New Reason For Denial

Ordorf v. Paul Revere Life Insurance Company, 404 F.3d 510 (1st Cir. 2005).

Ordorf v. Paul Revere Life Insurance Company, 404 F.3d 510 (1st Cir. 2005). Plaintiff appealed the district court’s denial of benefits on de novo review of an ‘own occupation’ disability policy.  He started benefits in 1995 for drug dependency but was limited to three years of benefits for that condition.  Before benefits ended for that reason he informed defendant he was disabled due to back problems.   Plaintiff treated for back injuries beginning in 1976.  He did have objective evidence of disc disease and had multiple treatments over the years.  The question for the first circuit was what is entailed in a de novo review.  Firestone v. Bruch, 489 U.S. 101 (1989) makes clear that in plan language disputes no deference is given and courts should apply the normal rules for contract interpretation.  But it also includes a conclusion to deny benefits based on a set of facts.  The court agreed with the plaintiff that the correct standard is whether, upon a full review of the administrative record, the decision of the administrator was correct.  De novo review generally consists of the court’s independent weighing of the facts and opinions in the record to determine whether the claimant has met his burden of showing that he is disabled within the meaning of the policy.  Plaintiff bears the burden of making a showing sufficient to establish a violation of ERISA.  GRE Ins. Group v. Met. Boston Hous., 61 F.3d 79, 81 (1st Cir. 1995).  As in deferential review, see Liston v. Unum, 330 F.3d 19 (1st Cir. 2003) on de novo review, the focus of judicial review is ordinarily the record made before the administrator and at least some very good reason is needed to overcome that preference.  After an exhaustive review of the medical history and other facts, the court concluded that Plaintiff did not meet his burden because he worked for years despite back pain and treatment, he originally became disabled for drug dependency, his back pain was controllable even after he went out on disability, his recreational life was inconsistent with his claim, the SSA decision did not establish disability due to back problems alone and his claim based on the back disability came only after he expressed concerns with work issues as he started to cope with the idea of getting cut off from benefits based on the drug disability limitation. 


Other notable rules and statements.  The plan is limited to the grounds of denial it articulates to the claimant.  Citing Glista v. Unum Life Ins. Co., 378 F.3d 113, 128-29 (1st Cir. 2004).  (It’s hard to see how this applies to de novo review).  Summary judgment is just a vehicle for deciding the issue.  Liston v. Unum, 330 F.3d 19 (1st Cir. 2003).  The fact that judicial review is de novo does not itself entitle a claimant to a trial or to put on new evidence. 

Lavery v. Restoration Hardware, 2018 WL 3733936.

Plaintiff had an office visit for a lesion on his back on April 25, 2014 at which his primary care physician suspected that it was a basal cell carcinoma (a non-life threatening skin cancer) and recommended he consult a dermatologist.  He began working on May 12, 2014 and his coverage under the plan began June 1, 2014 according to the plan administrator and based on communications between the claims administrator (Aetna) and the employer/plan administrator.  Plaintiff went to a dermatologist on June 10, 2014 and was diagnosed with malignant melanoma (life threatening cancer requiring chemotherapy) on June 19, 2014.  Plaintiff stopped working on September 29, 2014 and ultimately sought LTD benefits.  The pre-existing condition provision in the policy provided that “a disease or injury is pre-existing if, during the three months before the date you last became covered [the look back period]: it was diagnosed or treated; or services were received for the disease or injury; or you took drugs or medicines prescribed or recommended by a physician for that condition.”  The claims administrator’s initial pre-x assessment by a clinical consultant concluded that the malignant melanoma was not pre-existing because there was no evidence of a definitive diagnosis and management for it during the look back period.  Another Aetna employee on the same day recommended denying the claim, without receiving any new medicals and without providing any adequate reasoning.  The claim was denied.  On appeal, the same basic pattern recurred: a clinical consultant recommended overturning the denial because the disease was not pre-existing, but again another Aetna claims administrator overrode the recommendation and denied the appeal.  Just before issuing the final denial, Aetna added a note to the claim file indicating that the effective date of coverage was not June 1, 2014 but July 1, 2014, based on a new Summary of Coverage that had been issued on June 23, 2014 that changed eligibility to the first day of the calendar month following the date the employee completes a 30 day probationary period.  If applicable to the claim, this would mean that the June 10, 2014 dermatologist appointment and June 19, 2014 diagnosis of malignant melanoma would be in the pre-x period and would make the disease pre-x under the plan. 


            The case was before the judge for ‘summary judgment’ and also for Defendant’s motion to enlarge the administrative record to include affidavits purporting to show steps taken by the Defendant to guard against any conflict of interest that Aetna has as both the decider of the claim and the payer of any benefits found due.   The court reviewed the rule that there is a strong presumption that the record on review is the one before the administrator when it made its determination but that new evidence relating to the procedure as opposed to the merits of the decision that outside evidence may be relevant and may be allowed based on the discretion of the court.  The court assumed that the evidence was considered but still found in favor of the plaintiff.


            Regarding the determination on the merits based on a look back period calculated based on the original June 1, 2014 coverage date and a focus on the initial consultation with the primary care physician, the court focused on the lack of any explanation for Aetna’s change in position in either the initial decision or the decision on appeal, especially because it did not receive any additional evidence and because the initial determination that was changed had been detailed and specific, calling them unexplained reversals.  Aetna’s reasoning did not explain why it was reasonable to conclude that the lesion was itself a disease or injury or why the mere presentation of the lesion to the primary care physician constituted receipt of ‘services’ for a ‘disease or injury.’


            Regarding the determination on the merits based on the new, July 1, 2014 coverage date that would have included the June 19, 2014 diagnosis, the court found that it would not award summary judgment to Defendants based on this reasoning because Plaintiff did not have a full and fair opportunity to contest it during the appeal period, citing Glista.  As to whether it was appropriate to award benefits or remand to determine whether Plaintiff was on notice of the new Summary of Coverage provisions, the court found that even if he was, he had his dermatologist appointments before he could have had notice of the June 23, 2014 provisions.  ERISA does not allow modifications that affect benefits that have already become due, which is analogous to the situation here where Plaintiff would have reasonably relied on the Summary of Coverage in effect when he decided to have his appointment when he did, according to which any diagnosis received at that time would not be considered pre-existing and subject to exclusion under the plan.