Kentucky Employment Law Blog

Insurance Company's Failure to Consider Treating Doctor's Opinions Is Arbitrary

A disability insurance company is required by ERISA to provide a reasonable explanation for its decision on a claim and must address any reliable, contrary evidence the claimant presents.  The failure to explain why it is discounting or disregarding a claimant's evidence is arbitrary and capricious.  The Seventh Circuit made this ruling recently in Love v. National City Benefits Plan, No. 08-1722 (July 23, 2009).

The claimant, Love, a 20 year employee, developed multiple sclerosis and proved unable to continue working in August 2001.  She received disability benefits for more than four years before they were terminated in December 2005.  The benefits were terminated because the claims administrator, Liberty Mutual, had a medical consultant, a Dr. Jonathan Sands, do a file review; he concluded, despite the payment of benefits for over 4 years, that there were "no objective limitations in functional ability or capacity" noted in Love's medical files.  The court was clearly troubled by Dr. Sands' cursory dismissal of the substantial evidence generated by the doctors that had personally examined Love, observing:

In fact, every doctor that personally examined Love concluded that she was unable to work more than a few hours a day and that she could no stand, sit or walk for more than an hour at a time. Dr. Sands did not address any of these reports in his cursory report, which dedicated less than half a page to its analysis and recommendation. 

Love appealed the termination of her long-term disability benefits.  She submitted further evidence supporting her claim including a physical therapy evaluation, a functional-capacity evaluation and a vocational evaluation.  The court noted that "these reports showed that Love had significant impairments."  This evidence too was disregarded by Liberty Mutual, which hired another medical consultant, a Dr. Winkler, who "did not address the opinions of these other physicians." 

The court ruled that Liberty Mutual's claims process was arbitrary and capricious and violated ERISA.  First, the court noted that ERISA required an insurance company to provide "a reasonable explanation for its determination and must address any reliable, contrary evidence presented by the claimant."  Liberty Mutual failed to do so because it "did not explain why it chose to discount the near-unanimous opinions of Love's treating physicians."  Therefore, the court concluded that Liberty Mutual "acted arbitrarily by terminating Love's benefits without sufficiently explaining its basis for doing so." 

Robert L. Abell
www.RobertAbellLaw.com

"Aren't You Being Discriminatory?": Protected Activity in Retaliation Cases

"Aren't you being discriminatory?" asked Mary Casna in response to her supervisor's questions about her hearing disability, "How can you work if you cannot hear?"  Casna's supervisor immediately reported Casna's statement to her supervisor, wrote up a job evaluation for Casna and Casna was filed three days later. Casna sued claiming that her statement to her supervisor ("Aren't you being discriminatory?") was protected activity and she claimed that her firing was unlawful retaliation in violation of the Americans With Disabilities Act.

This informal complaint, the Seventh Circuit ruled in Casna v. Loves Park, No. 07-1044 (7th Cir., July 24, 2009), was "protected activity for purposes of retaliation claims."  The court ordered that Casna's retaliation claim under the Americans With Disabilities Act must be decided by a jury at trial.

Robert L. Abell
www.RobertAbellLaw.com

When Does A Racial Hostile Work Environment Become Unlawful?

In a racial harassment case an unlawful the hostile work environment exists where the harassment is severe or pervasive.  Recently, the Fourth Circuit Court of Appeals in EEOC v. Central Wholesalers, No. 08-1181 (July 23, 2009), described the type of facts that could establish an unlawful hostile work environment:

"We also conclude that a reasonable jury could find that the race-based harassment was objectively severe or pervasive.  Three of Medley's co-workers in Inside Sales used the word n****r, and at least one of them used it 'pretty much everyday.'  Moreover, during the November 10 incident, DaBay called Medley a black stupid n****r, a black n****r, and a black stupid b***h, among other derogatory terms.  In addition, two of her co-worker's kept blue-colored mop-head dolls in their offices which they had hanging by nooses tied around the dolls' necks.  As in past cases, 'we cannot ignore the habitual use of epithets here or view the conduct without an eye for its cumulative effect.'" 

Robert L. Abell
www.RobertAbellLaw.com

When Does Sexual Harassment Become Unlawful?

To rise to the level of an unlawful hostile work environment based on sex the gender-based harassment must be severe or pervasive.  The Fourth Circuit Court of Appeals in EEOC v. Central Wholesalers, No 08-1181 (July 24, 2009), recently described a hostile work environment where it could be found that the sexual harassment was severe or pervasive:

"We conclude that a reasonable jury could find that the gender-based harassment was objectively severe or pervasive.  The evidence shows that Mike, Tony, and Green all regularly referred to women as b***hes.  Moreover, DaBay called Medley a b***h a number of times during the November 10 incident.  In addition, Mike -- whose cubicle was right next to Medley's -- had a Playboy calendar on his desk, kept Playboy magazines in his cubicle, hung a Playboy poster on his wall, watched pornography on his computer in Medley's presence, used a pornographic screensaver depicting partially naked women, and placed the screwdriver in the Halloween decoration in a sexual manner more than once.  This evidence is certainly sufficient to create a triable issue on whether the gender-based harassment was objectively severe or pervasive."

Robert L. Abell
www.RobertAbellLaw.com

How Can You Prove Harassment Is Based On Sex?

For workplace harassment to be illegal or unlawful under Kentucky and federal employment laws it must be proven to be motivated by some discriminatory criteria such as sex or gender. Recently, the Fourth Circuit Court of Appeals in EEOC v. Central Wholesalers, No 08-1181 (July 21, 2009), described workplace where the harassment could be found to be motivated by sex or gender discrimination:

"The evidence shows that oneor more of Medley's co-workers used the word b***h on a daily basis when referring to women, had Playboy items around the office, watched pornography right next to Medley such that she could hear the sounds of people having sex, and used a pornographic screen-saver depicting partially naked women.  Moreover, DaBay called Medley a b***h a number of times during the November 10 incident.  In light of this evidence, a reasonable jury could conclude that the harassment was based on Medley's gender." 

Robert L. Abell
www.RobertAbellLaw.com

How Can You Prove Harassment Is Based On Race?

For harassment in the workplace to be unlawful it must be shown to be based on some sort of discriminatory criteria such as race.  Recently, the Fourth Circuit Court of Appeals decided a case, EEOC v. Central Wholesalers, No. 1181 (July 21, 2009), where the court found the following to be sufficient evidence that race motivated the harassment:

"The evidence also shows that a number of Medley's co-workers (Medley was the employee harassed) used the work n****r in her presence on a regular basis, and at least one co-worker used the word 'pretty much everyday.'  Moreover, [a co-worker] called Medley a black stupid n****r and other racially derogatory terms during the November 10 incident.  In addition, both Tony [another co-worker] and DaBay kept blue-colored mop-head dolls in their offices and had the dolls hanging from noose which were tied around the dolls' necks.  Given this evidence, a reasonable jury could conclude that the harassment was also based on Medley's race."

Robert L. Abell
www.RobertAbellLaw.com

Unum's Termination of Disability Benefits, After Paying for Five Years, Reversed

After paying disability benefits for five years to a OB/GYN doctor whose diminished use of her left arm left her unable to perform surgery and uninsurable, Unum terminated her benefits.  This decision was reversed by the Sixth Circuit in Kramer v. Paul Revere Life Insurance Company, No 07-1557 (April 8, 2009).  The court observed that "there is no explanation for the decision to cancel benefits that had been paid for some five years based upon the initial determination of total disability in the absence of any medical evidence that the plaintiff's condition had improved during that time."  

Dr. Lois Kramer, an OB/GYN, had disability insurance policies with Paul Revere Life Insurance Company and Provident Life and Accident Insurance Company (which later were acquired by Unum).  Beginning in the mid-1990's Dr. Kramer began experiencing back and spinal cord problems, eventually undergoing a C6-C7 laminectomy.  Further treatment including nerve root injections proved ineffective and she eventually lost full use of her left arm.  As a result, she struggled to perform routine office tasks and could not perform surgery and related procedures.  Her claim was approved and she began receiving disability benefits in late 1998.

Unum paid the benefits through 2003.  In the interim, at least two medical file reviewers reviewed Dr. Kramer's file and affirmed that she remained disabled and entitled to benefits.  Nonetheless, in late 2003, Unum terminated payment of the benefits based on two more reviews, one by a Dr. Phillip Mayer and another by a Dr. Geron Brown, both of whom opined that Dr. Kramer could resume working as a OB/GYN.  Dr. Kramer appealed the termination of her benefits, presenting additional medical evidence along with evidence that she could not obtain medical malpractice insurance because of her disability.  

Kramer filed suit for reinstatement of her benefits.  The district court ruled applied a de novo standard of review to the termination of benefits under the Provident policy and reinstated her benefits.  However, the district court applied an arbitrary and capricious standard to the Paul Revere policy and affirmed the termination of benefits.  

The Sixth Circuit ruled that Unum's termination of the benefits under the Paul Revere policy was arbitrary and capricious.  The court was disturbed by Unum's disregard for the opinions of numerous treating physicians and rejected its reliance on the opinions of the file reviewers it had hired:

there is no explanation for the decision to cancel benefits that had been paid for some five years based upon the initial determination of total disability in the absence of any medical evidence that [Kramer's] condition had improved during that time.  The best that can be said of the opinions of Dr. Mayer and the other company consultants is that they support the proposition that Dr. Kramer was, in fact, never disabled from her 'own occupation.'  But that conclusion flies in the face of all the other evidence in the record, and the plan administrator's reliance upon it can only be described as arbitrary and capricious.   

Robert L. Abell
www.RobertAbellLaw.com

Injury From Unexplained Fall Covered By Workers' Compensation

An injury sustained on the job is presumed work-related and covered by workers' compensation.  The Kentucky Supreme Court reaffirmed this principle recently in Vacuum Depositing, Inc. v. Dever, No 2008-SC-853-WC (June 25, 2009).  The employer must demonstrate by substantial evidence that the injury is not work-related for workers compensation not to apply.

Dever slipped and fell in the break room.  There were no witnesses and she "did not know why she fell."  She suffered a fractured wrist and sustained a minor back injury.  According to another employee, Dever later stated that she was "clumsy," that she had "just turned around and fell and had no idea how" and that she was "the only person she knew that could fall while standing still."  At the time of the fall, Dever was wearing high heels, which were commonly worn by women in the office.  An administrative law judge denied her claim on the grounds that the injury was due to her clumsiness and was not work-related.

The Supreme Court ruled that Dever's injury was covered by workers' compensation.  First, Kentucky law presumes that an unexplained workplace fall is work-related unless the employer presents substantial evidence to show otherwise.  To prevail the employer was required to show that the fall was not work-related.  The court ruled that evidence that Dever was clumsy and wearing high heels was not sufficient to demonstrate that her fall was not work-related and not covered by workers' compensation.

Robert L. Abell
www.RobertAbellLaw.com 

Workers Comp Exclusive Remedy Doctrine Does Not Bar Negligence Claim Against Temp Service

A contractor's employee injured on the job by the negligence of a temporary labor service's employee may sue the labor service for his damages the Kentucky Supreme Court recently ruled in Labor Ready, Inc. v. Johnston, No. 2007-SC-419 (June 25, 2009).  The court ruled that the exclusive remedy doctrine does not bar the injured worker's claim.

Johnston, an employee of Mid-America Auto Auction, was injured when Hudson, a Labor Ready employee, struck her with a car.  Labor Ready regularly supplied workers to Mid-America.  Johnston filed and settled a workers' compensation claim with Mid-America.  Johnston then sued Labor Ready for the negligence of its employee.  The Jefferson Circuit Court dismissed the case as barred by the exclusive remedy doctrine.

The Court affirmed reinstatement of Johnston's negligence claim.  First, the court ruled that the workers' compensation exclusive remedy doctrine did not bar the claim.  The court traced Kentucky law defining the scope of this doctrine and concluded that it did not apply because a subcontractor is not liable to pay workers' compensation benefits to a contractor's employee.  Second, the court ruled that the "loaned employee" doctrine did not apply.  Third, the court ruled that the negligence claim was not barred by any indemnity agreement between Mid-America and Labor Ready.

Robert L. Abell
www.RobertAbellLaw.com

Retaliation Prohibitions Narrowed By Sixth Circuit

The anti-retaliation prohibitions in Title VII have been narrowed by the Sixth Circuit sitting en banc in Thompson v. North American Stainless, LP, No 07-5040 (June 5, 2009), reversing and vacating a earlier panel decision of the Court discussed in an earlier posting at Employer's Retaliation Against Fiancee of Employee Charging Discrimination Violates Title VII.

By a vote of 10-6 the Court ruled that the firing of the fiancee of an employee who had formally and officially charged the employer with discrimination could not sue under Title VII for retaliation.  

This case and the Supreme Court's decision last week in Gross v. FBL Financial Services, Inc., No. 08-441 (June 18, 2009), illustrate the continuing need for Congress to amend employee protection, anti-discrimination and anti-retaliation laws in the face of judicial decisions that practically eliminate the protections the laws are intended to provide. 

Robert L. Abell
www.RobertAbellLaw.com