ERISA’s notice requirement violated

Where the disability administrator’s initial letter concluded the applicant was disabled due to a mental condition, but its final determination concluded that he was not, the claim was remanded to the administrator so that the applicant could administratively appeal the denial.

Background

In this ERISA case, both parties have filed motions for judgment on whether Hartford Life & Accident Insurance Company properly exercised its discretion in determining that Andrew Brooks was not entitled to long term disability benefits for disability due to both physical and mental conditions.

Mental condition

In the initial denial letter, Hartford determined that Brooks was not disabled due to a physical condition, but was disabled due to a mental condition. In the final denial letter, on the other hand, defendant determined that plaintiff was neither disabled due to a physical condition nor a mental condition. Defendant thus failed to give plaintiff the requisite opportunity to appeal administratively the finding that plaintiff was not disabled due to a mental condition, thereby violating ERISA’s procedural requirements.

Defendant claims that its determination was warranted because plaintiff has consistently denied being disabled due to a mental condition. That fact does not eliminate ERISA’s notice requirement. Because defendant has not provided plaintiff with full and fair review of defendant’s determination that plaintiff was not disabled due to mental condition, that determination must be remanded to the administrator for full and fair administrative review.

Physical condition

Defendant did not abuse its discretion in determining that plaintiff was not disabled due to a physical condition. And because defendant’s determination was the result of a deliberate, principled reasoning process and supported by substantial evidence, that determination will not be disturbed. Moreover, the eight nonexclusive factors the Fourth Circuit has identified for courts to determine whether the plan administrator exceeded its discretion clearly support the conclusion that defendant did not abuse its discretion in determining that plaintiff was not disabled due to a physical condition, and then later upholding that determination.

Defendant’s determination that plaintiff was not disabled due to a physical condition is amply supported by substantial record evidence and by each of the independent medical reviews conducted by three doctors. Seeking to avoid this outcome, plaintiff argues that there is also evidence that plaintiff was disabled due to physical disability caused by the car accident. Plaintiff’s argument fails. Although it is true that several medical professionals concluded that plaintiff was disabled due to physical disability, defendant is not required to accept those findings over the conclusions of other experts.

Defendant’s determination that plaintiff was not disabled due to a physical condition was also consistent with the provisions of the group policy. Moreover, although the determination marked a shift in application of defendant’s interpretation of the group policy, the determination was nonetheless consistent with both the language and past interpretations of the plan.

Next, from defendant’s original determination that plaintiff was disabled due to a physical disability to defendant’s review of the claim five years later, the record reflects that defendant’s decision-making process was thorough, reasoned and principled. Defendant based its decision on substantial evidence that supported defendant’s determination that plaintiff was not disabled due to a physical condition.

Defendant’s determination that plaintiff was not disabled due to physical disability was also fully consistent with ERISA’s procedural and substantive requirements. In this regard, plaintiff presents no persuasive evidence that defendant’s determination violated the requirements of ERISA. Defendant provided plaintiff with both notice of defendant’s determination and opportunity to appeal that determination.

Finally, defendant’s structural conflict of interest in making its claim determination as both the claim reviewer and the claim payor does not make the determination illegitimate. Although defendant has a structural conflict of interest as both the claim reviewer and the claim payor in this case, defendant has constructed adequate safeguards to reduce the impact of the conflict of interest on claim decisions.

Attorneys’ fees

Although defendant failed to provide plaintiff with a meaningful opportunity to challenge the determination that plaintiff was not disabled due to a mental condition, defendant reasonably based that conclusion on defendant’s expert reports and on plaintiff’s own contention that plaintiff was not disabled due to a mental condition. Defendant’s determination was therefore not made in bad faith. Defendant has prevailed on all other grounds. No fees are awarded.

Defendant’s motion for judgment on the record granted in part and denied in part. Plaintiff’s motion for judgment on the record denied.

Brooks v. Hartford Life & Accident Insurance Company, Case No. 1:20-cv-85, March 11, 2021. EDVA at Alexandria (Ellis). VLW 021-3-111. 25 pp.