Applying the abuse of discretion standard of judicial review, the United States District Court for the Central District of California overturned Anthem Life Insurance Company's ("Anthem") denial of long term disability benefits.
Plaintiff Marilyn McIlhaney ("Plaintiff") suffered from Legionnaire's disease (a type of pneumonia) and received short term disability benefits under her employer's disability plan. Plaintiff continued to suffer effects of Legionnaire's disease, including fatigue, weakness, and depression. A month after the time to file for long term disability expired, otherwise known as the "elimination period," Plaintiff applied for long term disability benefits. As part of the application process, Anthem reviewed Plaintiff's Employee's Statement and Activities of Daily Living Form, reviewed records from Plaintiff's medical providers, including her attending physician, neurologist, and psychologist who started to treat her a month after the elimination period.
As part of its claim review, Anthem retained a third-party independent medical review of the medical records from a registered nurse who opined there was no objective data to support Plaintiff's claim for disability. After receiving the registered nurse's opinion, Anthem commissioned another third-party independent medical review by two doctors, an internist and psychologist. Both doctors concluded there was no clinical evidence to support Plaintiff's claim that her physical and mental conditions were severe enough to prevent her from performing the duties of her job as an auditor. Based on these opinions and the totality of the claim record, Anthem denied Plaintiff's claim for long term disability benefits.
Plaintiff appealed and submitted to Anthem further medical documentation, and documents from the Social Security Administration ("SSA") approving her for disability benefits. Anthem retained two third-party medical providers to opine on whether Plaintiff met the plan's definition of disability, which required she provide objective medical evidence she was unable to perform some or all of the material and substantial duties of her regular occupation. At least one of the medical providers acknowledged objective symptoms of Plaintiff's depression. After receiving the medical providers' reports, Anthem declined long term disability benefits, finding Plaintiff was disabled by the psychiatric condition for a limited period of time following the elimination period.
Reviewing the administrative record for an abuse of discretion, the district court disagreed and held Plaintiff's symptoms were apparent prior to the elimination period. The district court pointed to Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006), and followed Ninth Circuit ERISA law, finding there was an inherent structural conflict of interest because Anthem was the underwriter of Plaintiff's employer's disability plan and the claim administrator for the plan.
The district court weighed Anthem's conflict of interest as part of its determination of whether Anthem abused its discretion in denying Plaintiff's claim. The weight attributed to the conflict of interest included consideration of (a) whether the administrator provided conflicting reasons for the denial, (b) whether the administrator failed to adequately investigate the claim, and (c) whether the administrator failed to credit Plaintiff's reliable evidence.
The district court held Anthem acted in its own self-interest when it denied Plaintiff's claim. The administrative record strongly suggested Plaintiff was disabled prior to the elimination period, and the fact she saw a psychiatrist after the elimination period did not mean she was not disabled at an earlier time. The district court also indicated it was troubling that after Anthem reviewed the medical records and the opinion of its own independent medical provider, it did not conduct further investigation as to when Plaintiff's depression first arose. The district court placed significant weight on these factors, and the fact that the SSA awarded disability benefits. Based on these factors, the district court concluded there was sufficient support in the administrative record Plaintiff could not perform some or all of the material and substantial duties of her regular occupation.
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