A Long Term Care Insurance Case
The Federal Long Term Care Insurance Program (FLTCIP) isn’t one that you run across very often. I can find only three decisions that deal with it and two arise out of the claim filed by Russell Conger. Yesterday the U.S. Court of Appeals for the Sixth Circuit ruled in favor of Conger in Metropolitan Life Ins. Co. v. Conger, ___ F.3d ___, 2007 U.S. App. LEXIS 848.
Conger applied for long term care insurance from Met Life under the FLTCIP. He answered a questionnaire asking for personal medical information about a list of items including diabetes, brain disorder, neuropathy, paralysis, progressive neurological disorder, memory loss, muscle disorder, chronic fatigue disorder and fibromyalgia. Conger stated that he had not been diagnosed with or treated for any of the listed conditions. The policy was approved and became effective October 1, 2002.
About 11 months later Conger submitted a claim for benefits based on difficulties with mobility and balance. When Met Life investigated the claim it found medical records showing Conger had experienced mobility and balance problems for at least 5 years but, despite regular medical care, his physicians were unable to pin down the cause of those problems. When Met Life uncovered this health history, it rescinded the policy arguing that Conger had failed to disclose in the application that he suffered from a progressive neurological disorder.
The Sixth Circuit rejected Met Life’s argument, ruled that it had acted arbitrarily and capriciously in rescinding the policy and reinstated Conger’s coverage. The basis for the decision was that the medical records made clear Conger had never been either diagnosed with or treated for progressive neurological disorder. Thus, the Met Life’s decision was not the result of a “deliberate, principled reasoning process.”
Moreover, the court faulted Met Life for focusing on “slivers of information that could be read to support a denial of coverage and ignored–without explanation–a wealth of evidence that directly contradicted its basis for denying coverage,” concluding, “[t]his is not the hallmark of a reasoned explanation.” The decision also finds problematic another basis for ruling in favor of Met Life. The trial court blamed Conger for not volunteering information on the application about his balance and mobility problems. The decision looks to federal common law in ruling that “Conger’s failure to volunteer unrequested information did not justify Met Life’s decision to terminate coverage.”
Although Conger is not an ERISA case, it borrows heavily from ERISA cases and principles developed in that area of law. It certainly can be cited in the future as persuasive authority in the context of that statute.