In a very significant ruling, the 6th U.S. Circuit Court of Appeals extended several recent precedents to reject an insurer's reviewing doctor's findings and uphold a judgment reinstating payment of disability benefits. Evans v. UnumProvident Corp., 2006 U.S.App.LEXIS 1359 (Jan. 20, 2006). The plaintiff, a nursing-home administrator, became disabled due to a seizure disorder that was uncontrollable with medication. The treating doctors further reported that the stress of plaintiff's work was the cause of the severity and frequency of the seizures. Although the claim was initially approved, an in-house vocational evaluation performed by Unum led to the finding that Evans could perform her regular job.

When the treating doctor was asked to comment on Unum's findings, he responded: ''Increased levels of stress can be a precipitant to seizure activity. Since Ms. Evans has been away from her work environment, the seizures have improved tremendously. The position of Nursing Home Administrator requires an enormous amount of responsibility along with very important decision-making skills. The stress level is very high. During and after a seizure, Ms. Evans is unaware of her surroundings, and is unable to make any rational decisions. It would be in Ms. Evans' best interest not to return to work at this time.''

Nonetheless, an in-house Unum physician concluded ''that it was unreasonable to speculate that plaintiff's return to work would exacerbate her condition.'' The in-house doctor added that the stress comment was ''prophylactic'' and lacked supporting documentation. He further concluded the seizures were controlled with medication. However, while a second in-house doctor concurred that stress avoidance was prophylactic, he otherwise agreed with the treating doctor's restrictions and benefits were continued.

Subsequently, the treating doctor recertified Evans's disability; and he also restricted her from operating machinery. Unum's investigator videotaped her driving, though. When asked to comment, the treating physician wrote that the surveillance did not change his opinion despite the fact Evans should not be driving; and he reiterated that because the frequency of seizures increase with stress, she should not return to work.

Disregarding the treating doctor's opinion, Unum terminated benefits. Immediately after receiving Unum's telephone notification of the benefit termination, Evans had a seizure requiring emergency medical attention. Her treating doctor then wrote a detailed letter to Unum advising of the intractable nature of the plaintiff's seizures and their recurrence.

The doctor also pointed out: ''The issue of stress provoking seizures is a real one. Stress is probably the most important seizure-provoking factor in all patients, and not just Ms. Evans. The position of Nursing Home Administrator carries an enormous amount of responsibility. Since Ms. Evans has been away from her work environment, her seizures have improved. I agree that it is hard to eliminate stress from life. Nevertheless, if seizures are not fully controlled without stress, they will not be controlled in the presence of stress.''

The treating doctor also added that while Evans may have been driving against medical advice, it had ''no relevance to her disability.'' Unum then had one of its in-house medical directors, Dr. Alan Neuren, review the file. Dr. Neuren disagreed with the treating doctor's opinions and characterized the plaintiff's symptoms as self-reported, particularly since she did have extended periods when she was seizure-free. Unum then upheld its decision and litigation ensued.

Reviewing the district court's decision de novo, but applying an arbitrary and capricious standard of review to Unum's findings, the court upheld the district court's findings.

The court explained the arbitrary and capricious standard of review. ''While the arbitrary and capricious standard is deferential, ' ''it is not, however, without some teeth.'' ' McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 172 (6th Cir. 2003) (quoting Cozzie v. Metro. Life Ins. Co., 140 F.3d 1104, 1107-08 (7th Cir. 1998)). Merely because our review must be deferential does not mean our review must also be inconsequential. While a benefits plan may vest discretion in the plan administrator, the federal courts do not sit in review of the administrator's decisions only for the purpose of rubber stamping those decisions. Moon v. Unum Provident Corp., 405 F.3d 373, 379 (6th Cir. 2005). The obligation under ERISA to review the administrative record in order to determine whether the plan administrator acted arbitrarily and capriciously 'inherently includes some review of the quality and quantity of the medical evidence and the opinions on both sides of the issues.' McDonald, 347 F.3d at 172.'' *23-*24.

The court also explained how a conflict of interest would be considered.

''We have recognized that a conflict of interest exists when the insurer both decides whether the employee is eligible for benefits and pays those benefits. Gismondi v. United Techs. Corp., 408 F.3d 295, 299 (6th Cir. 2005); see Killian [v. Healthsource Provident Adm'rs], 152 F.3d at 521 (observing 'there is an actual, readily apparent conflict …, not a mere potential for one' where a company both funds and administers an LTD policy, because 'it incurs a direct expense as a result of the allowance of benefits, and it benefits directly from the denial or discontinuation of benefits'). In this case, because defendant maintains such a dual role, 'the potential for self-interested decision-making is evident.' Univ. Hosps. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 846 n.4 (6th Cir. 2000). However, this conflict of interest does not displace the arbitrary and capricious standard of review; rather, it is a factor that we consider when determining whether the administrator's decision to deny benefits was arbitrary and capricious. Kalish v. Liberty Mut./Liberty Life Assurance Co. of Boston, 419 F.3d 501, 506 (6th Cir. 2005). The reviewing court looks to see if there is evidence that the conflict in any way influenced the plan administrator's decision. Carr v. Reliance Standard Life Ins. Co. , 363 F.3d 604, 606 n.2 (6th Cir. 2004).'' *24-*25.

The court then pointed out that while the choice of one expert opinion over another will not be deemed arbitrary and capricious, and that there is ''nothing inherently objectionable about a file review by a qualified physician,'' the absence of independent review is a factor to be considered in assessing the reasonableness of the decision according to Calvert v. Firstar Finance Inc., 409 F.3d 286, 296 (6th Cir. 2005).

Calvert noted: ''Thus, while we find that [the administrator's] reliance on a file review does not, standing alone, require the conclusion that [the administrator] acted improperly, we find that the failure to conduct a physical examination — especially where the right to do so is specifically reserved in the plan — may, in some cases, raise questions about the thoroughness and accuracy of the benefits determination.'' 409 F.3d at 295. *27.

Citing McDonald and Moon, where Unum's reviewing doctor was found to have based his opinion on a selective review of the records, the court found Unum's doctor was not a ''neutral independent reviewer, but — an employee of Unum. It is not enough for Unum to offer an explanation for the termination of benefits; the explanation must be consistent with the 'quantity and quality of the medical evidence' that is available on the record.' '' (quoting McDonald, 347 F.3d at 172). Further, the court cited Moon, which observed, ''when a plan administrator's explanation is based on the work of a doctor in its employ, we must view the explanation with some skepticism.''

The court also relied on its 2005 decisions in Calvert and Kalish, finding similarities to those cases; and applying the lessons of those rulings, the court concluded: ''When the present administrative record is considered within the parameters of the above precedents, we hold that defendant's decision to terminate plaintiff's LTD benefits was arbitrary and capricious. It is evident that defendant's conflict of interest arising from its dual role as administrator and insurer of the LTD policy interfered with an objective review of the record. Although not required to do so, defendant never sought independent medical review, either in the form of file review or an actual examination, but instead relied solely on file review by its in-house staff physicians. Significantly, the evidence contained in the administrative record shows that defendant ignored reliable medical evidence proffered by plaintiff. Defendant's letter to plaintiff terminating her benefits erroneously states that there was no video/electroencephalography monitoring and no emergency room visits or prolonged hospitalization records in plaintiff's file to support the intractable nature of the complex partial seizures. Plaintiff's seizures, however, are well-documented and supported by laboratory testing, e.g., the 1999 hospitalization.

''Moreover, despite the unwavering expert medical opinion of plaintiff's treating physician, neurologist Dr. Abou-Khalil, that stress is probably the most important seizure-provoking factor in all patients, and not just plaintiff, and that plaintiff's high-stress position would exacerbate her condition, defendant nonetheless unreasonably discounted stress as merely a 'prophylactic' factor that should be accorded minimal, if any, weight in its determination of disability. The physicians in defendant's employ who conducted the file reviews characterized the stress restriction as speculative and unverifiable, despite documented instances when stressful situations precipitated plaintiff's seizures. The district court, in its well-reasoned opinion, accurately noted that so-called 'prophylactic' restrictions are not precluded from consideration in disability determinations under the terms of the LTD policy. The court further correctly noted that the LTD policy does not state that self-reported occurrences are to be accorded lesser significance when considering whether a person is able to work. Likewise, imprudent behavior (i.e., driving against doctor's orders) does not adversely impact a doctor's diagnosis or disqualify a person for benefits.

''Furthermore, as the district court concluded, defendant's vocational analysis ignores unrefuted evidence that plaintiff's position as the senior nursing-home administrator in charge of three health care facilities was a demanding and stressful occupation and, hence, incompatible with her condition. Although defendant classifies the job as 'light work,' which presumably pertains to the sedentary aspect of such a position, defendant in its decision denying benefits does not address the mental aspect of the position and the uncontradicted evidence, consisting of Dr. Abou-Khalil's reports that the stressful nature of the job and plaintiff's documented postictal impairments (disorientation and memory loss) would make it impossible for her to perform such duties, and the job description itself (which sets forth the multitude of responsibilities of plaintiff's administrative position and states that 'extreme mental stress can occur often for short periods'). Defendant's in-house physicians did not contradict this evidence.

''Finally, a series of inter-office e-mails and memos between defendant's customer care specialists in early 2002 discussing the status of plaintiff's LTD and life insurance claims, and noting that they were 'working on denying this claim' at that point in time, certainly indicate a predisposition toward terminating plaintiff's benefits and manifest the conflict of interest inherent in defendant's dual role as the decision-maker and payor of the LTD policy. The administrative record leaves no doubt that defendant's conflict of interest unduly influenced its evaluation of plaintiff's claim.'' *34-*36.

The court added a final key observation: ''Defendant's reliance solely on file reviews by its in-house physicians is questionable in light of the critical credibility determinations made in those file reviews, the factual inaccuracies contained therein regarding plaintiff's treatment history, and the fact that the file reviews categorically dismissed the reliable opinion of plaintiff's treating physician that the stress factor militated against plaintiff's resumption of her administrative position.'' *36. Consequently, the court found that Unum had no ''reasoned explanation'' for its actions.

This is an extremely significant opinion that shows at least the 6th Circuit understands the ERISA law does not provide insurers a license to engage in gamesmanship where sham reviews are advanced with the expectation that the arbitrary and capricious standard of court review will suffice to insulate defective claim decisions. Particularly where only in-house doctors are utilized, the courts are beginning to understand that they should have serious doubts about the validity of the claim determination.

The Supreme Court handed insurers administering benefits under ERISA's umbrella a tremendous gift when it issued Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), the ruling allowing for a deferential standard of review. Sadly, the disability insurance companies have systematically abused the responsibility that came with wide-ranging discretion as shown by the multi-state and California market conduct investigations. Nor is UnumProvident the only offender; the same perverse incentives that have encouraged UnumProvident to engage in bad-faith claim handling have also been cited in rulings involving every other disability insurer. This case, and the cases cited within the opinion, makes it clear that insurers have been influenced by their own self-interest and have deviated from the fiduciary obligation imposed by the ERISA law.

In addition to its general observations, this case makes several other points that bear additional mention. The fact that the plaintiff's seizures diminished while she was no longer working is not grounds for terminating her benefits, a point recognized both in this decision and by the 8th Circuit in Walke v. Group Long Term Disability Insurance , 256 F.3d 835 (2001), which drew the same conclusion. Moreover, the defense that avoidance of the stress of work is merely ''prophylactic'' is a very poor defense in view of the treating doctor's opinions, which he supported with citation to medical literature. Just the day before this note was written, an article was published in the British Medical Journal titled, ''Chronic Stress at Work and the Metabolic Syndrome: A Prospective Study'' (BMJ, doi:10.1136/bmj.38693.435301.80 (published 20 January 2006)). Work stress poses a real danger; and no disability claimant should have to risk death or further exacerbation of an illness as a condition of collecting benefits.