Last month the U.S. Court of Appeals for the Seventh Circuit issued an important ruling in Holmstrom v. Metropolitan Life Ins. Co., 2010 U.S. App. LEXIS 16123 (7th Cir. 2010).  You can find the case in the "hits" section of the website library here.  

Lanette Holmstrom had been receiving disability benefits for a number of years when MetLife cut them off.  She sued the company and the trial court ruled that MetLife had not acted unreasonably.  She appealed to the Seventh Circuit.  That court reversed and order payment of benefits by MetLife to Holmstrom.  

The case has a number of noteworthy comments.  The decision faults MetLife for relying on "normal" test results when all parties agreed that there were no tests to definitively pin down the illness Holmstrong suffered from (complex regional pain syndrome).  In addition, it was an abuse of discretion for MetLife to insist on objective proof of her condition when there were no objective tests available for this illness.  What Holmstrom did present was a functional capacity evaluation that the court ruled constituted objective evidence that satisfied the requirements of the terms of the policy.  

MetLife also rejected Holmstrom's argument that her award of social security disability benefits justified an award of disability benefits from MetLife.  The court noted that the requirements to qualify for benefits under the social security act were more stringent than the any occupation disability requirements of the MetLife policy and that MetLife encouraged Holmstrom to apply for social security disability benefits.  As in MetLife v. Glenn, 128 S.Ct. 2343 (2008), MetLife ignored the social security award in considering whether Holmstrom was disabled under the terms of the policy.  The court ruled that this indicated arbitrary and capricious decision-making by MetLife.  

The court also ruled that MetLife failed in its obligation to consider Holmstrom's medical evidence as a whole, including evidence of the cognitive impairment that Ms. Holmstrom's CRPS, a physical condition, created through its pain and the prescriptions necessary to treat her symptoms.  The court also faulted MetLife for relying on reviewing physicians while minimizing the opinions of treating physicians who were in a superior position to reach valid conclusions about Holmstrom's illness and limitations.  If reviewing physicians disagree with the treating doctors, the reviewers must identify specific reasons for that disagreement.  Especially troubling to the court was the fact that MetLife's consultant recommended an independent medical examination and MetLife failed to follow up on that recommendation.  

The court was also concerned by what it characterized as a "moving target" MetLife established in dealing with Holmstrom's claim.  MetLife would tell the claimant what she needed to present to establish her right to benefits and then, when she presented that information, MetLife would present additional evidentiary hurdles for Holmstrom to jump over.  "Such conduct frustrates fair claim resolution and is evidence of arbitrary and capricious behavior."

Next, the court criticized MetLife for "cherry picking" information from Holmstrom's records that supported a basis to deny the claim while ignoring information that demonstrated she was entitled to benefits.  

Finally, the court discussed MetLife's inherent, structural conflict of interest and found that, while the court did not think Holmstrom's claim presented a close call based on the analysis in the decision to that point, it was nevertheless true that MetLife's conflict of interest was yet another reason to overturn it's denial of the claim.  As a remedy, the court ordered reinstatement of Holmstrom's benefits.  

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