This month’s Friday Five explores decisions from around the country discussing the concept of reasonableness in various forms. One court rejected the parties’ proffered definitions of the term “working” and instead determined that a dictionary definition was reasonable. Two cases reflect courts considering whether it is reasonable for an insurer to award or deny LTD benefits based largely on subjective evidence, and due to differing facts come to different conclusions. Another court considered the reasonableness of a class action settlement related to dependent child life insurance policies. And another court considered whether an insurer acted reasonably in terminating LTD benefits in the face of a structural conflict of interest.
- Will a court affirm a termination of LTD benefits using a dictionary definition of the term “working”? Yes, because where terms are not otherwise defined, courts should use the “plain, ordinary, and natural meaning” of words. The plaintiff, DeSilva, was an independent financial advisor who was seriously injured in a car accident in April 2016. The insurer approved his claim for LTD benefits in December 2016, but in February 2021 terminated his benefits because the insurer determined that DeSilva was “working.” DeSilva pursued an internal appeal but lost and subsequently commenced suit. The sole issue in the suit was whether DeSilva was “working,” which per the terms of the LTD policy would render him ineligible for benefits. The court concluded that the insurer’s decision was subject to de novo review and rejected the definitions of “working” offered by both DeSilva and the insurer. Instead, the court “surveyed various reliable dictionaries” to determine that the plain meaning of the term is “engaged in activity regularly for wages or salary.” Based on that definition, the court concluded that DeSilva was “working” and therefore ineligible for LTD benefits because he had returned to servicing previously existing customers at his business. DeSilva v. Guardian Life Ins Co. of Am., No. 23-cv-12625-MRG, 2025 WL 999920 (D. Mass. Mar. 31, 2025).
- Can an insured meet his burden to prove that he is disabled under the de novo standard of review relying largely on self-reported conditions not confirmed through objective medical tests? Yes, where the insured’s conditions are corroborated by observations by treating physicians. The plaintiff, Waldron, managed the daily operation of a manufacturing production line, but stopped working after he received the first dose of a Covid-19 vaccine and he thereafter experienced chronic and debilitating fatigue. The insurer denied Waldron’s claim for LTD benefits, which Waldron appealed. After denial of the appeal, the claim proceeded to litigation. On cross motions for judgment on the record, which the court described as “a bench trial on the papers” where the court evaluated the persuasiveness of conflicting evidence, the court granted judgment for Waldron. The court found that Waldron established that he experienced headaches, chronic fatigue, brain fog, dizziness, sleep issues and double vision, corroborated by his treatment with numerous physicians of differing specialties. The court noted the “complicated dynamic” where a multitude of tests were able to rule out some diseases, but objectively confirm none. The court found Waldron’s subjective evidence credible and sufficient to establish disability, and entered judgment that Waldron was entitled to LTD benefits based on his regular occupation. Waldron v. Unum Life Ins. Co. of Am., No. 3:24-cv-05193-TMC, 2025 WL 949028 (W.D. Wash. Mar. 28, 2025).
- Does an insurer act reasonably in concluding that an insured is no longer disabled where the insured’s physicians fail to provide medical records and an IME determines that the insured is not disabled? Yes, where the insured fails to prove that the insurer’s structural conflict of interest does not establish that the insurer abused its discretion. The plaintiff, Wallace, was a mining engineer who left work after being diagnosed with fibromyalgia. He was approved for STD benefits in 2016 and LTD benefits in 2017. In 2018 the insurer investigated whether Wallace remained eligible for benefits under the “any occupation” standard, initially concluding that he was not and terminating LTD benefits in 2019 but reversing that decision and reinstating benefits in 2020. In January 2021 Wallace was adjudicated disabled by the SSA. In March 2021 the insurer sent an annual review letter to Wallace. In response, Wallace’s two physicians provided opinion letters to the effect that Wallace was still disabled but provided no medical records. The insurer required Wallace to participate in an IME. The IME doctor concluded that Wallace had no restrictions or impairment. The insurer shared the IME results with Wallace’s doctors, but they did not respond. The insurer cancelled Wallace’s LTD benefits, Wallace appealed and subsequently filed suit. On cross motions for summary judgment, the court applied the discretionary standard of review. Wallace argued that the insurer had a conflict of interest, but the court concluded that while a structural conflict of interest gives rise to “a higher degree of skepticism” Wallace’s evidence did not establish that the insurer abused its discretion. The court concluded that the insurer’s decision to terminate benefits was reasonable and granted judgment in favor of the insurer. Wallace v. Hartford Life & Accident Ins. Co., No. CV-23-00071-TUC-JGZ, 2025 WL 963579 (D. Ariz. March 31, 2025).
- Will a court approve a class action settlement related to coverage and benefits for dependent child life insurance? Yes, where the court independently concludes that the settlement is in the best interests of those whose claims will be extinguished. Plaintiffs were a class of participants in an ERISA-covered plan that provided or offered dependent child life insurance and who either had no children who met the definition of dependent or had a claim denied because a child was too old or not a full-time student. The defendant insurers entered into a settlement agreement which was approved by the court. The court concluded that the settlement provided adequate relief to the class, because denied claims would be paid at either 50% or 100% depending on the facts of each case, and an option to purchase an individual life insurance policy would be offered for each child who did not satisfy the definition of dependent child but for whom premiums were paid. The court observed that the class of 99 members would recover $620,250 for previously denied claims, which was 72% of the maximum value that could be obtained, with an additional 40 class members submitting notice of a potential claim. The court also awarded $77,053 in expenses, and $920,835 in attorney’s fees. Lewis-Abdulhaadi v. Union Security Ins. Co., No. 21-cv-03805-WB, slip op. (E.D. Pa. Mar. 20, 2025).
- Will a court find that an insurer acted reasonably in denying LTD benefits where the insured’s physician does not offer evidence contradicting expert reports that there was no impairment? Yes, even where the court expresses that it would have awarded benefits but defers to the discretion of the insurer. The plaintiff, Schwingle, was a spiritual and grief counselor who left her job in 2021 after being diagnosed with long-Covid. She was approved for STD benefits and then applied for LTD benefits. The insurer had the claim reviewed by a specialist in occupational medicine, who concluded that there was not evidence supporting any limitations on her ability to work. Schwingle’s physician reviewed the specialist’s report but offered no comments. The insurer denied Schwingle’s claim and Schwingle appealed. The insurer sought the opinion of a specialist in internal medicine and a psychologist, who concluded that there was a lack of documentation to support restrictions or limitations. Schwingle’s physician reviewed the report and indicated to the insurer that he found no significant error in the objective findings. The insurer denied the appeal, and Schwingle then initiated suit. On cross motions for summary judgment, the court followed discretionary review and determined that the insurer’s decision to deny benefits was not arbitrary and capricious. The court stated that “if the court were acting as the factfinder, it would be inclined to find for Schwingle,” but articulated that “the question is whether [the insurer] considered the evidence before it, explained the reasons for its decision, and identified the evidence supporting its decision.” The court concluded that the insurer had met that standard and entered judgment in favor of the insurer. Schwingle v. Hartford Life & Accident Ins. Co., No. 24-cv-125-jdp, 2025 WL 1019986 (W.D. Wisc. Apr. 4, 2025).
