A recent ruling from the federal court in Atlanta, Johnson v. Metropolitan Life Ins.Co., 2008 U.S.Dist.LEXIS 42944 (N.D.Ga. May 30, 2008), offered a very interesting and thorough analysis of a disability benefit dispute. In Johnson, the plaintiff, who had worked for Cingular for more than 13 years as a ''field coordinator, global accounts,'' suffered from several medical problems including congestive heart failure resulting in shortness of breath, fatigue, and syncope, uncontrolled diabetes, cervical spondylosis, and carpal tunnel syndrome. In 2002, the cumulative effect of all of Johnson's medical conditions led her cardiologist to recommend that she cease working and go on disability.

Based on the cardiologist's certification of disability, MetLife approved Johnson's short-term disability claim and also approved the continuation of benefits under Cingular's long-term disability program insured by MetLife. MetLife also deemed Johnson an excellent candidate to receive social security disability benefits and encouraged her to apply. The application was ultimately approved by an administrative law judge following a hearing at which a vocational expert testified.

Thereafter, Johnson's condition worsened, and she developed additional spinal problems and fibromyalgia which limited her ability to perform basic daily activities and household chores. Nonetheless, when Johnson reached the point where the definition of disability transitioned from ''own occupation'' to ''any occupation'' disability after 24 months of LTD payments, MetLife cut off the benefits after receiving the results of a file review performed by Kevin Smith, D.O., who maintained Johnson could work. Johnson appealed, and submitted additional evidence, including the Social Security findings and a report from her cardiologist and other records showing that her diabetes remained uncontrolled; and symptoms of cardiomyopathy resulted in fatigue and poor exercise tolerance. Those records were reviewed by a cardiologist retained by MetLife, along with a pulmonologist, both of whom found Johnson capable of sedentary activity. A third consultant who specialized in physical medicine and rehabilitation concurred; and MetLife upheld its decision.

Johnson then retained an attorney who submitted extensive additional documentation documenting specific functional deficiencies; and who requested reconsideration of the claim determination. MetLife agreed to have the new records referred to the same panel of doctors who had previously examined the file, but to no avail; the denial was again upheld.

Johnson filed suit; and the court resolved the matter on MetLife's motion for summary judgment. Instead of granting MetLife's motion, though, the court, sua sponte, entered judgment for the plaintiff. Applying the 11th U.S Circuit Court of Appeals paradigm for resolving ERISA claims where, even under a deferential standard of review, the court first examines the record to determine whether, under a de novo standard, the decision is supported ( Williams v. BellSouth Telecommunications Inc., 373 F.3d 1132 (11th Cir. 2004)), and then taking into consideration the insurer's conflict of interest as both payor and administrator of benefits, the court sided with the plaintiff.

First, the court ruled the decision to terminate benefits was wrong under a de novo consideration. Comparing plaintiff's specialist doctors who had treated Johnson for years to MetLife's doctors who merely reviewed records, the court deemed the evidence strongly favored the plaintiff. The court acknowledged that while Black & Decker Disability Plan v. Nord, 538 U.S. 822, 825 (2003), ruled that no deference need be given to the treating doctor's findings, the court also ruled that such findings cannot be ignored, and ''treating physicians, as a rule, have a greater opportunity than consultants to know and observe the patient as an individual.'' The court also cited a ruling from within its district which held, ''[c]ommon sense and a stream of legal precedent suggest, however, factual determinations of a treating physician are objectively more reliable.'' Burt v. Metropolitan Life Insurance Co., No. 1:04-CV-2376-BBM, 2005 U.S. Dist. LEXIS 22810, at 33 (N.D. Ga. Sept. 16, 2005).

The court also responded to MetLife's contention that the treating cardiologist failed to document restrictions in activities such as sitting, standing and walking. Although the doctor wrote ''not cardiac related'' next to those sections of the functional capacity form, a separate section titled ''Cardiac Functional Capacity;'' was filled out. Hence the court found, ''MetLife cannot now complain that Dr. Silverman's [the cardiologist] failure to fill out one section of its own poorly designed form somehow indicates a lack of objective evidence for his conclusions.'' The court also rejected MetLife's argument that Johnson's other physicians did not certify her disability, finding the conditions those doctors treated were not the cause of her disability. Thus, their opinions were deemed ''of minimal relevance.''

The same conclusion applied to MetLife's consulting physicians. For example, the court found the physiatrist's opinion that there was no disability due to ''neuromusculoskeletal issues'' worthless since the plaintiff's core conditions causing her disability were cardiac and endocrine related.

The court also overruled MetLife's argument that the plaintiff's activities were inconsistent with her claimed disability. The court described those assertions as ''a highly selective parsing of the plaintiff's statements.'' The court also cited a litany of cases that have held that the performance of sporadic household activities is not the equivalent of working such as Hawkins v. First Union Corp.Long-Term Disability Plan, 326 F.3d 914, 918 (7th Cir. 2003) (claimant's ability to do some activities at home did not establish that he could do a full-time job) and Hillock v. Continental Casualty Co., No. 02-C-5126, 2004 U.S. Dist. LEXIS 3907, at 20 (N.D. Ill. Mar. 1, 2004) (''CNA also assumed that the ability to do some activities at home by itself shows that a claimant can perform the material duties of her job. This assumption is not supported by case law or common sense.'').

Further, the court found the Social Security award persuasive. The ALJ's conclusion was characterized as ''a finding by an independent fact-finder that in light of the plaintiff's physical limitations, there were no jobs that she could perform given her age, education, and work experience — virtually the same disability definition that the plaintiff must prove in this case.''

The court added that the ALJ had the benefit of observation of Johnson's demeanor and that of the independent vocational expert who testified that ''a person with the plaintiff's level of fatigue would need to take rest breaks during the day and would not be able to perform any jobs.''

Nor did the court accept MetLife's argument that the plaintiff lacked ''substantiating objective medical evidence.'' The court found the plaintiff's diagnoses of cardiomyopathy, diabetes and asthma were objectively diagnosed, and no one disputed that Johnson suffered from those conditions or that fatigue is associated with those impairments.

Nor did the policy require the submission of ''objective'' proof; thus, MetLife could not insist on production of evidence the plan did not require.

In addition, the court was troubled by the manner in which MetLife's consultants looked at Johnson's disability solely from the perspective of their specialties; and it appeared to the court that none of them looked at ''the 'big picture' combination of effects from the plaintiff's primary and secondary health issues and medications.''

Thus, the consultants' review was ''based on what was, at best, an incomplete picture of the plaintiff's overall health situation.''

Despite those conclusions, the court was not done. Because the policy contained a clause that gave discretion to the insurer, the court was then obligated to determine whether MetLife's decision was arbitrary and capricious, although that evaluation was tempered by a further examination into whether MetLife may have been influenced by its conflict of interest. Thus, after first finding that MetLife's decision was wrong, but not unreasonable as a matter of law because it was based on the opinions of four physicians, the court's view of the insurer's conflict of interest resulted in an ultimate finding in favor of the plaintiff.

Under 11th Circuit guidelines, MetLife was under the burden of proving its decision was not tainted by a conflict of interest. MetLife's first argument in that regard is that it provided no bonuses to its employees for denying claims, nor did it impose quotas for claim payments or denials. MetLife further argued that its overly generous acceptance of non-qualifying claims could result in increased premiums for other policyholders. The court rejected all of those arguments, particularly since the fact that the plaintiff's condition worsened after she initially qualified for benefits ''calls MetLife's motivation for later denying benefits squarely into question.'' The court also ruled the ''higher premiums'' argument was unsupported by empirical evidence, and the contrary argument is more plausible — MetLife can increase its profits by paying fewer claims.

The court further overruled MetLife's argument that it could meet its burden by showing its decision ''represented a uniform construction of the policy.'' The court reiterated that MetLife imposed an objective proof requirement that was nonexistent, a defect the 11th Circuit had recently found to be arbitrary and capricious in Oliver v. Coca Cola Co., 497 F.3d 1181, 1196-97 (2007), rehearing granted by, vacated in part on other grounds by, Oliver v. Coca Cola Co., 506 F.3d 1316 (11th Cir. Nov. 6, 2007).

In addition to factual similarities, due to the court's finding the plan had arbitrarily rejected symptom complaints despite substantial corroboration based on the plaintiff's course of treatment, the court also found Oliver relevant in its rejection of a claim denial based on a physician's failure to fully complete a ''checkoff'' form. The court of appeals pointed out the treating doctor provided more detailed narrative evidence that clarified any ambiguity. The court thus deemed MetLife's similar conduct in this case as ''willful failure to see the forest for the trees on MetLife's part, and represents arbitrary and capricious decision making.'' Likewise, MetLife's disregard of the side effects of plaintiff's medications was also a ground for findings its decision arbitrary and capricious. Therefore, based on all of these factors, the court found MetLife's determination arbitrary and capricious and ruled that Johnson was entitled to all past-due benefits with interest.

Although the 11th Circuit imposes a difficult exercise upon district judges in performing the mental gymnastics necessary to evaluate an ERISA claim under the arbitrary and capricious standard of review, Judge Charles A. Pannell Jr., proved he was well up to the task. The ruling exposed the gamesmanship MetLife engaged in, and it suggests a pattern of mendacity by the insurer.

Prominent ERISA scholar, Professor John H. Langbein of the Yale Law School, takes the position that the type of claim review performed by MetLife has been motivated by the arbitrary and capricious standard of review applicable in ERISA claims. Langbein, ''Trust Law As Regulatory Law: The UNUM/Provident Scandal and Judicial Review of Benefit Denials Under ERISA,'' 101 Nw. U. L. Rev. 1315 (2007). Pannell put his finger squarely on the issue when he accepted the plaintiff's argument that fewer paid claims means higher profits, an argument that Langbein also recognizes.

Given the immunity from damages provided insurers by ERISA, and virtual insulation from penetrating review through a plenary court proceeding, empirical evidence is now available that shows insurers operating under ERISA have systematically engaged in the wrongful denial of claims. I recently co-authored an amicus brief with attorney Ronald Dean on behalf of the National Employment Lawyers Association and United Policyholders filed in the MetLife v. Glenn case currently pending before the Supreme Court (available at http://www.abanet.org/publiced/ preview/briefs/pdfs/07-08/ 06-923_RespondentAmCu- NELAUntdPolicyholders.pdf), which furnished concrete examples. Even more recently, additional evidence was revealed by the final report relating to UnumProvident's reassessment of disability claims that resulted from an earlier market conduct investigation of its claims practices. Of the group long-term disability claims that were reassessed (most of which were undoubtedly governed by ERISA), Unum acknowledged wrongfully denying 45.1 percent of the claims it reassessed (saving $558.6 million, which the insurer ultimately had to pay). See, http://mainegov-images.informe.org/pfr/insurance/company/exam_reports/2007/pdf/Unum_Multistate_Examination _Report_4-14-08.pdf. This experience suggests, according to Langbein, ''Broadly speaking, there are two plausible interpretations of the Unum/Provident scandal. Unum could be such an outlier that the saga lacks legal policy implications. On this view, a rogue insurance company behaved exceptionally badly, it got caught and was sanctioned, and its fate should deter others. The other reading of these events is less sanguine: For reasons discussed below in Part III, conflicted plan decisionmaking is a structural feature of ERISA plan administration. The danger pervades the ERISA-plan world that a self-interested plan decisionmaker will take advantage of its license under Bruch to line its own pockets by denying meritorious claims. Cases of abusive benefit denials involving other disability insurers abound. Unum turns out to have been a clumsy villain, but in the hands of subtler operators such misbehavior is much harder to detect.'' 101 Nw.U.L.Rev. at 1321.

Johnson thus establishes the need for courts to show more skepticism toward insurers' claims regarding ''independent'' review by non-examining physicians and less deference to their findings, particularly since even bias-related discovery is routinely disallowed in most ERISA claims and trials virtually non-existent. As the National Association of Insurance Commissioners argued in its amicus brief filed in the Glenn litigation (available at http://www.abanet.org/ publiced/preview/briefs/pdfs/ 07-08/06-923_Respondent AmCuNAIC.pdf) granting deference to insurers' findings in disability claims is contrary to public policy and should be disallowed as a matter of law. The forthcoming Supreme Court ruling in Glenn will therefore soon decide whether to maintain the status quo or to recognize, as the Johnson court did, the reality of the misuse of deferential authority.

I was counsel in the Hillock case cited by the court.