Beware of Insurance Company Changing Reason for Disability Approval

By Gregory Dell
Mental health limitations are common to disability insurance policies. The typical policy will limit disability coverage to 24 months, and then terminate disability coverage. But what happens if a disability insurance company approves a claim based on a physical condition? Can the company come back later and terminate disability coverage at 24 months for a mental health condition? This is a question answered by a case that was heard in the U.S. District Court for the District of South Carolina.

The woman involved in this case had been a participant in a group disability insurance policy offered by her employer. She had been one of the company's programmer managers for 14 years. The job was sedentary, which meant she sat most of the time, but occasional walking, bending, stooping and reaching were also part of the job.
When she began to suffer severe chronic joint and muscle pain, she left work and applied for disability insurance benefits. The basis of her claim was a combination of migraine headaches and chronic pain. The medical records that she submitted with her application included two attending physician statements. Her internist supported her claim of chronic pain, while her physiatrist supported her claim of arthralgias.

The disability insurance company approved her application for long-term disability based upon her chronic pain. It used the "own occupation" definition included in the policy. But after she began sending physician statements from her psychiatrist, the disability insurance company concluded that she was now disabled from her position as a programmer manager because she had a mental issue.

As the two year mark was approaching, the disability insurance provider began reviewing the woman's file. Because no additional information had come into the record to demonstrate that she still suffered from chronic pain, the disability insurance company notified her that they were terminating her long-term disability benefits based upon the mental illness limitation. She was also informed that she would not qualify under the "any occupation" phase which was also set to begin at the two-year mark, because the insurer had determined that she was capable of working in her own occupation.

Appeal of Disability Termination

The woman appealed this decision, which resulted in her file being sent to review by a board-certified rheumatologist. The rheumatologist found that the medical records did support the fact that she met the 1990 criteria established by the American College of rheumatology for diagnosing fibromyalgia. Yet, he went on to question whether or not her symptoms were legitimate because they were not supported by MRI results.

Her file was also sent to a psychiatrist/neurologist. This physician questioned the appropriateness of the woman's treatment program, and questioned whether or not she actually had fibromyalgia at all. He found that her primary impairing condition was depression and anxiety.

These two reviews were sent to the woman's long-term disability attorney. He then made sure that the correct documents that supported her appeal were collected and delivered to the insurance company. He made sure that the woman prepared an affidavit regarding her physical and mental condition outlining the impact of these two factors on her daily activities. He also secured the medical records from her active treating physician which supported her continuing diagnosis of fibromyalgia. Additional medical records from four other physicians were also included. These records supported the woman's chronic pain disorder.

Based upon the opinions of the physicians who reviewed the woman's file, the disability insurance company chose to uphold its termination of benefits. The woman had no further administrative appeals available, so her disability attorney filed an instant action on her behalf.

Court Review of Disability Termination

The Court's first responsibility was to determine which standard of review it should use to evaluate the disability insurance companies decision. Because the disability insurance plan was not vested with discretion, the Court was able to use standard known as de novo. This would allow the Court to sit as though it was the plan administrator looking at the information provided by the claimant.

What did the Court find when it looked at the administrative record? The Court found that the woman had been approved for disability on the grounds of her physical limitations. Even though she had been sending physician statements from her psychiatrist after she was approved for disability benefits, when she appealed the decision to terminate her benefits, she had proved medical records that proved she was still disabled from fibromyalgia.
Yet the disability insurance plan had ignored this supporting information. A previous ruling, Cothran v. Reliance Standard Life Ins. Co., had established that in cases where a claimant suffers from a combination of physical and mental/nervous conditions, a disability insurance company cannot apply the mental illness limitation.

If the woman's disability had originally been based upon a mental illness, and she had waited until after the two years had expired to suddenly claimed that she had a physical ailment, the cases of Tumbleston v. A.O. Smith Corp. and Lynd v. Reliance Standard Life Ins. Co. would have argued against her situation. But there was no question, based upon the medical record that her disability had begun with fibromyalgia and the fibromyalgia continued to be a serious limiting factor on her activities and ability to work.

The disability insurance company did not have the right to change the basis upon which it determined her disability, when the medical records demonstrated that she still had the condition for which they had approved her for benefits. The Court found that this woman had been wrongfully denied an extension of her long-term disability benefits into the "any occupation" phase of the disability benefit plan.