Ron Alberts (Los Angeles) and Sarah Turner (Seattle) obtained a defense judgment for the defendant insurer, employee plan, and plan administrator after a bench trial held in U.S. District Court -Western District of Washington.
Plaintiff filed an appeal of the termination of her short term disability benefits, and sought to have the short term disability benefits reinstated, and an order directing the defendants to process her long term disability claim. Under the short term disability plan, the plaintiff received benefits for back and neck pain. While plaintiff was receiving the short term disability benefits the defendants reevaluated her claim by reviewing recent medical records and conducting independent physician peer reviews, and peer-to-peer consultations. After engaging in this process, the defendants concluded that the medical documents no longer supported a finding of disability and terminated her benefits. Plaintiff appealed, and the defendants reviewed additional records provided by the plaintiff, and conducted a second independent physician peer review and peer-to-peer consultations. After reviewing the independent physician's opinion the defendants upheld the denial.
Plaintiff filed suit arguing that the denial of disability benefits was improper. Plaintiff also argued that the de novo standard of review should apply because an inherent conflict of interest existed because the short term disability plan was self-funded by the employer, and the insurer, that served as the claims administrator for the short term disability plan, would have been both the claims administrator and funding source for the long term disability benefits. Plaintiff alleged the defendant insurer had a motive to terminate the short term disability benefits so it would not have to process the long term disability claim. In a significant decision, the Court held that plaintiff's conflict of interest argument was speculative, and applied the more favorable abuse of discretion standard.
The Court distinguished a host of unfavorable Ninth Circuit case law relied upon by plaintiff, and found that the defendants engaged in a "meaningful dialogue" with the plaintiff, and properly relied on the medical records and the opinions of both independent physician peer reviews, and peer-to-peer consultations. The Court concluded that there was no evidence that plaintiff was disabled at the time her benefits were terminated, and upheld the defendants decision to terminate the short term disability benefits.