MacNally v. Life Ins.Co. of North America, 2009 U.S.Dist.LEXIS 44423 (D.Minn. May 26, 2009)(Issue: Termination of Benefits).  This ruling, together with such recent cases as Gordon v. Northwest Airlines, Inc. and Life Ins.Co. of North America, 2009 U.S.Dist.LEXIS 22217 (D.Minn. March 18, 2009)(April 2009) and Alfano v. Cigna Life Ins.Co. of N.Y., 2009 U.S.Dist.LEXIS 7688 (S.D.N.Y. January 30, 2009)(February 2009), make it clear that CIGNA, the parent of LINA, has a history of biased claim administration.

In this case, the plaintiff had been CEO of several hospitals operated by the Allina healthcare system and later headed up Allina’s human resources and information systems.  In those positions, MacNally received life insurance and long-term disability insurance coverage underwritten by LINA.  The life insurance coverage included a benefit providing a waiver of premium in the event of disability.

MacNally suffered from multiple sclerosis which was initially diagnosed in 1993.  However, he was able to continue working until 2002 when his symptoms worsened; and he qualified for both long-term disability benefits and the waiver of premium benefit even though LINA initially disputed eligibility.  However, in 2006, LINA terminated the waiver of premium benefit; and after exhausting pre-suit appeals, MacNally sued LINA for reinstatement of the waiver of premium benefit.  On cross-motions for summary judgment, MacNally prevailed. 

The requirement for the waiver of premium benefit is that (after an initial 12 month own occupation period), the insured be incapable of engaging in any occupation.  Although the long-term disability definition was slightly different, the court pointed out that “LINA's decision on the waiver-of-premium claim was intertwined with its decision on MacNally's long-term disability claim.” *6-*7.  The court recounted the course of the long-term disability claim, which had been terminated in 2006 based on the findings of an in-house doctor, Dr. John Mendez, who rejected disability, finding: "although multiple subjective complaints are noted" in MacNally's medical records, "there is no documentation of significant measured physical limitations . . . and no documentation of cognitive and/or psychological limitations . . . ." AR 448, 142. *14.  LINA also obtained a transferable skills analysis that ostensibly identified jobs MacNally was capable of performing.  However, LINA reversed course and reinstated the long-term disability payments, although there was no evidence in the record as to why LINA had changed its mind. 

The court extensively recounted MacNally’s medical history and the course of his treatment and documentation of his disability claim, including criticism of a CIGNA form referred to as a PAA (Physical Activities Assessment) form, which the court found deficient because it failed to afford the physician completing the form the ability to check off that the claimant is “never” able to perform certain activities. *61.  The court also recounted the unequivocal findings of MacNally’s doctors who consistently expressed their opinion that MacNally would be unable to perform any occupational activities on a consistent and regular basis. Indeed, one of the treating doctors expressly criticized Dr. Mendez, writing: 

   I am unaware of any documentation from a qualified physician that has evaluated Mr. Mac[N]ally that he is able to work.

Mr. Mac[N]ally's chronic fatigue is the primary issue regarding his inability to sustain full-time competitive employment. Mr. Mac[N]ally has always been an individual with respect to his symptomatology. Fatigue is a common and often debilitating problem seen in patients with multiple sclerosis. The limitation of fatigue is not measurable by manual muscle testing or strength testing.

Dr. Mendez is listed as an occupational and internal medicine physician. He obviously lacks the necessary familiarity or training with the nature of fatigue and multiple sclerosis, as he suggests . . . quite incorrectly that physical testing would protect this. . . .

The nature of multiple sclerosis is that of progressive dysfunction, and over time, it would be expected that Mr. Mac[N]ally's inability to work would increase rather than decrease.

AR 124. *66-*67.  The court also singled out a finding by Cathi Coon, RN, a CIGNA nurse, who summarized Dr. Mendez’s findings in the record and documented: "Provided documentation does not support the restrictions detailed in [Dr.] Bernard's 9/18/02 PAA, particularly given the fact that Mr. MacNally continued working until 7/3/02 despite reported MS flare-ups." The court remarked,

Everyone who goes on disability leave necessarily works until some point before taking that leave. The fact that a person was working before he went on disability leave is not very good evidence that he was not disabled at the time he went on leave. *70 (n.46).

The court also pointed to a second Mendez report submitted in relation to the waiver of premium claim which stated:  

Based on the additional provided records, the original assessment regarding [waiver of premium] remains unchanged. This is because, although multiple subjective complaints are noted, predominantly fatigue, inability to work in stressful situations and insomnia, there is no documentation of significant measured physical limitations, such as strength deficits measured by manual muscle testing, and no documentation of cognitive and/or psychological limitations, such as could be obtained by a mini-mental status examination/MMSE and/or, more comprehensively, by neuropsychological testing.

AR 448. *74. However, the court pointed out that the phrase "significant measured physical limitations" does not appear in MacNally's life-insurance policy.  The court was also critical of CIGNA’s psychological assessment which relied on an opinion from Dr. Daniel Benincasa who found capability to engage in other occupations even though MacNally could not return to his regular occupation.  The court found Benincasa had neither the qualifications nor a basis to assess overall ability to work because he only looked at the psychological records. 

Finally, after an exhaustive review of the records and history of the claim, the court turned to the merits.  Based on LINA’s stipulation, the court applied the de novo standard.  The court also found that regardless of who bears the burden of proof, MacNally established by a preponderance of the evidence that he was entitled to the waiver of premium.  The court found there was no dispute as to the diagnosis of MS and found that MacNally’s condition deteriorated, “as would be expected, given that he suffers from a progressive disorder.” *82.  The court also found that MacNally’s efforts to continue working show him to be “the opposite of a malingerer.” *82. 

The court then found that by 2006, MacNally was incapable of working at any occupation due to a combination of MS-produced symptoms, particularly fatigue.  The court noted, “Fatigue is perhaps the most debilitating symptom of MS, and the medical records show that fatigue was a constant and increasingly troublesome problem for MacNally.” *84.  The court added:

Nothing in the record contradicts MacNally's description of the unpredictability of his fatigue. LINA has not explained how someone who does not know, from day to day, whether he will even have enough energy to drive could successfully hold down any of the five jobs identified by LINA in its June 2007 TSA. *84-*85.

The court also cited a Social Security finding of disability; and while that finding was not binding on LINA, it constituted additional evidence of disability.  The court then expanded its discussion based on a finding that “LINA's handling of MacNally's claims seems to reveal either bias or incompetence on LINA's part.” *85.  The court zeroed in on Dr. Mendez’s findings, ruling,

An insurance policy certainly could require that a disability claim be supported by "documentation of significant measured physical limitations," but MacNally's life-insurance policy does not do so. And while fatigue may be subjective, that does not make it feigned. Further, fatigue is a common, potentially debilitating symptom of MS -- a point even Graulich, LINA's consulting neurologist, acknowledged. AR 660. Finally, Mendez does not appear to be a neurologist, and LINA therefore had little reason to disregard the opinions of MacNally's treating neurologist in favor of Mendez's opinion. *86.

The court also found additional evidence of bias such as the insurer’s treatment of the PAA form in isolation without considering more detailed evidence giving specifics on MacNally’s condition. The court also criticized Dr. Benincasa’s opinion as lacking a reasoned basis within the scope of his qualifications.  The court summarized its findings as follows:

In short, LINA unjustifiably disregarded substantial medical evidence that MacNally's MS-related fatigue was disabling. And rather than fairly reviewing the evidence as a whole, LINA consistently looked for isolated pieces of evidence (such as MacNally's ability to drive and to exercise, and the fact that MacNally -- with difficulties ignored by LINA -- cared for his wife) that could be taken out of context or distorted to support LINA's goal of denying MacNally's claims. *87. 

Hence, the court reinstated benefits and also deemed an attorneys’ fee award appropriate.  The court remarked,

In this case, as in another case recently before this Court [Gordon v. Northwest Airlines], LINA did not behave toward MacNally as a fiduciary acting in his interests and the interests of plan participants. Rather, LINA acted like a company whose goal was to deny MacNally's claim. Instead of considering the evidence fairly and as a whole -- instead of being driven by a sincere desire to discover the truth about MacNally's condition -- LINA instead hunted through the record and grabbed on to any isolated bit of evidence that might support a decision to deny benefits. LINA acted as MacNally's adversary, not as his fiduciary, and thus MacNally is entitled to recover his attorney's fees. *88.

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