Adjudicating the issue of whether someone's complaints of debilitating pain result in disability is a daunting task. In a recent ruling out of California, a district court found that CIGNA subsidiary, Life Insurance Company of North America (LINA), failed that undertaking. In Austin v. Life Ins.Co. of North America, 2010 U.S.Dist.LEXIS 38294 (C.D.Cal. April 13, 2010), the plaintiff, Zainab Austin, had been a sales brokerage assistant for UBS, until 2004 when she had to cease working due to complications of a cardiovascular disorder that left her short of breath even at rest and suffering from severe chest wall pain. Because she was unable to return to work, Austin received both short-term and long-term disability benefits from LINA, which acknowledged that she had "no functional capacity at present." LINA also referred Austin to Advantage 2000 to assist her in prosecuting a claim for social security disability benefits.

Although Austin's treating doctors continued to report that she was incapable of working and that she had also developed fibromyalgia, which caused additional pain and fatigue, LINA terminated the benefit payments when the definition of disability became more stringent after two years of payments and required proof that she was disabled not only from her regular occupation, but was also unable to perform the duties of any occupation. Two months later, though, the Social Security Administration found Austin disabled; and Austin appealed LINA's determination, providing the social security award and additional medical documentation from her treating doctor. Nonetheless, LINA upheld its denial without even mentioning the Social Security decision.

Austin appealed a second time, and provided additional documentation from two doctors who submitted detailed rationales as to why she could not work; i.e., that she was only able to sit in 10-minute increments before experiencing back pain and numbness due to blocked circulation. LINA's in-house associate medical director, Paul Seiferth, M.D., reviewed that submission but disagreed and concluded that the available information did not support a restriction from a sedentary occupation. LINA then upheld its decision, again without mentioning the Social Security finding.

Austin brought suit and secured a remand with an order that LINA review certain medical evidence that it had apparently failed to consider earlier, but LINA once again maintained its determination, and the litigation proceeded. Although the court determined a deferential standard of review applied, citing Metro. Life Ins. Co. v. Glenn, 128 S. Ct. 2343, 2346, 171 L. Ed. 2d 299 (2008), the court explained it was required to consider the insurer's conflict of interest as a factor in determining whether the insurer abused its discretion, applying the following considerations:

In determining whether the insurer has abused its discretion, the court must also consider other case-specific factors, including the quality and quantity of the medical evidence, whether the plan administrator subjected the claimant to an in-person medical evaluation or relied instead on a paper review, whether the administrator provided its experts with all of the relevant evidence, and whether the administrator considered a contrary Social Security Administration disability determination. Montour v. Hartford Life & Accident Ins. Co., 588 F.3d 623, 630 (9th Cir. 2009); Metro Life Ins., 128 S. Ct. at 2352; Saffon, 522 F.3d at 869-73.

While LINA acknowledged that its dual role as the source of payment and the adjudicator of benefit entitlement established an inherent conflict, the insurer denied the conflict affected its decision. The court disagreed, citing a litany of deficiencies in LINA's evaluation.

First, the court pointed out the insurer failed to give any consideration to the social security award despite the similarity between Social Security's definition of disability and the LINA definition. Both disability programs require an inability to engage in any occupation on a regular basis. While insurers are not bound by the decision made by social security, the court cited Montour v. Hartford Life & Accident Ins. Co., 588 F.3d 623, 635 (9th Cir. 2009), which points out: "[C]omplete disregard for a contrary conclusion without so much as an explanation raises questions about whether an adverse benefits determination was the product of a principled and deliberative reasoning process." The court added, "In fact, not distinguishing the [Social Security Administration's] contrary conclusion may indicate a failure to consider relevant evidence." Id.

The court also examined the basis of the Social Security finding and determined that LINA "made no attempt to explain why its decision differed from that of the Social Security Administration" despite the fact that "it was LINA that assisted plaintiff in obtaining Social Security benefits and reaped a financial benefit when benefits were awarded."

The court also found LINA placed undue emphasis on the plaintiff's expressed desire to return to work on a part-time basis – the insurer characterized the plaintiff's hoped-for return to work as evidence she was capable of working. The court noted "that plaintiff's expressed desire to try to return to work on a part-time basis does not in itself establish that she was in fact able to do so." Further, because Austin never returned to work at all, it was unclear whether she could work even on a part-time basis. Finally, the court pointed out that even if Austin could work on a part-time basis, she would still meet the policy definition of disability — the policy deemed her disabled so long as she is "unable to earn more than 80 percent of [her] indexed covered earnings."

The court next turned to LINA's argument that the plaintiff failed to provide objective evidence of her disability. The court found the record contained ample clinical findings and also cited precedent for the proposition that pain is subjective and there are no laboratory tests for fibromyalgia, citing, among other authorities, Minton v. Deloitte & Touche USA LLP Plan, 631 F. Supp. 2d 1213, 1219 (N.D. Cal. 2009), which found, "By effectively requiring 'objective' evidence for a disease that eludes such measurement, [the insurer] has established a threshold that can never be met by claimants who suffer from fibromyalgia, no matter how disabling the pain." Because LINA never suggested what kind of objective evidence it was seeking, the court determined, "To the extent that LINA's denial of plaintiff's claim was based on the failure to produce evidence that is simply not available, that bears on the degree of deference that the Court should accord LINA's decision." (citation omitted).

The lack of an in-person examination was another factor mentioned by the court, as was the fact that Austin's condition had not improved and had even worsened somewhat. Thus, for all of these reasons, the court found LINA abused its discretion in terminating benefits and awarded the benefits due. The court rejected LINA's request for a remand, holding:

If the Court were to remand plaintiff's claim to LINA so it could again decide whether plaintiff was eligible under the "any occupation" standard, LINA would be afforded a "second bite at the apple." Given that the evidence establishes LINA's abuse of its discretion in failing to seek clarification from plaintiff's physicians and failing to credit the reliable evidence submitted by plaintiff, there is no basis on which to find that such an opportunity is warranted.

In addition to reinstating benefits, the court also reinstated the plaintiff's life insurance under a waiver of premium, and invited a petition for attorneys' fees.

The court's finding in this case appears to suggest a growing consensus among the courts. In particular, the courts are demanding more than a complete disregard of a favorable Social Security determination or dismissal of the agency finding by asserting that Social Security applies different standards. Given the functional similarity between a Social Security disability award, and the definition of disability in most private plans, courts have been requiring a more detailed comparison between the Social Security approval and the insurer's determination. Further, as MetLife v. Glenn recognized, that burden of explanation is heightened when the insurer invokes coordination of benefits provisions in its policy to recoup benefits previously paid, since "reaping a financial benefit" from the Social Security award and then denying benefits altogether are both financially advantageous to the insurer. When the insurer assists in the claimant's application for Social Security benefits, the burden of explanation appears even more heightened.

The other factor that was clearly important to the court in this case is that LINA put the claimant to a burden of proof that was impossible to meet. Without suggesting to the claimant what evidence would be considered persuasive, the insurer simply concluded the plaintiff's proof was inadequate. In these circumstances, the insurer's failure to have the claimant examined only magnified the deficiency in LINA's evaluation of Austin's claim.