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LTD Insurer May Subsequently Reverse Disability Determination

by | Jan 11, 2024 |

The U.S. District Court for the Southern District of Florida has ruled, in Delucca v. The Guardian Life Insurance Company of America, that a long term disability (“LTD”) plan was not bound by prior determinations that a plan participant was totally disabled.

Facts.  In Delucca, the participant claimed total disability based on unspecified trauma and stress related disorder, major depressive disorder, and agoraphobia.

The LTD plan’s underlying insurance policy required claimants to provide the insurer with ongoing “Proof of Loss,” defined as “objective medical evidence from a doctor” that the claimant is currently disabled; and has been receiving regular and appropriate care from a doctor. “Objective medical evidence,…[m]ay include but is not limited to: (a) diagnostic testing; (b) laboratory reports; and (c) medical records of a doctor’s exam documenting: (i) clinical signs; and (ii) presence of symptoms.”

The participant’s two doctors said that the participant was disabled, could not return to work and “gave no [expected return-to-work] date” or any recommendations for potential workplace accommodations.

The plan awarded the participant LTD benefits. After the passage of several years, her doctors continued to opine that the participant was disabled.

However, an independent medical reviewer concluded that the “available psychiatric information d[id] not support the claim since there are few psychiatric [symptoms] described, which…appear to be severe in extent or scope.” The review also noted that her symptoms no longer appeared to impact “global” functioning and that the “available medical [information] does not support extending LTD.”

The plan then terminated benefits because the review highlighted that the participant’s “‘problems with anxiety, depression, and agoraphobia symptoms’ had ‘been lessening in severity’” and that “her mood ha[d] [been] better.” Therefore, the insurer concluded the participant no longer satisfied the “Proof of Loss” standard.

The participant sued, claiming that there was no basis for termination of her LTD benefits because the insurer “had approved her claim based on the same type of evidence it later claimed was insufficient.” She argued that “Because [the insurer] previously accepted [her] evidence as ‘objective, [the insurer] was required to show what had changed to support their [sic] decision to terminate benefits.’” In particular, the participant claimed the insurer had “merely ‘cherry picked’ instances where she was doing better while ignoring those where she was doing worse.”

Both sides asked the court for summary judgment.

District Court Decision. In reviewing the matter, the court first noted that the applicable insurance policy makes clear that the participant had an “ongoing” burden of showing that she was disabled under the applicable policy definition and therefore “it is irrelevant, standing alone, that [the insurer] had for years deemed her disabled.”  It noted that under the policy, a claimant’s “burden is the same whether or not the administrator denies a claim initially or decides to discontinue benefits after initially approving them.”

The court then determined that the administrative record and the parties’ submissions, taken as a whole, supported the insurer’s decision to terminate LTD benefits for three related reasons: “First, [the participant’s] symptoms significantly improved over time; second, [her] providers’ opinion that she was unfit to work was unsupported by objective medical evidence; and, third, [the insurer’s] decision was supported by the opinion of an independent physician consultant[.]”

Therefore, the court ruled in favor of the LTD plan and insurer and dismissed the participant’s claim.