Category: Disability insurance

Burden of Proof: The “What Changed?” Argument from “A Medley of Interesting Disability Cases”

Hegger v. Unum Life Ins. Co. of America2013 U.S. Dist. LEXIS 28587 (N.D. Cal. 2013)

Facts and holding: Plaintiff Tami Hegger (“Hegger”) was employed as a medical device sales representative until she left work in December 2004 due to back and neck pain. Hegger was covered by her employer’s ERISA-governed, long term disability (“LTD”) plan , which was insured by Unum Life Insurance Company of America (“Unum”). In April 2005, Unum approved Hegger’s claim for LTD benefits. Unum continued to pay her LTD benefits for five years, and during this time, Unum periodically reviewed Hegger’s file and determined that she remained disabled.

In November 2010, Unum terminated Hegger’s disability benefits, stating that she was physically able to perform her own occupation as a field sales representative and that the occupation would provide her with a gainful wage as defined by the Plan. Unum’s termination letter relied on the medical information in Hegger’s file, as well as the results of vocational analyses, surveillance, and Hegger’s Social Security disability benefits denial. Hegger appealed, and Unum upheld its determination. Hegger then filed suit.

Applying a de novo standard of review, the Court ruled in favor of Unum after a bench trial, and held that Hegger was not disabled under the terms of the Plan.

First, the Court found that there was “a clear medical consensus among nearly all of [Hegger’s] numerous physicians – whether retained by [Hegger], independent, or retained by Unum – that [Hegger] was able to work in a sedentary or light duty capacity.” Id. at *30. Notably, at least eight physicians arrived at this conclusion, and although several physicians stated that at times Hegger was unable to work, “these diagnoses were expressly temporary.” Id. at *31. The Court acknowledged that Hegger suffered from legitimate medical conditions that caused her some level of pain; however, it noted that this did not mean that Hegger was disabled under the terms of her Plan.

The Court stated that she had not “lived the life of a person who . . . suffer[ed] from frequent, excruciating, and debilitating pain.” Id. at *32. Indeed, Hegger continued her advanced martial arts training (and even competed in Tae Kwon Do tournaments), went to the gym, ran errands, and carried her own groceries without assistance. She walked, drove, and stood for more than six hours at a time. She also took regular vacation trips to Hawaii and, starting in 2008, intermittently worked in her prior occupation of medical device sales.

Despite Hegger’s own statements to her doctors and Unum regarding her alleged disability, the Court questioned her credibility. Specifically, the Court noted that Hegger made false and misleading statements to her doctors and to Unum regarding her physical abilities, her functional capacity to work, and her earnings.

Finally, the Court stated that although Unum’s five years of disability payments to Hegger weighed against the propriety of Unum’s subsequent benefits denial, this fact alone was not dispositive. Rather, the Court stated that “Unum is not precluded from changing its evaluation, taking a fresh look at a claim file, or re-interpreting evidence in light of developments in the administrative record over time.” Id. at *35. Thus, the Court concluded that Hegger was not disabled under the terms of the Plan and that the evidence showed she could obtain gainful employment.

Lessons learned: In the author’s opinion, the outcome of this action was likely due to the claimant’s lack of credibility, her assertions regarding her activities being contradicted by surveillance and other evidence that discredited her claimed disability. That was so, even though the claimant pointed out that the surveillance did not reveal any activities inconsistent with her reported activities. While the Court found that to be true, it found the surveillance inconsistent (and persuasive) with the claimant’s reports of debilitating, excruciating pain.

The claimant in Hegger also raised the “What changed?” argument, that is, the argument that if a disability insurer concedes and pays a claim for total disability, it should have to demonstrate some reason for changing its conclusion. While the Court acknowledged that it is appropriate to examine what new evidence the insurer is relying upon, it declined to adopt a strict estoppel approach, noting at page *35: “An initial grant and payment of disability benefits may be evidence relevant to whether a claimant is disabled, but it is not necessarily dispositive.” This issue has been discussed before. It is present in the Williams and Held cases, discussed elsewhere in this Medley, and it also arose in Muniz v. Amec Construction Mgmt., 623 F.3d 1290 (9th Cir. 2010) (discussed in the Smorgasbord), Hoffman v. Reliance Standard Life Ins. Co., 2012 U.S. Dist. Lexis 140854 (E.D. Kan. 2012) (discussed in the Ensemble); and McCollum v. Life Ins. Co. of North America, 2012 U.S. App. Lexis 17798 (6th Cir. 2012) (also discussed in the Ensemble).

Finally, the author is pleased to see another court explicitly recognize the distinction between a medical condition and a disability. As the Court stated at page *32: “The evidence establishes that plaintiff suffers from legitimate medical conditions and that these conditions cause her some level of pain. She is not, however, disabled.”

From A Medley of Interesting Disability Cases

Court favors plain and ordinary meaning of policy terms when insured claims policy language is ambiguous

Two of Barger & Wolen‘s lawyers — Martin Rosen and Ophir Johna — received a victory from the Ninth Circuit Court of Appeal earlier this week in Glassman v. Crown Life Ins. Co., 2013 U.S. App. LEXIS 21312 (9th Cir. 2013). 

In Glassman, the plaintiff insured sued his disability insurer, Crown Life, claiming that while Crown Life had been paying his disability claim for well over two decades, it had failed to increase his benefits each year due to a cost of living adjustment rider that he had purchased with the policy. With well over 20 years of purported policy benefit increases at issue, the amount at stake exceeded $1.5 million.

Crown Life brought a motion to dismiss the action based on both policy interpretation and statute of limitation grounds. 

Although the United States District Court for the Central District of California (Judge Steven V. Wilson) permitted the insured to conduct discovery, the court eventually granted Crown Life’s motion to dismiss. 

It ruled (as Crown Life had argued) that the language of the rider served to increase a potential residual disability benefit, but did not increase the amount of total disability benefits payable in any month. The insured appealed the district court’s ruling. 

On appeal, the Ninth Circuit sided with Crown Life and affirmed the district court’s ruling, finding that “The language of the Rider unambiguously applies only to partial or ‘residual’ disability benefits, rather than total disability benefits.” Id. at *1-2.

The opinion, while unpublished, is a reminder to insureds and their lawyers that simply contending that policy language is ambiguous does not make it so, and that courts will construe policy language in its plain and ordinary meaning.

To listen to the Ninth Circuit arguments, click here.

More than 20 new insurance-related bills signed into law by Governor Brown

By Sam Sorich
September 30, 2012, was the deadline for Governor Jerry Brown to take action on bills passed by the California Legislature during the 2012 regular legislative session.
Here are summaries of noteworthy insurance-related bills that were sig…

More than 20 new insurance-related bills signed into law by Governor Brown

September 30, 2012, was the deadline for Governor Jerry Brown to take action on bills passed by the California Legislature during the 2012 regular legislative session.
Here are summaries of noteworthy insurance-related bills that were signed into law. …

Updated: California Legislature Passes Insurance-Related Bills Prior to Ending 2012 Session

The California Legislature’s regular 2012 session ended on August 31. In the last days of the session, legislators passed hundreds of bills, including several insurance-related measures. Here are noteworthy insurance-related bills that were passe…