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Insurer Cannot Terminate LTD Benefits Without Additional Information

by | Jan 27, 2022 |

The United States Court of Appeals for the Eighth Circuit has determined, in Roehr v. Sun Life Assurance Co. of Canada, that long term disability (“LTD”) benefits cannot be terminated by an insurer in the absence of significant new evidence.

Facts. A plan participant began experiencing intermittent tremors in his fingers. Examining doctors were unable to provide a diagnosis and said that it was possible the tremors had a psychogenic origin. They recommended that the participant submit to neuropsychological testing. Nevertheless, the doctors forwarded a report to the insurer that unequivocally concluded the participant suffered from a tremor and slowing of movement that prevented him from working. The participant was granted an LTD benefit of $10,000 per month.

According to the controlling LTD Plan document, once LTD monthly benefits have been approved, they “will cease on the earliest of: [1] the date you are no longer Totally or Partially Disabled… [2] the date you die… [3] the end of your Maximum Benefit Period and, [4] the date you do not provide…proof that you continue to be Totally or Partially Disabled as requested.”

Over the next 10 years, the participant continued his follow-up treatment with the same doctors. The insurer never objected to this treatment decision, nor did it seek an independent examination.

After LTD benefits had been paid for 10 years, the insurer hired an independent neurologist to review the participant’s file. After reviewing the original files and consulting with the original doctors, the neurologist concluded that “[t]he medical evidence does not…preclude [the participant from] returning to his occupation.”

The insurer then told the participant it was terminating his LTD benefits, and the participant filed a lawsuit to challenge this decision. Upon reviewing the matter, the district court determined there was substantial evidence in the administrative record to support the insurer’s decision to terminate the participant’s benefits and ruled in favor of the insurer. In turn, the participant appealed the district court’s adverse determination.

Court of Appeals. The Court of Appeals began its analysis by noting that,“[w]hile a plan administrator’s history of paying benefits to a claimant does not prevent it from changing its mind, unless information available to an insurer alters in some significant way, the previous payment of benefits is a circumstance weighing against the termination of benefits.”

The insurer explained it terminated benefits because, in addition to its review of past records, the cause of the participants tremors remained unexplained; his original doctor had observed temporary improvement in his condition; and, the participant had not completed the neuropsychological examination, as suggested.

However, the Court of Appeals noted that the insurer, in making its termination decision, had “relied on virtually the same medical records that had been available for a decade” and that there was no new information available to it that altered, in some significant way, its previous decision to pay benefits. The insurer “had accepted these records as proof of a qualifying disability and then later…used essentially the same records to find that the participant had failed to establish an ongoing, qualifying disability.” While the participant bears the burden of proving entitlement to benefits, the Court explained that a plan administrator’s reliance on the same evidence to both find a disability and later discredit that disability does not amount to a reliance on significant new evidence The insurer’s about face requires evidence that a “reasonable mind might accept as adequate to support” its change in decision. It concluded “(t)hat evidence does not exist in this record.”

The Court of Appeals therefore ruled in favor of the participant.