What all must a disability benefits insurance company consider when it handles a claim? The Sixth Circuit, in its recent decision in Helfman v. GE Group Life Assurance Company, No 08-2168 (July 24, 2009), provides an outline on how a claim should not be handled.
Helfman, the claimant, was 66 years old and suffered from severe coronary artery disease, morbid obesity, hypertension, diabetes and other conditions. He began receiving disability benefits from Sun Life in January 2005 and the benefits were terminated in June 2005. Helfman appealed the termination of his benefits. Sun Life hired two doctors and a rehab specialist to say that Helfman was not disabled, denied Helfman's appeal and he filed suit.
The court ruled that termination of the benefits by Sun Life was arbitrary and capricious based on the following:
(1) Conflict of Interest: Sun Life was responsible for both deciding and paying the claim. It also paid a doctor to review Helfman's file. "When a plan administrator's explanation is based on the work of a doctor in its employ, we must view the explanation with some skepticism."
(2) File Review Instead of Actual Examination of the Claimant: Sun Life had the right to have the claimant actually examined by a doctor but chose not to do so. "Because the right to do so was reserved by the plan, its failure to examine Helfman raises questions about the thoroughness and accuracy of its review of the claim."
(3) Disregarding the Issue of Stress As a Factor: Helfman's doctor said that he should not work because stress generated from work aggravated his condition. The court noted that the policy did not preclude such factors from consideration when considering his claim. "The administrator's rejection as such is a factor weighing in favor of a finding that the decision was arbitrary and capricious."
(4) Making An Adverse Credibility Determination Against the Claimant Without an Actual Medical Examination: Sun Life disregarded Helfman's claims of stress as subjective and unsupported by objective medical evidence. This, the court observed, was an implicit credibility determination "as to the nature and extent of Helfman's stress." That combined with a file review instead of an actual examination was improper: "where an adminstrator exercises its discretion to conduct a file review, credibility determinations made without the benefit of a physical examination support a conclusion that the decision was arbitrary."
