Court Chooses ‘Could’ Over ‘Would’ In Insurance Benefits Case

A circuit court has upheld an insurance company’s suspension of long-term disability benefits after the court found the insurer hadn’t met the “abuse of discretion” standard in denying disability benefits to a Minnesota doctor who suffered from the effects of a car accident and a subsequent unrelated knee injury.

When the case involves a conflict of opinion between a claimant’s treating physicians and the plan administrators’ reviewing physicians, the administrator, in this case the insurance carrier, has discretion to deny benefits “unless the record does not support denial,” the U.S. Court of Appeals for the 8th Circuit wrote.

“In resolving this conflict, Standard was not required to give special deference to the opinions of Whitley’s treating physicians,” the three-judge panel found, in a 13-page decision issued earlier this month in Gwendolyn Whitley v. Standard Insurance Company.

Under the abuse of discretion standard, the administrator’s decision stands so long as a “reasonable person could have reached a similar decision, given the evidence before him, not that a reasonable person would have reached that decision,” the court wrote.

A lower court had agreed previously with Whitley when it found the insurance company had abused its discretion in discontinuing benefits because the carrier’s doctors dismissed Whitley’s physicians’ findings that she could return to work part time under supervision.

Standard Insurance Co. appealed the district court’s finding. Standard Insurance Co., which had been paying Whitley’s long-term disability benefits since May 2011, suspended payments July 31, 2012 after doctors retained by the carrier found Whitley fit to work full time under the occupational scope of her family medical license.

In her internal appeal to the carrier, however, Whitley said she was only ready to return to her employer, Lake Regional Hospital in Fergus Falls, Minn., on a part-time basis and cited opinions from her attending physicians to bolster her case.

“I am improved; I am happy to be better,” Whitley wrote in an August 2012 appeal to the insurer, according to court documents. “I do want to return to full-time work as an emergency medicine physician. I am not ready to return to work full time yet.”

Employer’s Accommodation at Issue

Lake Region Hospital couldn’t accommodate her part-time request on her terms, but was agreeable to an alternative arrangement, according to court documents.

Subsequent to knee surgery, however, Whitley in January 2013 amended her original claim, which she filed under her employer’s group long-term disability coverage, to say she was disabled and suffering from “chronic pain.”

Doctors and consultants retained by the insurer found that Whitley was able not only to work from July 31, 2012, up until her knee surgeries ending in December 2012, and would be able to return to work full time once more as of March 11, 2013, after recovering from surgery.

When the insurer in March 2013 finally affirmed its decision to stop its long-term disability payments related to the car accident, Whitley sued.

There was “substantial evidence” to show that the insurance carrier had offered Whitley a “full and fair review” as required by the Employee Retirement Income Security Act (ERISA) before denying her appeal, the appeals court also found.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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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 cyril.tuohy@innfeedback.com.