Long Term Disability In The News

Feb 22, 2016 - Articles by

The United States District Court for the Eastern District of Kentucky on February 12, 2016 found Aetna arbitrarily and capriciously terminated Scott Bishop’s ERISA-governed long-term disability benefits. Mr. Bishop stopped working in February 2012 due to “diffuse osteoarthritis and swelling in his joints, gout, and degenerative joint disease in his left knee.” Based upon his physical conditions, Mr. Bishop applied for his Aetna LTD benefits and Social Security (“SSA”) disability benefits.

Social Security had Mr. Bishop examined by Dr. David Winkle, who authored a report on Mr. Bishop’s condition. Aetna quickly determined Mr. Bishop was not entitled to LTD benefits. Mr. Bishop appealed Aetna’s decision and during the appeal, Aetna had Dr. Tracey Schmidt review Mr. Bishop’s medical records.

Social Security conducted a hearing to determine Mr. Bishop’s eligibility for SSA disability benefits. Vocational expert Joyce Forest took part in Mr. Bishop’s Social Security hearing. “The SSA found that Mr. Bishop has the residual functional capacity to perform sedentary work, but stated a number of other restrictions on that ability, including that he would routinely miss three or more day of work per month due to his health problems.” Concluding, “there are no jobs that exist in significant number in the national economy that the claimant can perform.” Social Security found Mr. Bishop disabled and awarded him SSA disability benefits.

Aetna next overturned its original decision and determined Mr. Bishop met the plan’s definition of disability because he was unable to perform his former job. Mr. Bishop’s Aetna LTD plan contained two definitions of disability. For the first two years, Mr. Bishop would be disabled if he were unable to perform his own occupation. Following the first two years, Mr. Bishop would be considered disabled if he was unable to work at any reasonable occupation. Mr. Bishop’s Aetna LTD plan defined reasonable occupation as “any gainful activity for which you are, or may reasonably become, fitted by education, training, or experience and which results in, or can be expected to result in, an income of more than 60% of [the claimant’s] adjusted predisability earnings.”

Following the end of the own occupation period, Aetna terminated Mr. Bishops’ LTD disability benefits. As part of the termination, Aetna ordered a vocational assessment performed by Diane Winiarski. Aetna cited in its termination letter Mr. Bishop was “not disabled from performing any reasonable occupation for which you are qualified by education, training or experience.” Mr. Bishop appealed Aetna’s decision and included with his appeal, a vocational report prepared by vocational consultant Dr. Stephanie Barnes. Aetna ordered a new review of Mr. Bishop’s records completed by Dr. Timothy Craven and a vocational analysis completed by Kristen Hamilton. Following these reports, Aetna upheld its decision to terminate Mr. Bishop’s benefits, forcing him to file a lawsuit.

The court first determined the arbitrary and capricious standard of review applied to the claim. Meaning, Aetna’s decision would be upheld by the court “if it is the result of a deliberate, principled reasoning process and if it is supported by substantial evidence.”
In reviewing Aetna’s determination, the court analyzed Aetna’s consideration of the SSA determination, Aetna’s reliance on the potential jobs found in Ms. Winiarski’s report, Dr. Craven’s report, and Ms. Hamilton’s report.

In review of Aetna’s consideration of the SSA determination, the court was quick to point out “a determination that a person meets the Social Security Administration’s uniform standards for disability benefits does not make him automatically entitled to benefits under an ERISA plan, since the plan’s disability criteria may differ from the Social Security Administration’s.” This court was just as quick to point out however the Sixth Circuit has established

If the plan administrator [here, Aetna] (1) encourages the applicant to apply for Social Security disability payments; (2) financially benefits from the applicant’s receipt of Social Security; and then (3) fails to explain why it is taking a position different from the SSA on the question of disability, the reviewing court should weigh this in favor of a finding that the decision was arbitrary or capricious.

Here, the court noted Aetna encouraged Mr. Bishop to apply for SSA disability benefits, and when benefits were awarded, took an offset of those benefits from his LTD benefits.

The court determined it needed to review whether Aetna explained why it was taking a different position than Social Security. During a detailed analysis of Aetna’s determination, the court noted Aetna did not include the phrase “or may reasonably become” that is part of the definition of reasonable occupation in its termination of Mr. Bishop’s disability benefits, but did then include the phrase when upholding its decision to terminate disability benefits. The court considered this to be a post hoc rationale, noting they are “strongly disfavor[ed]” when not explicitly stated by the plan administrator in the denial notice, but generated after the fact during the course of litigation. The court concluded it was “skeptical whether Aetna actually relied on the may reasonably become language when it terminated Mr. Bishop’s benefits.” Finding, “Aetna’s material omission deprived Mr. Bishop of the opportunity to offer evidence of why he was unable to reasonable become fitted for a job with additional training or education” and this “hampered his appeal of the termination.”

In review of Aetna’s reliance on the potential jobs found in Ms. Winiarski’s report, the court noted the report found four potential jobs for Mr. Bishop to perform. Potential jobs were defined to require additional training in tools and material in Ms. Winiarski’s report. The court was critical of Aetna stating in its termination letter to Mr. Bishop “it was determined that you have the skills” to perform the four jobs, finding “Aetna erroneously stated that Mr. Bishop was qualified for the four jobs.” The court concluded, “since the stated basis for Aetna’s termination was unsupported by substantial evidence, the Court cannot conclude that Aetna performed a reasoned review of Mr. Bishop’s claim.”

In review of the reports Aetna order, the court did not take issue with Dr. Craven’s report based on Mr. Bishop’s medical records. However, the court found “serious defects in Ms. Hamilton’s vocational analysis.” The court’s main contention was Aetna not providing Mr. Bishop’s complete file to Ms. Hamilton. The court noted, “a vocational expert must be given a complete understanding of the claimant’s condition in order to conduct a reliable analysis.” However, Ms. Hamilton was only provided Dr. Craven and Ms. Winiarski’s reports. By not also providing the reports from Dr. Winkle, Dr. Schmidt, Ms. Forest, or Dr. Barnes, the court found “Aetna acted unreasonably by commissioning a results-oriented vocational report based on limited records.”

In addition to taking issue with the documents provided to Ms. Hamilton, the court took issue with Ms. Hamilton’s report, finding it flawed in several respects. The court found Ms. Hamilton made inaccurate assumptions in her report which “undermined the credibility of her other findings.” This included findings contrary to Dr. Barnes’s vocational report. The court found Aetna then failed “to even acknowledge the contrary findings.” Concluding, “Aetna’s reliance on Ms. Hamilton’s highly suspect report to deny Mr. Bishop’s appeal shows that it failed to engage in principled reasoning throughout the entire claim process.”

Based upon Aetna’s errors through the termination and appeal process of Mr. Bishop’s claim, the court found Aetna acted arbitrarily and capriciously. Therefore, the court reversed Aetna’s termination of Mr. Bishop’s disability benefits. However, the court did not award Mr. Bishop benefits, instead ordering Aetna to again analyze Mr. Bishop’s claim and provide him “a full and fair evaluation consistent with the concerns expressed in [the court’s] opinion.”

Bishop v. Aetna Life Insurance Company, Civil Action No. 5:15-cv-104-KKC, 2016 WL 591765