the case, filed on behalf of the Social Security Administration."

In a release, Phillips & Cohen LLP claimed that Unum "had been trying to 'enrich itself' by telling thousands of claimants that it would cut their private disability benefits in half or more if they didn't apply for Social Security disability benefits, despite customers often telling Unum they were not eligible under Social Security's stricter criteria," according to the Wall Street Journal (10/23, Kardos). In response to the Phillips & Cohen release, Unum said "the Boston jury actually sided with Unum on the majority of claims. The insurer said the two claims that were decided in favor of the plaintiff resulted in an award of less than $3,000." Unum's US general counsel Chris Collins called the release "a blatant attempt...to try to influence public opinion in a situation where they were unable to claim victory in a court of law."

The AP (10/23) added that "in 2003, whistleblower Patrick Loughren filed a lawsuit under the federal False Claims Act." For the trial, Unum "produced 1,600 claim files that the plaintiffs then narrowed down to 101 claims that they said should not have been submitted to the Social Security Administration. This number was later reduced to 61 as it was revealed that many of these claims were actually awarded Social Security disability benefits, and in other instances there was no proof that an application was ever made to the government."

The Chattanooga Times Free Press (10/24, Lazenby) notes, "Court records show the jury reviewed seven insurance claims. In four of those claims, the jury said Unum acted appropriately. Of the remaining three, the jury was unable to reach a unanimous verdict on one and ruled in favor of the plaintiff in the other two."

U.S. Court In Pennsylvania Finds Insurance Plan's Decision To Deny Long Term Disability Benefits Unreasonable

The U.S. District Court for the Eastern District of Pennsylvania granted summary judgment September 24 to a plaintiff seeking to recover long term disability benefits under the Employee Retirement Income Security Act of 1974 (ERISA).

In so holding, the court found the insurer's denial was arbitrary and capricious because it gave no rational explanation for its decision to credit the conflicting opinion of its own consultants rather than multiple other opinions finding plaintiff was unable to perform her job.

Anne C. Kaufmann was employed by Siemens Corporation as a senior project manager. As part of her employee benefits, Kaufmann was covered under a group long term disability plan funded and administered by Metropolitan Life Insurance Company (MetLife).

Kaufmann stopped working on May 26, 2006 when her treating physician advised her that she was unable to work after having unsuccessfully undergone a diskectomy and a laminectomy.

After initially paying disability benefits, MetLife terminated benefits effective November 9, 2007. In its denial letter, MetLife advised Kaufmann that her physicians had failed to provide evidence that she remained disabled from performing her "own occupation."

Kaufmann sued to recover benefits under ERISA, arguing that MetLife's conclusion that she was not prevented from performing her occupation as a senior project manager was based on inadequate medical records reviews and the mischaracterization of her light duty job as a sedentary one.

After reviewing all of the evidence available to MetLife, the court noted that MetLife relied on report by two of its consultants finding that Kaufmann was not precluded from working full time.

In finding the consultants' reports unreliable, the court noted that neither consultant analyzed Kaufmann's job requirements; instead they accepted, without any investigation or evaluation, that her job was sedentary.

"MetLife's acceptance of Dr. Brenman's bare conclusion over the contrary detailed findings of Kaufmann's treating physicians and its failure to explain its choosing one consultant's opinion over its other consultant's opinion suggests that it was searching for anything to justify denying the claim," the court commented.

The Plan's definition of "own occupation" focuses on the activity of a job, the court noted. Here, the physical demands listed in Kaufmann's job description fit the category of light duty.

"MetLife offers no explanation why it disregarded the actual physical demands of Kaufmann's job and defined it as sedentary based upon the job title only," the court said.

Accordingly, MetLife's decision to credit its consultants' unreliable reports "over multiple treating physicians' evaluations was not reasonable and not supported by substantial evidence," and thus was arbitrary and capricious, the court held.

Kaufmann v. Metropolitan Life Ins. Co., No. 08-2587 (E.D. Pa. Sept. 24, 2009)

Ninth Circuit Holds Montana's Practice Of Disapproving "Discretionary Clauses" Saved From ERISA Preemption

The Employee Retirement Income Security Act (ERISA) does not preempt the Montana Insurance Commissioner's practice of disapproving of insurance policies that contain "discretionary clauses," the Ninth Circuit ruled October 27.

Affirming a lower court decision, the appeals court found the state's practice in this regard regulated insurance and therefore was saved from preemption under ERISA, 29 U.S.C. § 1144(b)(2)(A).

Discretionary clauses, which the appeals court characterized as "controversial," provide that courts will give deference to a plan administrator's decision to award or deny benefits or interpretation of plan terms in any court proceeding challenging such decisions or interpretations.

If an insurance contract has a discretionary clause, the insurance companies' decisions are reviewed under an abuse of discretion standard; absent a discretionary clause, review is de novo.

Standard Insurance Company sued Montana Insurance Commissioner John Morrison after it applied for and was denied approval of its proposed disability insurance forms, which contained discretionary clauses, arguing the state's practice ran afoul of ERISA.

The district court granted summary judgment in the Commissioner's favor. On appeal, the Ninth Circuit affirmed, citing with approval a recent Sixth Circuit decision that also upheld Michigan's ban on discretionary clauses under ERISA. See American Council of Life Insurers v. Ross, No. 08-1406 (6th Cir. Mar. 18, 2009).

Applying the two-prong test set forth by the U.S. Supreme Court in Kentucky Association of Health Plans v. Miller, 538 U.S. 329 (2003), the appeals court found the Commissioner's practice fell under the ERISA saving clause because it was directed toward entities engaged in insurance and substantially affected the risk-pooling arrangement between the insurer and the insureds.

The appeals court also rejected Standard's argument that the Commissioner's practice could not be saved from ERISA preemption because it conflicted with ERISA's civil enforcement provision, 29 U.S.C. § 1132(a)(1)(B).

According to the Ninth Circuit, the Commissioner's practice did not implicate ERISA's civil enforcement provision because it neither authorized any form of relief in state courts not served as an alternate enforcement mechanism outside of ERISA.

"While it is true that the Commissioner's practice will lead to de novo review in federal courts, this is hardly foreign to the ERISA statute. Indeed, de novo review is the default standard of review in an ERISA case," the appeals court observed.

Finally, the Ninth Circuit rejected Standard's contention that the Commissioner's practice conflicted with ERISA's policy of ensuring a set of uniform rules for adjudicating cases under the statute.

Standard cited the Supreme Court's recent decision in Metropolitan life Insurance Co. v. Glenn, 128 S.Ct. 2343 (2008), which refused to repudiate the abuse of discretion standard and adopt "a rule that in practice could bring about near universal review by judges de novo." The Court did, however, indicate that courts reviewing a benefits decision by an insurer with discretion over assessing and paying benefits may consider that conflict as a factor in deciding whether the plan administrator's decision amounted to an abuse of discretion.

"The Court's refusal to create a system of universal de novo review does not necessarily mean that states are categorically forbidden from issuing insurance regulations with such effect," the appeals court said.

Rather, Glenn's acknowledgment that the conflict of interest could prove "of great importance" in some cases, as well as other Supreme Court precedent, indicated "that highly deferential review is not a cornerstone of the ERISA system."

In the appeals court's view, while state requirements like the one at issue may create certain "disuniformities in the regime of rights and remedies under ERISA," such a result will inevitably flow from Congress' decision to save local insurance regulation from preemption.

Standard Ins. Co. v. Morrison, No. 08-35246 (9th Cir. Oct. 27, 2009)