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."
