Long Term Disability Law Blog

In Jacoby v. Hartford, 254 F.R.D. 477 (S.D.N.Y. 2009), the Federal District in New York City ordered Hartford to produce thousands of pages of documents pertaining to Hartford’s inherent conflict of interest. Rejecting Hartford’s claims of confidentiality and burdensomeness, the Court ordered Hartford to respond to plaintiff’s interrogatories and document demands, including the full production of Hartford’s BMS Claims Manual and SIU Reference Manual. The Court also rejected Hartford’s claim that documents held by its consulting firms Medical Advisory Group and University Disability Consortium were not within its “possession, custody or control.”

This decision is a valuable precedent because it provides a possible solution to the dilemma of being whipsawed between the insurance company and its consultants. When seeking documents, each entity claims that the other has the sole duty of producing the requested documents. In this case, the Court rejected Hartford's assertion that the documents held by its consultants, Medical Advisory Group and University Disability Consortium were outside Hartford's control. The Court ordered Hartford to use its influence with its consultants to obtain the requested documents. The Court held:

In these circumstances, Hartford is directed to cause the production of the requested materials that are in the hands of UDC and MAG. Should it fail to do so, and should plaintiff press the point, a hearing concerning the relationships between Hartford and each of these entities and the nature of Hartford's efforts to secure their cooperation could prove necessary.

On November 3, 2008, Scott M. Riemer appeared as a Panelist at the NY, NJ and CT Regional Conference of the College of Labor & Employment Lawyers. The College is a non-profit professional association honoring the leading lawyers nationwide in the practice of labor and employment law. Mr. Riemer highlighted four paradigm shifts in ERISA law as a result of the Supreme Court's recent case MetLife v. Glenn:

1. Glenn describes a "combination-of-factors method of review" in order to determine whether a defendant has "abused its discretion." It does not describe the standard as the "arbitrary and capricious" standard of review. This represents a shift from the arbitrary and capricious standard of review, which has its basis in administrative law, to the abuse of discretion standard, which has its basis in trust law. This shift is important to claimants because trust law calls for much more scrutiny of a defendant's determination than administrative law.

2. Glenn establishes for the first time a priority of the competing goals and purposes of ERISA. Prior to Glenn, Courts have restricted discovery and judicial review on the grounds that extensive proceedings were inconsistent with ERISA's goals to: (a) avoid complex review proceedings; (b) avoid deterring employers from setting up benefit plans; and (c) allowing employers to administer their own plans. The Glenn Court held, "As to all three [of those goals] taken together, we believe them outweighed by Congress' desire to offer employees enhanced protection for their benefits." Courts will now focus more on protecting the rights of employees.

3. Glenn shifts the presumption that a tie goes to the defendant. Glenn holds that a defendant's conflict of interest could "act as a tiebreaker when the other factors are closely balanced." This is hugely important to claimants because in many of the cases that make it to litigation the other factors are closely balanced. Thus, instead of a victory in favor of defendant, Glenn supports a victory in favor of the claimant.

4. Glenn specified that there should be no "special burden-of-proof rules, or other special procedural or evidentiary rules, focused narrowly upon the evaluator/payor conflict." Prior to Glenn, the Courts established elaborate procedures for dealing with a defendant's conflict of interest. These rules often made it difficult for a claimant to present the insurer's conflict of interest as an issue in the case.

As a result of these paradigm shifts, the law will enter a period of uncertainty as the lower courts parse through what is still good law. Overall, however, Glenn appears to be very good news for claimants. Claimants will be provided with increased discovery and Courts will provide much closer scrutiny of insurance company determinations.

We believe that the MetLife v. Glenn standard of review may turn out to be better for plaintiffs than the de novo standard of review. This is because a de novo review focuses exclusively on the evidence of disability, whereas the Glenn standard also focuses on an insurer’s conduct. In MetLife v. Glenn, the Supreme Court upheld a "combination-of-factors method of review." Under such a standard, "any one factor (even the insurer's inherent conflict of interest) will act as a tiebreaker when the other factors are closely balanced."

Glenn's focus on the insurer's conduct will be crucial in the average case that reaches litigation, where the record includes both evidence submitted by the claimant supporting disability and evidence procured by the insurer militating against disability. Under the de novo standard, the Court will weigh that evidence, with plaintiff having the burden of establishing disability by a “preponderance” of the evidence. When the evidence is evenly balanced, it is far from certain that the plaintiff will establish this burden.

Under the Glenn standard, however, the Court will take into account a conflicted insurer’s own conduct. As the Court states, “ERISA imposes higher-than-marketplace quality standards on insurers.” Accordingly, instead of evenly weighing the medical evidence and deciding whether the claimant satisfied his or her burden, the Glenn standard requires the Court to look at the insurer’s evidence with a degree of skepticism. To a judge with no medical background being asked to make a medical determination, this may tip the balance. In other words, when there is evidence on both sides (as there is in most cases in litigation), the insurer’s conflict will taint the insurer’s evidence and thereby serve as a tiebreaker in favor of the claimant.

The Supreme Court agreed to hear MetLife's appeal in MetLife v. Glenn. This will perhaps be the most important Supreme Court decision in the area of long term disability claims in decades.

On January 18, 2008, the Supreme Court agreed to decide whether the arbitrary and capricious standard of review should be tempered or abandoned if the insurance company both decides the claim and pays the benefits. Right now, the Circuit Courts of Appeal have widely different standards. In the Second Circuit, where we practice, such a conflict has no impact on the standard of review. The standard of review is only switched if a plaintiff can demonstrate that the insurance company's conflict of interest in fact influenced the claim determination. Because that is extremely difficult to establish, no plaintiff has ever been able to switch the standard of review based on a conflict of interest. In other Circuits, such as the Third Circuit, the Court will apply a heightened standard of review in the event of an inherent conflict. In Glenn v. MetLife, the Sixth Circuit held that the District Court committed reversible error because it failed to take into account that MetLife was both decider and payor of the claim.

Given the existing standard in the Second Circuit, we are cautiously optimistic that no matter how the Supreme Court decides MetLife v. Glenn, plaintiffs within the Second Circuit will benefit.

Your client's disability insurance company schedules a Functional Capacity Examination (FCE); what do you do? This is often a judgment call. On the one hand, an FCE almost always results in a bad result for your client. If your client is able to perform the tasks assigned, the examiner will pronounce that your client is not disabled. If your client is not able to perform the tasks, the examiner will pronounce that your client gave sub-maximal effort. On the other hand, if your client refuses to go to the FCE, the insurer will either terminate your client's benefits for failure to cooperate or will schedule an independent medical examination (IME). An IME is often harder to discredit later than the FCE. FCE's can often be discredited because: the protocol that they apply has not been subjected to peer review; asks claimants to perform tasks that are completely unrelated to their occupations; and are just downright unscientific. It is a great leap in logic to project from the ability to perform certain discrete physical tasks on one or two particular days to the ability to perform a full time occupation (that involves cognitive tasks and time pressures) on a consistent basis day after day.

If a decision is made to attempt to cancel the FCE, how do you approach the insurance company? There are two general strategies. First, consult the policy. Most LTD policies give the insurer the authority to request a physical examination by a physician, but make no mention of an FCE. You could argue that the insurer has no contractual right to request an FCE; an FCE is not an "examination" and it is generally not conducted by a physician. Second, consult with the claimant's treating physician. The physical tasks required by the FCE may be potentially harmful to your client depending on the nature of his or her disability. If the tasks are harmful, get a short note from the treating physician explaining why the tasks are potentially harmful to your client. It is has been our experience that the insurer will almost always cancel an FCE if you provide it with proof of potential harm.

If a decision is made to permit your client to attend the FCE, what do you do? If possible, arrange to either have someone videotape the FCE or to have a nurse be present who will take detailed notes of the FCE. This will not only help to keep the examiner honest, but could later be used to attack the conclusions of the examiner.

For more information about helping your client obtain long term disability benefits, please consult the obtaining disability benefits section of our website.