An insurance company’s denial of an application for long-term disability benefits could not be upheld even though video surveillance showed the applicant engaged in activities inconsistent with her claimed disability, the 1st U.S. Circuit Court of Appeals has ruled.
The applicant argued that the insurer should have taken into account the context of the video evidence, particularly the emergency nature of her two-hour drive to a hospital where her mother had been admitted with chest pain.
The 1st Circuit agreed.
“Individuals often rise to the occasion in the event of an emergency,” Judge Kermit V. Lipez wrote for the unanimous 1st Circuit panel. “In context, the extra driving, the hurried movements, the pumping of gas may have been at the far edge of what she could manage with the aid of medication in the face of a family crisis.”
In reaching its decision, the court ruled that policy language requiring proof of disability “satisfactory to us” was inadequate to confer the discretionary authority that would trigger deferential — rather than de novo — judicial review.
The 61-page decision is Gross v. Sun Life Assurance Company of Canada.
Michael D. Grabhorn of Kentucky argued the appeal on behalf of the applicant. The insurance company was represented by Joshua Bachrach of Philadelphia.
Plaintiff Diahann Gross, an optician and office manager for Pinnacle Eye Care LLC, was placed on disability leave in early August 2006. Her treating physician concluded that she had reflex sympathetic dystrophy, or RSD, as well as fibromyalgia, migraines and chronic fatigue.
The plaintiff was covered under a long-term disability policy that was obtained by Pinnacle. When she filed a claim for LTD benefits, defendant Sun Life Assurance Co. of Canada hired an investigator to perform a background check and video surveillance on her.
In April 2007, Sun Life notified the plaintiff that it had denied her request for benefits because of “insufficient objective evidence to substantiate” a disability that precluded her from performing her duties at Pinnacle. In so concluding, the insurance company relied, inter alia, on its video surveillance and the opinions of consulting physicians who reviewed Gross’ medical history but did not physically examine her.
The plaintiff responded with a suit under the Employee Retirement Income Security Act. Employing the highly deferential “arbitrary and capricious” review, U.S. District Court Judge Rya W. Zobel in Boston upheld the insurer’s denial of benefits to the plaintiff.
‘No choice’ but to remand
On appeal, the defendant insurance carrier contended that the LTD policy contained sufficiently clear language granting discretionary authority to the insurer.
But Lipez said 1st Circuit precedent long recognized that the threshold question in determining the standard of review is whether the provisions of the benefit plan at issue “reflect a clear grant of discretionary authority to determine eligibility for benefits.”
Having fully considered the issue, “we agree with those courts holding that the ‘satisfactory to us’ wording, without more, will ordinarily fail to meet the ‘requisite if minimum clarity’ necessary to shift from de novo to deferential review,” Lipez said. “Hence, Sun Life’s rejection of Gross’s claim for benefits is subject to de novo review.”
The 1st Circuit concluded that the medical evidence in the record, if credited, was adequate to prove the plaintiff’s entitlement to disability benefits.
“[T]he sustained and progressive nature of Gross’s complaints, their facial credibility to the medical practitioners who personally examined her, and the objective symptoms consistent with [RSD] — given the absence of any method for reaching a conclusive diagnosis — support a finding of total disability,” Lipez said.
The court noted that the insurer supplemented the medical evidence by arranging for nine days of video surveillance of the plaintiff, revealing little activity by her during most of the surveillance days — with three exceptions.
First, on Nov. 9, 2006, shortly after dropping off a teenager believed to be her stepdaughter at school, the plaintiff was observed driving for about an hour and a half to her mother’s home, with a brief stop at a rest area along the way.
Second, during the evening of Jan. 11, 2007, the plaintiff drove a short distance with her stepdaughter to a Kmart, where she was observed bending down toward lower-level shelves, extending her arms above her head to retrieve items, and kneeling to examine other items.
Third, on Feb. 21, after receiving a phone call that her mother had been admitted to the hospital with chest pain, the plaintiff drove to a gas station, pumped gas using her right hand, and then drove for two hours to the hospital, with a brief stop halfway through the trip. About two hours later, she left the hospital and drove home.
The plaintiff argued that the insurance carrier gave unjustified weight to the surveillance videotapes.
The 1st Circuit found her 120-mile round-trip drive from her home to the medical center to be “particularly troubling,” however.
“Her manipulation of the gas pump is especially noteworthy given her reports of pain and numbness and ‘little functional usage’ of her right hand,” Lipez said.
On the other hand, the court said, knowledge of the reason for the plaintiff’s unusual travel that day was essential for any reliable appraisal of her medical condition.
“Indeed, the record does not show that either Dr. [Rukmaiah] Bhupalam or Dr. [Alan] Neuren knew that Gross’s travel to the medical center in Ashland was in response to a phone call reporting that her mother had experienced a medical emergency, possibly a heart attack,” Lipez said.
“Sun Life’s handling of the inconsistencies between the medical reports and the video surveillance — specifically its apparent failure to provide important context to Dr. Bhupalam and its internal reviewers — raises a legitimate question about whether Sun Life has made a bona fide effort to determine Gross’s capabilities,” Lipez wrote. “On de novo review, we have no choice but to remand.”