Court: Insurer Used 'Selective' Medical Evidence in Denying Disability Claim

May 29, 2003 ( - An insurer's decision to deny disability benefits is not entitled to court deference if it grounded its denial on a "selective" reading of the medical evidence.

>Summary judgment was granted in Ferguson v. Hartford Life and Accident Insurance Co. to the plaintiff by US District Judge Timothy Savage after finding that the insurer gave too little weight to the findings and opinions of the plaintiff’s treating physicians.   “The treating physician rule requires that the opinions of a treating physician who is in a unique position to assess his patient’s health as a result of having treated him over time are entitled to substantial and at times controlling weight,” Savage wrote, according to a Legal Intelligencerreport.“Hartford was confronted with evaluating the opinions of numerous physicians, some of whom had treated Ferguson and others who had examined him or reviewed medical records at Hartford’s request. It chose to accept the opinions of the doctors it had hired and preferred over those of Ferguson’s doctors,” Savage wrote.

Dream Sequence

Ronald Ferguson began working at Occidental Chemical Corp. in 1986 as a division manager. In 1992, he was promoted to human resources manager and relocated from Texas to Pennsylvania.

Prior to transferring to Pennsylvania, Ferguson was diagnosed with a sleep disorder called central nervous system idiopathic hypersomnia and prescribed treatment.  Following the transfer, Ferguson continued treatment with a different physician.

As the effectiveness of the stimulant therapy decreased, Ferguson’s condition deteriorated, and his physician prescribed several different stimulants to combat Ferguson’s increased tolerance to his medication and his worsening symptoms. However, in March 1996, Ferguson claims his sleep disorder had worsened to the point that he felt he was unable to perform his job duties. After consulting with his physician, Ferguson resigned from his position at Occidental and filed a disability claim with Hartford.

Hartford denied the claim, advising Ferguson that he was “not totally disabled” as defined in the policy.   Ferguson appealed and Hartford ordered Ferguson to undergo three medical examinations.

In the first, a doctor concluded that there was insufficient reliable medical evidence to support a diagnosis of idiopathic hypersomnia and that the cause of Ferguson’s symptoms was his chronic dependence on amphetamines and stimulants, and associated psychological and emotional factors. Two neuropsychologists later concluded that Ferguson had a lifelong learning disability coupled with chronic fatigue that resulted in attention, concentration and memory deficiencies. In the third exam, a doctor concluded that it was unclear whether Ferguson suffered from a sleep disorder, but said he could not rule it out.

Hartford refused to reverse its initial decision to deny coverage, finding the reports of his treating physicians were “not substantiated by the information we have reviewed.” Ferguson filed suit in US District Court after Hartford denied his appeal of the original decision.

Thoroughly Reviewed

Savage found that courts must apply a deferential standard of review when considering the denial of benefits under an ERISA plan. Ordinarily, Savage said, application of that standard means that a court will not reverse the administrator’s decision unless it was “without reason, unsupported by substantial evidence or erroneous as a matter of law.”

However, courts employ a “heightened standard or review,” Savage said, whenever “the evidence raises a question of the plan administrator’s impartiality or there is an inherent conflict of interest.”

Since Hartford both funded and administered the plan, Savage found that a heightened standard of review was mandated under the 2000 decision of the US 3rd Circuit Court of Appeals in Pinto v. Reliance Standard Life Insurance Co. As a result, Savage said, “our inquiry focuses on whether the insurance company was arbitrary and capricious in its interpretation of the plan’s eligibility requirements and its application of the facts presented.” Savage found that Ferguson submitted two reports from doctors who had treated him over five years.

Savage found that Hartford violated the treating physician rule because it was “obvious” that the insurer “did not give any weight, let alone substantial or controlling weight, to Dr. Stafford’s or Dr. Karacan’s [Ferguson’s physicians] findings and conclusions.”

If the rule had been applied, Savage said, Hartford “would have explained the basis for its choosing its own doctors’ opinions and would have addressed Dr. Stafford’s rebuttal to the reports of the Hartford doctors.”