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Kentucky Court Overturn's Liberty Life's Denial Of Mental Illness Claim and Awards Claimant Long Term Disability Benefits

  • Synopsis: Published: 2014-08-26 (Revised/Updated 2016-03-20) - Disability Attorney Gregory Dell writes on how a Kentucky Court overturned a denial of claim for mental illness and awarded claimant long term disability benefits for 24 mth limited period as defined by the LTD Plan. For further information pertaining to this article contact: Attorneys Dell & Schaefer at diattorney.

Main Document

Quote: "Liberty denied Ms. H's claim for disability benefits, finding that she was not disabled pursuant to the Plan's definition of disability during the Elimination Period which ran from January 4, 2010 through July 4, 2010."

A Kentucky Court recently overturned Liberty Life's denial of claim for mental illness (depression and anxiety) and awarded claimant long term disability benefits for the 24-month limited period as defined by the LTD Plan. Unfortunately, the claimant's physical disability claim denial was upheld, but the dissenting judge explains why she believes the court erred in upholding the denial.

Ms. H's Claim for Long Term Disability Benefits with Liberty Life's

Ms. H filed a claim for long term disability benefits under her employer-provided LTD Plan, which was administered and funded by Liberty Life Assurance Company of Boston (hereafter referred to as "Liberty"). She claimed she was unable to perform her job as an Office Manager due to a combination of physical illness and mental illness, which included chronic hepatitis C, pancreatitis, fibrocystic breast disease with breast implants, degenerative arthritis, breast carcinoma, hypothyroidism, hypotension, hypertension, crepitation and decreased range of motion of her shoulders, cervical spine, hips and knees, as well as anxiety and depression.

Liberty denied Ms. H's claim for disability benefits, finding that she was not disabled pursuant to the Plan's definition of disability during the Elimination Period which ran from January 4, 2010 through July 4, 2010. Following Liberty's administrative denial of her ERISA appeal, Ms. H filed her lawsuit under ERISA. The district court upheld the denial of LTD benefits based on Ms. H's physical disability claim, but remanded her mental illness claim back to Liberty for further review as it found Liberty failed to consider certain medical evidence pertaining to the mental illness claim. On remand, Liberty again denied Ms. H's claim for LTD benefits and she again brought the matter before the district court under ERISA. However, the district court found in favor of Liberty and upheld the denial.

Appellate Court's Evaluation Regarding Claim for Physical Disability

The appellate court performed a de novo review of the district court's judgment to determine whether its decision was "the result of a deliberate, principled reasoning process and supported by substantial evidence." Particularly, Ms. H argued that Liberty failed to consider evidence which dated subsequent to the Elimination Period, ignored various pieces of evidence while evaluating her claim for physical disability, and erred in its reliance on the report of its expert, Dr. Olivares, in evaluating her mental illness claim.

With regard to the record evidence which Ms. H purported Liberty failed to consider during its evaluation of her physical disability claim, the appellate court concluded that the record did not support that Ms. H was disabled under the plan from any of the claimed ailments individually. Ms. H claimed Liberty ignored evidence that she suffered from arthritis of the hands. However, the court found no mention of arthritis of her hands during the subject elimination period; it was only mentioned nearly 11 months after that time period. She claimed Liberty ignored evidence supporting her diagnoses of diastolic dysfunction and hypertensive heart disease; however, the reports indicated the findings were clinically minor. Ms. H also argued that Liberty failed to consider her disability due to syncope and presyncope. The appellate court notes that, though the records establish that she was likely disabled from syncope and presyncope by the end of 2010, there was no evidence that these conditions caused disability during the subject elimination period, which was the time frame specifically under review.

Additionally, the appellate court found that the medical evidence did not support that any of her other medical conditions caused disability so as to preclude her from performing the duties of her own occupation. Her treating physician stated that she was not taken out of work or placed on any restrictions due to her left vocal cord paralysis; her breast cancer remained in clinical remission; her hypothyroidism and gastritis were noted as being under control during the elimination period; her hepatitis C was noted as chronic and was not suggested as being disabling; and she had not undergone any work up for neuropathy nor was it documented as causing any impairment, restriction or limitation.

Appellate Court Finds Liberty Was Wrong In Denying Mental Illness Claim

However, the appellate court reached a very different conclusion upon its review of Liberty's denial of Ms. H's claim for disability due to mental illness. Ms. H argued Liberty was wrong as far as its reliance on the reports of Liberty's expert, Dr. Olivares. The appellate court notes that it is generally accepted that a plan administrator is permitted to rely on the opinion of one doctor over that of another and that this alone would not necessarily render Liberty's decision arbitrary and capricious. However, ERISA does not permit plan administrators the freedom to "adopt the opinions of its reviewing physicians" especially when the expert's report is "inadequate" or is contrary to the terms of the Plan.

The definition of disability under Ms. H's LTD Plan required that she be unable to perform the material and substantial duties of her own occupation as an office manager. In his first report, Dr. Olivares concluded that there was no evidence of "severe psychiatric symptoms, suicidal ideation, homicidal ideation, hallucinations or cognitive impairment that would have precluded the claimant from engaging in a full-time job during" the elimination period. The appellate court took notice that Dr. Olivares seemingly heightened the standard of review by stating she was not precluded from performing any job, as opposed to her own occupation . Second, Dr. Olivares suggested that in order to be considered disabled, Ms. H would have to be suffering from "severe psychiatric symptoms, suicidal ideation, homicidal ideation, hallucination..." or cognitive impairment which he had previously defined in his statement that Ms. H did not have "any evidence of cognitive impairment or depression of such magnitude that she needed to stay off work because of severe suicidal ideation, homicidal ideation, hallucinations, or reality impairment ." The appellate court stated that Dr. Olivares' definition "would effectively preclude any claimant from establishing depression or anxiety as a disability" and that it was inconsistent with the terms of the LTD Plan, which dealt only with whether the claimant was able to perform the material and substantial duties of his/her own occupation - and did not state she is required to submit evidence of "severe psychiatric symptoms."

The appellate court also found that Dr. Olivares' repeated mention that Ms. H's prior employer was going into bankruptcy and that she was asked to work long hour with few breaks, suggested that Dr. Olivares was assessing Ms. H's disability as to her job with her prior employer. The LTD Plan, however, defined disability in terms of her ability to perform her own occupation as it was performed "in the national economy." Additionally, the appellate court also states that Dr. Olivares' statements could also suggest that he believed Ms. H's anxiety and depression were caused by job stressors, which could possibly be relieved if she performed her job with a different employer. The appellate court found that the medical records did not support such an assertion. In fact, the notes of her treating physician, as well as the physician reviewer for the Social Security Administration, noted that her anxiety and depression were exacerbated by her declining health and issues with her husband's health. Further, Dr. Olivares inappropriately used the former employer's bankruptcy to discredit the opinion of another of Ms. H's treating physicians that she was not ready to go back to work.

The appellate court concluded that Liberty's decision to deny Ms. H's claim for LTD benefits due to mental illness was arbitrary and capricious because of the fact that it relied solely on the reports of Dr. Olivares and those reports contained the above-stated "critical" errors.

Rather than remand the case back to Liberty for further review of Ms. H's mental illness claim, the appellate court determined that Ms. H clearly established that she was disabled under the LTD Plan due to her mental illness. She was awarded disability benefits consistent with the terms of the Plan, as well as any additional relief the district court found appropriate.

Dissenting Judge Finds That Claimant Was Disabled Due To Both Physical and Mental Illness and Award of Long Term Disability Benefits Beyond 24-Month Limit is Appropriate

Although the appellate holding was mostly favorable to Ms. H, one appellate judge did disagree with the finding that Ms. H was not disabled in terms of her physical illnesses and provided the opinion that her physical illnesses should have been considered all together, cumulatively, instead of individually. The dissenting judge stated that the record evidence indicated that Ms. H's treating physicians supported her disability due to her many diseases and that her mental illness was exacerbated by her deteriorating physical health. The judge further noted that the presiding caselaw referenced by the appellate court specifically provided that the inability to work be evaluated in terms of physical condition, mental condition, "or a combination of the two," and that the connection between physical ailments and mental ailments must be considered.

The dissenting judge concluded that when Ms. H's physical illnesses and mental illnesses were evaluated in combination, she met the LTD Plan's definition of disability beyond the 24-month limited period for mental disability, and was entitled to disability benefits not limited by this 24-month cap. This case was not handled by Attorneys Dell & Schaefer, but the issue of physical versus mentally disabling conditions is something we deal with on a daily basis. Disability carries will always try to limit a claim to 24 months for a mental condition.

Related Information:

  1. Ways Disability Insurance Companies Use to Deny Claims - Jason Newfield - (2011-11-11)
    https://www.disabled-world.com/disability/insurance/claims/denying.php
  2. An ERISA Disability Appeal Must Be Filed Timely or You Will Have No Right to Sue - Disability Attorneys Dell & Schaefer - (2013-02-12)
    https://www.disabled-world.com/disability/insurance/claims/appeal.php
  3. Cigna May Have to Pay Over $77 Million in Long Term Disability Benefits Which Were Wrongfully Denied - Gregory Michael Dell - (2013-05-31)
    https://www.disabled-world.com/disability/insurance/claims/cigna-denied.php


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