Virginia Lawyers Weekly

An ERISA disability claimant scored a rare win this month as a federal judge in Abingdon interpreted a new decision from the U.S. Supreme Court.

The case is Winebarger v. Liberty Life Assurance Co. (VLW 008-3-318). It was decided by Chief U.S. District Judge James P. Jones.

Plaintiff Garnice Winebarger was a coal miner injured on the job in 2001. He suffered from degenerative disk disease as well as severe L5-S1 disk space collapse. His employer’s disability carrier terminated his long term disability benefits and he appealed.
Jones applied the abuse of discretion standard to evaluate the denial of benefits, a standard that normally affords great deference to the decision of an ERISA plan administrator. Jones noted, however, that in the recent case of Metropolitan Life Insurance Co. v. Glenn, 128 S. Ct. 2343 (2008), the U.S. Supreme Court called for increased scrutiny of ERISA claims decisions when there is a conflict of interest in the carrier’s decision.

Jones found several instances where Liberty “over-valued the medical evidence supporting a denial of benefits, and under-valued or ignored contrary evidence.”

“Because I find the same indications of conflict-driven decision making as highlighted by the Supreme Court in its recent Glenn case, I must set aside the denial of benefits and award judgment to the plaintiff Winebarger,” Jones wrote.

Jones ordered the LTD benefits reinstated retroactively, with an allowance for Social Security benefits, but denied any award of attorney’s fees.

Among the factors cited by Jones was the carrier’s decision to ignore the disability determination by Social Security after encouraging the claimant to seek Social Security disability benefits.

“This is a huge help to claimants in these cases,” said Salem attorney Susan A. Waddell, who handles disability claims. Waddell said that carriers often have argued that any consideration of an award of benefits by Social Security is error.

Fairfax lawyer Benjamin W. Glass III, who also represents claimants in ERISA cases, said that the claims process now “must be pristine,” especially in light of Glenn.

Glass explains that the insurance company now is regarded as a fiduciary and is scrutinized for signs of self-dealing. Glass points to three factors in Winebarger that showed that the claims handler was acting as an advocate and not as a fiduciary:

• The insurance company used a negative note from a doctor without explaining why it disregarded a later correction made by the same doctor;

• The insurance company failed to seek clarification of ambiguous handwritten notes from a treating doctor and, instead, chose to interpret the notes in the light most favorable to the carrier; and

• The insurance company failed to explain why it disregarded the Social Security disability determination.

The plaintiff in Winebarger was represented by Lewey K. Lee of Wise. E. Paul Stephens of Richmond represented the defendant.

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