A California Realtor was successful for 20 years, until he developed severe medical problems that incapacitated him. Diagnosed with restless leg syndrome, sleep apnea, and a variety of other ailments, he applied for long-term disability benefits under his employer’s new insurance plan. But things did not go well for him.
What happened. “Miller” had suffered extreme fatigue for more than a year—and watched his income, based entirely on commissions and bonuses—fall from a high of $343,857 in 2002 to just $12,585 in 2004. His employer, CB Richard Ellis, had changed insurance carriers as of January 1, 2004, when Metropolitan Life replaced UNUM.
Miller applied for benefits on April 15, 2004, by submitting an application to MetLife. He stated that he had first been treated for his conditions in October 2003 and was still working when he applied. A week later, MetLife denied him benefits, asserting that he didn’t meet the plan’s definition of disabled. Miller appealed, providing substantial additional medical information, but MetLife again denied his claim in January 2005. So, the following month, Miller sued the insurer and CB Richard Ellis’s plan for violating the Employee Retirement Income Security Act (ERISA), which covered the plan.
Only then did MetLife argue in court that because Miller’s problems began in 2003, UNUM was responsible for his payments. A federal district judge, after hearing all the evidence in the case, ruled that MetLife was responsible not only for benefits retroactive to October 2003 plus interest but also for Miller’s attorney’s fees and court costs. MetLife appealed to the 9th Circuit, which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.
What the court said. Appellate judges first acknowledged what is known in the ERISA world as a ‘structural conflict of interest’—that MetLife served as both claims administrator and claims payer, which could encourage it to deny claims. Not a violation in and of itself, it permits judges more scrutiny of the decisions made. They were very skeptical of MetLife’s changing reasons for denial—first that Miller wasn’t disabled and then that it was UNUM’s responsibility—and suggested the company had withheld needed information from Miller. Ultimately, judges affirmed all the lower court’s rulings. Mitchell v. MetLife, et al., U.S. Court of Appeals for the 9th Circuit, No. 08-55277 (7/26/10).
Point to remember: Judges were critical of MetLife’s policy, which gave two different definitions of disability. They also faulted the insurer for an “unwritten and unexplained objective evidence requirement” that wasn’t in the policy.