Aetna Pays Back Injury Disability for 4 Years Then Terminates – Reversed in Court Because No Change in Condition
In August of 2007, Randi Dunda was working as a general manager at a Wawa convenience store when she had to take a leave of absence due to a herniated disc in her low back which was causing severe pain. Pain and limitations due to back injury disability are the number one cause of disability in the USA, and Ms. Dunda was fortunate enough that Wawa sponsored a group Long Term Disability (LTD) Plan, and she began receiving benefits from the Plan’s insurer, Aeta Life Insurance Company. Wawa had purchased a group disability insurance policy from Aetna to fund its disability benefit plan.
Aetna Hired A Social Security Representative Who Helped Dunda Get Social Security Disability
After Aetna started paying LTD benefits, over a year later, in November 2008, Aetna informed Dunda that she was required to apply for Social Security Disability (SSD). Aetna even hired a non-attorney representative company called Alsup to represent her in getting SSD benefits. Dunda’s back condition was so severe that she was able to get SSD benefits, being approved in August 2010, retroactively to February 2008.
Aetna Approved Own Occupation, AND Any Occupation Disability Benefits
Aetna not only approved Dunda as disabled from doing her own job, but Aetna also approved and paid disability benefits due to Dunda’s inability to perform any occupation. Like most group disability insurance policies issued in the U.S. today, the policy which Aetna sold to Wawa pays benefits for 2 years (24 months) based on an employee’s ability to perform the duties of their own occupation. However, after 2 years, Aetna evaluates whether the employee is capable of doing the duties of ANY job, not just their own.
The Aetna policy had an added feature that is good for employees. Aetna would have to show that a disabled worker was capable of earning money at a certain level before they could be cut off from disability benefits. In Dunda’s case, Aetna decided that Dunda’s disability was so bad that she could not do her own job or any other job that could place her at the earnings level required by the LTD Plan.
Four Years After Dunda’s Disability Started, Aetna Decided There Were Jobs She Could Do
Throughout 2014, Aetna ramped up its efforts to investigate Dunda’s disability. She was required to take forms to her physicians as she had from the beginning of her claim. Her treating doctors all assigned restrictions to her; and none of them released her to full-time work at any level. Incredibly, an Aetna staff nurse reviewed the file and concluded that she had “stabilized,” and “she has regained sufficient functional capabilities for seated/desk work at this time.” This was over 4 years after Aetna initially paid the claim, yet nothing about her condition had changed.
Aetna had an employee do a transferable skills analysis / labor market survey, and its disability analyst decided that Dunda could do a variety of jobs at the required salary level. So…Aetna cut off Ms. Dunda’s benefits. Aetna’s LTD benefit manager actually wrote that there were no quantifiable medical findings to support her musculoskeletal symptoms or impairments, and that a cardiac condition had resolved as well. It is almost as if Ms. Dunda had miraculously gotten better, because she did not have “objective” markers in her medical records to all of her impairments.
Notably, Aetna had never required these objective indicators of disability before they decided to cut her off.
Aetna Finally Had a Doctor Look at the Claim File on Appeal
Aetna hired a Dr. Frank Polanco to conduct what is called a “paper review” after Dunda appealed Aetna’s termination of benefits. This was not an actual exam. Instead, Dr. Polanco just reviewed the records and offered his “opinion.” His opinion turned out to be that Ms. Dunda’s limitations were all based on “self-reports,” and she had no clinical findings to support that she was limited to working 4 hours per day at a sedentary level. Put simply, Aetna’s Dr. Polanco said that Dunda had no proof she was disabled other than her own statements about her condition, which he, of course, discounted.
New York Court Reverses Aetna’s Termination of Benefits For Never Having Required Objective Evidence Before
Because Dunda’s claim was covered by ERISA, the Employee Retirement Income Security Act, the New York federal judge hearing the case had to evaluate whether Aetna’s decision to cutoff benefits was “arbitrary and capricious.” To win the case, Dunda had to prove that Aetna’s decision lacked any reasonable basis. To put it another way, she had to show that Aetna acted arbitrarily, denying her a fair review.
The judge concluded that its was completely unreasonable for Aetna to required objective evidence of disability for the first time after paying benefits for 4 years. The lack of a change in Dunda’s condition was also a key fact, and the court stated:
The Court is “not suggesting that paying benefits operates forever as an estoppel so that an insurer can never change its mind; but unless information available to an insurer alters in some significant way, the previous payment of benefits is a circumstance that must weigh against the propriety of an insurer’s decision to discontinue those payments.
The court cited other cases which reached a similar conclusion. Without any improvement or change in her condition, it was arbitrary for Aetna to cutoff the claim by requiring objective evidence when that is not stated as a requirement in the LTD Plan’s terms.
Takeaway: LTD Insurer Cannot Change the Rules Midstream and Cutoff Benefits Without a Change in Condition
This court found that Aetna had injected a new standard that it had not used before. That was crucial to the decision. Combined with no change in condition, the judge concluded that Aetna had arbitrarily decided the case.
You should keep track of everything your insurance company does to help you prove your disability. In this case, Aetna hired the Social Security Disability representative that helped the claimant get paid. That is certainly a fact that should work against them, since their rep proved the employee could not work in any job to Social Security.
How the insurer conducts itself before it terminates LTD benefits is a key fact, but the safest thing for claimants to do is to regularly see their doctors and document both the objective and subjective bases for proving why they cannot work.
CASE: Randi Dunda v. Aetna Life Insurance Company, No. 6:16-cv-6232-MAT (W.D. NY June 30, 2016).