The United States Court of Appeals decision in Iley v Met Life, No 06-2589 (January 18, 2008) illustrates just how easy it is for insurance companies to get out of paying benefits to disabled persons on long-term disability insurance policies that they received through their employment.
Iley was employed by the Kroger company and through Kroger was covered by a long-term disability insurance policy issued by Met Life, which was also the benefit administrator.
Iley hurt her back, underwent two back surgeries and was paid benefits for 24 months. Met Life then terminated Iley's benefits, although Iley's doctor had just reported that Iley suffered from the precise condition -- radiculopathy -- that Met Life asserted there was no medical evidence that she suffered from. Iley appealed the termination of her benefits "and her physicians submitted statements regarding Iley's disability in conjunction with her appeal." Met Life denied Iley's appeal, claiming that her claim file had been reviewed by a "health care professional." Iley then filed suit and a federal district court ruled that she was entitled to benefits.
The appeals court criticized the district court for not giving "any deference to Met Life's decision" and for conducting an "in-depth review of the record." In addition, even though Met Life, as both the insurer and the benefits administrator, was responsible for deciding whether Iley qualified for benefits that it would then have to pay her, a dual role that is ordinarily considered a "conflict of interest," the appeals court ruled that "it was improper to find that Met Life acted under a conflict of interest." Finally, when it turned out the "health care professional" that reviewed Iley's claim file on appeal was a nurse, the appeals court failed to consider whether a nurse's opinion based on only a review of Iley's claim file not an actual examination of her could or should be given more weight than the opinion of her doctors who had performed two surgeries and treated her for many years and instead asserted that "this court has never held that a file review by a nurse is an insufficient form of review."
This case is a disturbing illustration of how empty is the promise of long-term disability insurance that many workers obtain through their employment. These insurance policies are almost always governed by ERISA. And under ERISA insurance companies, as the Iley case shows, can disregard the opinions of doctors who have performed multiple surgeries and treated an insured for many years in favor of an opinion from a nurse based only on a review of the claim file, not an actual examination.
