The U.S. Court of Appeals for the Fourth Circuit issued McKoy v. International Paper Co., ___ F.3d ___, 2007 U.S. App. LEXIS 13724 (4th Cir. 2007) this week. Sampson McKoy, without help from legal counsel, applied for disability benefits after he suffered a torn rotator cuff. The insurer, Wausau, felt that he was not disabled and denied his claim. And, in fact, based on the records that McKoy submitted, it's hard to fault Wausau. His doctors all felt that based solely on the shoulder injury he was not precluded from doing a job that only required light or sedentary work. McKoy retained an attorney who saw there were other problems with McKoy that kept him from working. He sent McKoy out to have mental testing. Those evaluations showed that he had "borderline" intellectual capacity, a full IQ scale of 75, and low cognitive ability. He submitted this material with McKoy's appeal to Wausau but was again rebuffed. The insurer could not get past the relatively limited incapacity McKoy had as a result of his shoulder injury. The trial court reversed the denial, granted McKoy benefits and the Fourth Circuit affirmed the trial court. They ruled that while the physical disability, standing alone, may not have justified paying the claim, when combined with his cognitive impairments, McKoy clearly was entitled to disability benefits. McKoy illustrates one of the insurer dodges I've often seen in disability cases: the refusal to acknowledge the role cognitive dysfunction plays in keeping a person from doing either their own, or in serious cases, any occupation. Here's how I often see it play out. Disability claimant gets benefits it they aren't able to do each and every material duty of their occupation. Their occupation requires a relatively high set of skills and qualifications but doesn't present great physical demands, per se. You can come up with a pretty long list of these types of jobs: engineer, business executive, doctor, architect, judge, airline pilot, etc. Probably the great majority of folks working in occupations where they earn six figures or more fall into this category. As well as a huge percentage of those making less. Our heroine develops a chronic, painful condition. It could be one or more of a long list of ailments: a degenerated back, chronic regional pain syndrome (aka, RSD), etc. Or maybe she develops dementia due to Alzheimers or is in a car wreck that leaves her with permanent mental loss. She soldiers on for as long as possible but can't carry out the relatively high level of performance necessary to do her job. Her physicians, work peers and family all say that she can't carry out each and every material duty of her job. She applies for disability benefits and gets denied. Why? The insurer focuses like a dog with a bone on the relatively undemanding physical demands of the job. They send it out to their medical reviewers who do the same: "well, it's true that Sally has a lot of pain in her leg but she's got a sedentary job. She sits at a desk most of every day. I can't understand why she can't carry out the material duties of her job." Claim remains denied. And, sadly, many courts have upheld these denials in litigation (usually noting they are constrained by an abuse of discretion standard of review) and the claimant has walked away with nothing. Of course, the insurer is simply demonstrating willful ignorance. The denial should be reversed immediately and, if the standard of review is de novo, it often is. But the fact that it so often gets to a point where a court has to be called in at all to review such transparent error by an insurer is a strong indication that ERISA is a system off the tracks. In fact, most ERISA cases are reviewed using some form of an abuse of discretion type of review: an "arbitrary and capricious" standard of review. That makes it difficult to challenge insurer denials and win. And insurers recognize that based on ERISA's limited remedies, the worst that will happen to them if they deny a claim wrongfully is that years down the road a judge may order them to pay the withheld benefits. In many cases, the lack of resource to pay an attorney by the hour to pursue wrongfully denied claims and the lack of incentives for attorneys to pursue those claims on a contingent fee means the claimants will simply walk away without the benefits for which they and their employer paid. Another good example of this syndrome is the Rochow case, which I commented on here. The problem with deferring to the actions of insurers who act as ERISA fiduciaries is nicely summed up by Upton Sinclair in this quote: "It is difficult to get a man to understand something when his job depends on not understanding it."
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