WASHINGTON – A federal appeals court said an insurance company cannot deny long-term disability benefits to a Frederick woman who suffers from lupus, degenerative disk disease and other problems.
In a published opinion, a three-judge panel of the 4th U.S. Circuit Court of Appeals said Wednesday that because the company had a vested interest in the case, it had to provide substantial evidence to refute Wanda J. Stup’s disability claim. It did not do so, the court ruled.
“This is a serious indictment of the claims-review process,” said Stup’s attorney Michael McAuliffe.
Stup was working at Frederick Underwriters Inc. in the mid-1990s when she was diagnosed with lupus and a rheumatic disease, both of which cause extreme pain and fatigue.
In 1998, after her doctor determined she was no longer able to work in her job as an administrative assistant, she applied for disability benefits from the UNUM Life Insurance Co. of America. UNUM paid her benefits for two years, then stopped, claiming she could return to work “in a sedentary occupation.”
Stup appealed, submitting years of medical records as evidence. In response, UNUM had Stup undergo an evaluation by a physical therapist.
The therapist determined after a two-hour evaluation that Stup might be able to perform “sedentary work,” but noted that she complained of severe pain and that “it would not be prudent to make recommendations regarding specific job duties . . . due to a lack of consistent and true information.”
The examination ended early, the therapist said, because Stup felt that she could not continue.
But a UNUM doctor who read the therapist’s report deemed Stup capable of sedentary work, and the company denied her claim.
After Stup again appealed the decision and was denied, she sued UNUM August 2002, claiming the company violated the Employee Retirement Income Security Act by wrongfully denying her long-term disability benefits.
The district court said that in ERISA cases where the company both determines an employee’s eligibility for benefits and pays those benefits — as in Stup’s case — the conflict of interest requires that the company give substantial evidence to support its claim. UNUM abused its power in denying Stup long-term disability, the lower court ruled.
The appeals court agreed Wednesday, saying UNUM’s physician based his decision only on the ambiguous evaluation, not on Stup’s voluminous medical records.
“The so-called conflicting evidence, upon examination, fully supports the opinion of Stup’s board-certified rheumatologist or is . . . so ambiguous that the person administering the (exam) thought the test results were not a prudent basis for assessing Stup’s specific job capabilities,” the appellate court said.
UNUM disagreed with the court’s assertion that, because the exam lasted only 2.5 hours, it could not determine Stup’s ability to work an eight-hour day.
“Functional capacity evaluations are designed to test an individual’s strength, flexibility, balance, coordination, cardiovascular condition and body mechanics in relation to job demands,” the company said in a prepared statement. “This testing does not typically last eight hours per day for a five-day period as suggested in the court’s opinion.”
While disappointed with the ruling, the company said it was pleased that the court declined to hear outside evidence that McAuliffe submitted from the UNUM doctor and from a former UNUM medical director who criticized the company’s medical review process.
The court did not have to consider that evidence because Stup’s voluminous medical records were enough to show that Stup could not perform her job duties, McAuliffe said. That tells insurance companies that they have to consider a client’s entire medical background, not just their own evaluations, he said.
“They have to do a meaningful evaluation of these records, not just rubber-stamp their own decision,” McAuliffe said.
-30- CNS 12-02-04