Appeals Court Upholds ‘Treating Physician Rule’

By Cyril Tuohy
InsuranceNewsNet

A U.S. appeals court in St. Louis has ruled in favor of United of Omaha Life Insurance in denying long-term disability benefits to a real estate company employee after she was diagnosed with fibromyalgia, depression and chronic pain.

The decision by the 8th U.S. Circuit Court of Appeals is in line with a 2003 decision by the U.S. Supreme Court that the “treating physician rule” does not apply to disability determinations under employee benefit plans covered by the Employee Retirement Income Security Act (ERISA).

The appeals ruling in Vicki Johnson v. United of Omaha Life Insurance Co. reverses a lower court, which concluded that United, the life insurance and fixed annuity subsidiary of Mutual of Omaha, had “abused its discretion” after it failed to consider Johnson’s condition “as a whole” when denying the disability claim.

U.S. Circuit Judge Bobby E. Shepherd said in court documents that the company’s decision to deny Johnson long-term benefits “was based on substantial evidence, and thus the decision (to deny the benefits) must be upheld.”

The appeals court also vacated the $22,096 in attorney’s fees awarded to Johnson.

In Black & Decker v. Nord, the Supreme Court found that private benefit plan administrators are under no obligation to defer to a treating physician’s opinions in deciding whether an employee under the plan is entitled to disability benefits.

In Johnson v. United of Omaha, the opinion of Johnson’s treating physician, Dr. Cheryl MacDonald, came under challenge.

While MacDonald found that Johnson had some physical limitations to her job as a rent roll clerk for the Colorado Real Estate and Investment Co., MacDonald also conceded that her conclusions weren’t based on any medical testing, according to the 10-page rule issued Dec. 30.

MacDonald diagnosed Johnson with anxiety and depression the same day that Johnson resigned from the company on Feb. 26, 2009, even though Johnson was never previously treated for depression and anxiety, according to court documents.

Medical records were sent to an external orthopedic surgeon who reviewed the case on behalf of United of Omaha and found that Johnson’s complaints were “self-reported” and unsubstantiated by “conclusive, objective evidence,” court papers also indicate.

The surgeon’s conclusions were further supported by Dr. John McClellan who performed neck surgery on Johnson in 2004.

United of Omaha had previously denied Johnson short-term disability benefits.

When she was denied those in April 2009, she filed for long-term disability benefits, eight months after resigning from the company where she had worked since 1995.

In a statement in support of Johnson’s October 2009 application for long-term care benefits, MacDonald listed Johnson’s primary diagnosis as depression and chronic pain syndrome.

InsuranceNewsNet Senior Editor Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].