Robinson Warncke achieves confidential settlement against Guardian for disabled attorney.
Some long-term disability denials are the result of sloppy or biased claim investigations by the insurance company. Others involve poor decisions by a claimant, poor documentation by treating doctors, and/or difficulties in proof inherent to the disabling diagnosis. This case presented a little of all these, creating significant challenges to overcome requiring careful tactics and creative lawyering. In short, this case was anything but a slam dunk.
We are proud of the work we did to overcome the case’s shortcomings and confidentially settle a case with more than $2M in dispute. We believe the outcome would likely have been much better for the client if she had retained us to assist with her ERISA administrative appeal. We have much more influence during that process than if we were hired after the insurer denies the appeal. We have previously written extensively on why that is true. This point is even more vividly demonstrated here, because the person handling her own appeal was a sophisticated and experienced insurance attorney. Even for attorneys, unless you are an ERISA specialist, this area is a legal minefield.
Guardian long-term disability denial settlement case facts
Our client was a successful, established trial attorney specializing in insurance defense. After 14 years as a trial attorney, she became disabled by chronic gastroparesis – a gastric motility condition that causes symptoms including constant, daily nausea, frequent vomiting, abdominal pain and bloating, and other GI symptoms. She filed for benefits under her employer’s ERISA long-term disability plan, which provided “own occupation” coverage. The relevant inquiry therefore was whether the client’s symptoms prevented her from working full-time as a trial attorney.
Guardian initially approved the claim and continued to pay her benefits for more than three years. The crux of the claim was the unpredictability of the client’s symptoms. She might feel pretty good for a few hours, but then her nausea, abdominal pain, and regurgitation would render her totally incapacitated. Imagine having a stomach flu that never goes away and resurfaces unpredictably, daily or near-daily. This is not a recipe for success as a trial attorney.
The challenge, however, was that neither the diagnosis nor the disabling symptoms are easily susceptible to objective testing or verification. Add to that, the condition is primarily treated with medication, and our client rarely saw a doctor other than for medication adjustment, sometimes only once per year. This tends to raise suspicion in a disability setting. Here, Guardian focused on those issues and terminated benefits in October 2018 based on a nurse file review.
Our attorney/client appealed Guardian’s termination of benefits on her own. She did a good job, but failed to include evidence we would have preferred to see in the file that was more directly responsive to Guardian’s termination rationales. For instance, she failed to submit her pharmacy records showing she was consistently on medication, which would tend to refute Guardian’s assertion that she had not been receiving adequate treatment. She also failed to include all her updated medical records with her appeal, and Guardian failed to request them from certain of her doctors.
Guardian upheld its decision to terminate benefits after obtaining a paper-only medical review by a gastroenterologist arranged through third-party vendor MLS.
Upon receiving Guardian’s appeal decision upholding the termination of her benefits, the client retained Mr. Warncke. Upon reviewing the file, we immediately noted Guardian had failed to provide its appeal medical consultant with important medical evidence, a serious violation of ERISA claim regulations. For instance, the claimant herself had written up her medical history, describing the frequency and severity of her disabling symptoms. An ERISA insurer may not ignore this kind of important historical data.
Rather than filing suit, we tried to work with Guardian. We pointed out that one of an ERISA fiduciary’s most important duties is its duty to conduct a thorough claim investigation, including obtaining readily available and relevant information. See, e.g., Schwartz v. Hartford Life & Acc. Ins. Co., 2020 WL 1072449, at *5-6 (N.D.Cal. March 6, 2020); Harrison v. Wells Fargo Bank, N.A., 773 F.3d 15, 24 (4th Cir. 2014). We asked Guardian to note that our client’s treatment for the duration of the claim consisted primarily of medication management of her symptoms. Guardian had asserted a large gap in treatment, but it failed to obtain her pharmacy records during the termination or appeals investigations. It also failed to gather medical records showing our client had consulted with a colorectal surgeon during that same time period. Nor did Guardian ask that specialist about the legitimacy of the disability. If Guardian had bothered to ask, the colorectal surgeon was strongly supportive of severity of our client’s condition and the continuing disability.
Our client’s pharmacy records confirmed that her physicians had significantly increased her anti-nausea medications precisely when Guardian asserted inadequate treatment. We argued that Guardian’s failure to obtain readily available medical information undermined the reliability of its decision. Under ERISA law, this should ultimately lessen any deference a court should show Guardian’s decision. At the same time, we emphasized that other rationales employed by Guardian’s gastroenterologist did not pass muster.
We asked Guardian to re-open the matter and properly consider the entire body of evidence, but Guardian refused. We therefore sued Guardian in federal court, seeking among other things, an order requiring Guardian to reopen the claim. This remedy, commonly called a “remand,” is available under ERISA and can be a powerful tactic in the right circumstances.
Another critical legal and factual issue in this case was whether Guardian has complied with its ERISA regulatory duty to ensure that its medical reviews are independent and free from bias. 29 C.F.R. § 2560.503-1(b)(7). One of the wrinkles of ERISA law is that the insurer must prove compliance with regulatory minimum standards of conduct. The law says it is not our job to prove a violation. However, despite the burden being on the insurer, we always work hard to identify and prove any significant deviations from regulatory requirements and/or good faith claim handling standards of care.
At our request, the federal judge issued an order authorizing discovery into whether Guardian had adopted and followed proper procedures under ERISA’s regulations, into the completeness of the record, and into Guardian’s financial conflict of interest. We served discovery requests on Guardian specifically targeting these topics. After some strenuous objections by Guardian and time-consuming negotiations, Guardian produced much of what we sought, fighting us on other topics.
We also served a federal document subpoena on MLS, a company that operates out of Michigan and is solely to provide medical reviews and opinions to the insurance industry. We sought to investigate whether MLS’s history and its relationship with Guardian might establish a bias against disability claimants. Like Guardian, MLS also resisted producing the requested information, so we prepared a motion to enforce our subpoena in federal court in Michigan, where MLS “resides.”
It was necessary to undertake two separate settlement mediations to resolve the case. The first meditation was unsuccessful, so we had to continue fighting for discovery though motions practice. We kept pushing the case until Guardian agreed to a second mediation. Only after this prolonged campaign were we able to obtain a confidential settlement satisfactory to our client. We believe the net recovery to our client would have been considerably greater – and likely achieved much sooner – if she had retained us for the administrative appeal.