APRIL 2007 BAD FAITH CASES -NO BAD FAITH IN DENYING LONG TERM DISABILITY BENEFITS WHERE INVESTIGATION INCLUDED INDEPENDENT EXAMINATION AND REVIEW (Philadelphia Federal)
The plaintiff insured was a principal for a school for students with serious problems with discipline, weapons violations, drugs, or assault. The plaintiff was involved in a rear-impact car accident. She was covered under a disability insurance policy that included long term disability benefits. After the accident, she did not return to work, did not seek alternative employment as a principal or in any other capacity, and did not request that her employer make any accommodations for any disabilities.
At the time of the accident, the plaintiff was enrolled in and at the end of a doctoral program, taking her last classroom course before writing her dissertation. Approximately one and one-half years after the accident, she also enrolled in a Masters of Business Administration (“MBA”) program, and drove 25 miles each way to attend.
Approximately two years after the accident, while she still claimed total disability, she traveled to China, Singapore and Thailand as part of a three credit course which was not required for hr MBA program. She never informed the insurer of her enrollment in the MBA program or her overseas travel.
Eight months later, the insurer sent the plaintiff a letter reminding her that proof of continued disability is required for benefits, and requested information as to her current medical status, as well as information about any classes she had taken over the past two tears.
The letter specifically requested that the plaintiff provide a response to the following question: “[H]ow are you able to attend classes and fulfill all the requirements involved with attending school, but still feel unable to work? How do these requirements differ from the activities of your job?”
The plaintiff responded that her doctoral program permitted her to work at her own pace and communicate by phone, mail, and e-mail, whereas her job required 50-60 hour stressful weeks overseeing a school for disruptive youths and a commute of 38 miles each way for five to six days per week.
At no point did the plaintiff disclose that she was also pursuing an MBA, or that it required her to appear in person and commute. The insurer ordered additional medical record reviews by physicians, and two outside independent medical examinations of the plaintiff.
After giving plaintiff’s treating physician a chance to respond, the insurer notified the plaintiff that it was terminating her benefits. The plaintiff elected to appeal, and the insurer assigned the matter to an appeals analyst with no previous involvement in the matter.
The insurer also commissioned independent file reviews from two additional doctors, and gave the plaintiff’s treating physicians an opportunity to respond. One of the plaintiff’s physicians chose not to respond. The other relied on a report written approximately two years earlier that did not opine on any restrictions on the plaintiff’s ability to work. The insurer upheld the revocation of benefits.
The plaintiff filed a suit alleging, in part, that the revocation of benefits constituted bad faith. The plaintiff accused the insurer of having “a mindset of denial” throughout the investigation of her claim. She claimed that the insurer’s medical record reviews were defective and that its doctors were biased.
The court noted the many medical file reviews and medical reports that were conducted and drafted in the course of the investigation, including two reviews by independent consultants. The court also noted that the plaintiff underwent two independent medical examinations by independent doctors. Finally, the court noted that the plaintiff’s own physicians declined to supplement the record.
The court found that this was more than enough to show that the insurer conducted a thorough investigation and had a reasonable basis for terminating the benefits.
Moreover, as to the plaintiff’s claim that a certain employee doctor failed to consider evidence regarding the nature of her doctoral program, and that the employee doctor was biased, the court noted that the doctor was only one of many reviewers and was not the ultimate decision maker on the claim.
While the plaintiff argued that the particular employee doctor had the “real authority” to deny her claim, and that the claims analyst who purportedly had final decision making authority had a “relatively modest educational and training background” in comparison to the doctor, the court found the plaintiff’s argument unpersuasive.
“Absent specific facts suggesting that employees’ ages or years of job experience affected their decision-making abilities, such factors are irrelevant.” The court found that the plaintiff offered no such specific facts, but rather “only crude innuendo.” Therefore, the court granted summary judgment for the insurer on the bad faith claim.