Hypothetical vs. Actual Decisions

An unpublished case from the U.S. Court of Appeals for the Fourth Circuit, Gorski v. ITT LTD Plan for Salaried Employees, ___ Fed. Appx. ____, 2008 U.S. App. LEXIS 22904, caught my attention. It nicely illustrates some of the friction points on issues that can make or break disability and medical benefit cases.

Janet Gorski had back problems that caused her to apply for disability insurance benefits from MetLife, her employer’s long term disability insurance carrier. She’d had back surgery for a herniated disc but it resulted in little pain relief. Although her job was sedentary in its physical requirements, she could not sit for more than four hours at a time and during that period had to take frequent breaks. Her doctors attributed her continuing pain, in part, to the fact that x-rays showed her fusion hardware had become displaced. But they felt she was a poor candidate for additional surgery. Janet reported to MetLife that she was limited in many aspects of her activities of daily living due to back and leg pain, weakness in walking, irritable bowel syndrome and urinary incontinence. However, MetLife had video surveillance taken of Janet that showed her driving to the grocery store, doing some shopping, tending plants in her front yard and bending at the knees to pour water from gallon jugs. MetLife terminated her benefits.

Janet asked the insurer to reconsider, submitting additional medical records and comments from her physicians. MetLife sent the file for review to an outside physician. He felt that Janet’s subjective complaints were out of proportion to any objective findings. He made no mention of the dislodged surgical hardware her treating physicians identified as the cause of her continuing pain.  Relying on his report, MetLife maintained its denial.

Gorski sued MetLife and the parties each filed motions for summary judgment. The trial court ruled in MetLife’s favor stating that while her physicians pinpointed the hardware problems as causing Gorski’s pain, the degree of her disability depended on Janet’s subjective complaints and that, considering all the evidence, MetLife’s denial was not unreasonable. Since the proper standard of review was modified abuse of discretion (taking into account MetLife’s inherent conflict of interest), the trial court gave MetLife the benefit of the doubt.

Gorski appealed and the Fourth Circuit reversed and reinstated her benefits. The court was troubled by the failure of MetLife’s final reviewer to consider and discuss the objective evidence noted by a number of Gorski’s treating physicians: the malfunctioning hardware. Those doctors were unequivocal in stating that this was the cause of Janet’s continuing pain. With no analysis of this aspect of her physical condition, the Fourth Circuit felt that MetLife’s physician reviewer improperly cast doubt on Gorski’s veracity when she reported limits on her ability to work. "Without such a discussion, . . . [MetLife’s medical reviewer’s] report is simply an unreasoned and unexplained rejection of the objective evidence in the record . . . MetLife was not justified in rejecting the opinions of [Gorski’s treating physicians] . . . on the basis of such a flawed report."  The court went on to state that while an insurer does not abuse its discretion solely because it resolves conflicting medical evidence in its financial favor, insurers may not arbitrarily refuse to credit the claimant’s reliable evidence. To do so falls short of the "deliberate, principled reasoning process" that ERISA requires.

While MetLife argued that the evidence in the pre-litigation appeal record provided substantial evidence to support its decision, the Fourth Circuit makes this cogent observation: "[i]mportantly, the defect in MetLife’s final decision was not that the evidence before it was insufficient to support a hypothetical decision to deny benefits, but rather, that the actual decision that MetLife issued was not reasoned and principled" (emphasis in original).   In short, the court was not going to let MetLife construct for the first time in litigation a rationale for denying Gorski’s claim that was not clearly supported by facts and clearly articulated in the all important pre-litigation appeal process.

The final important aspect of the case was the decision to reinstate benefits rather than simply remand the matter to the insurer for additional consideration. This was justified because the majority opinion felt that the record clearly reflected Gorski was entitled to continued benefits. Judge Traxler dissented on this aspect of the decision, stating that he felt remand was proper to allow MetLife to evaluate the claim without considering the outside reviewer’s opinion.