This month’s Friday Five explores decisions regarding the timeliness of appeals, the support necessary to sustain an LTD termination decision, a court’s discretion to credit and discredit expert opinions, the circumstances under which an insured may be required to prove they were prejudiced by the conduct of the insurer, and whether discovery may be permitted to supplement the administrative record when there are allegations of bias and bad faith in the LTD termination decision.

1. Is an appeal from an order modifying an earlier order certifying a class of LTD insureds timely? No, unless the modified order materially alters the original order granting or denying class certification. The insured received LTD benefits after she was seriously injured in a car accident. After the insured received a personal injury settlement payment, the LTD insurer sought to collect some of the settlement funds to recoup disability benefits paid. The insured filed a putative class action seeking a declaration that the LTD insurer did not have a right to recoup disability payments from her or others with similar policies. The trial court granted class certification on May 25, 2022. Three months later, the insurer filed a motion for reconsideration, and on November 22, 2022, the trial court issued an order modifying the earlier certified class, from which the insurer petitioned to appeal. Under Federal Rule of Civil Procedure 23(f), an appeal from an order certifying or refusing to certify a class must be filed within fourteen days, so the insurer’s appeal was late if the original order was operative, but timely if the modifying order was operative. The Third Circuit ruled that the appeal was untimely, because the modification order was limited to minor changes in the class definition. The court held that there should not be an opportunity to seek appellate review “whenever there [is] the slightest change in the class definition” and determined “that a modified class certification order triggers a new 23(f) petition period only when the modified order materially alters the original order granting (or denying) class certification.” Wolff v. Aetna Life Ins. Co., No. 22-8056, 2023 WL 5082238 (3d Cir. Aug. 9, 2023).
2. Can an LTD termination decision be sustained on appeal when grounded on independent record reviews? Yes, where the court determines that the review conducted by the experts and the insurer is sufficiently robust and where the review substantially complies with all plan requirements. The insured was a finance specialist who was approved for LTD benefits after being diagnosed with advanced peripheral deyelinatibe and axonal polyneuropathy of the lower legs. The insurer surveilled the insured and observed her driving, which she was medically restricted from doing, and suspected she was running a business out of her home. After an independent medical exam determined that the insured was able to work, the insurer terminated LTD benefits. The insurer denied an appeal after obtaining an additional independent record review. Eight months later, the insured demanded that her LTD benefits be reinstated. The insurer denied the “re-review” after the insured failed to submit additional medical records and after a second independent record review. The insured filed a complaint for LTD benefits, and the trial court entered summary judgment on the administrative record in favor of the insurer. The insured appealed, and the appellate court reviewed the matter noting that it was uncontested that the insurer’s conduct was to be reviewed under the arbitrary and capricious standard. The appellate court determined that the physicians used by the insurer to review the insured’s condition “engaged in a fulsome review of the record” and that the insurer “engaged in a deliberate, principled reasoning process when it decided to terminate [the insured’s] long-term disability benefits.” The appellate court affirmed the summary judgment in favor of the insurer after determining that it substantially complied with all plan requirements. Avery v. Sedgwick Claims Mgmt. Srvcs., Inc., No. 22-1960, 2023 WL 4703865 (6th Cir. July 24, 2023).
3. Can a court reject an insurer’s expert opinions when reviewing under the arbitrary and capricious standard and instead rely on the opinion of the insured’s expert? Yes, where the court determines that the insurer’s expert reports are inadequate and the insured’s expert’s report establishes an entitlement to benefits. The insured was a nurse anesthetist who received LTD benefits due to symptoms of Lyme disease. When the definition of disabled changed to the “any occupation” standard, the insurer terminated the insured’s benefits. The insured appealed, but failed to attend her independent medical exam, and her appeal was denied. After the insured filed a complaint, the trial court remanded the matter to the insurer to reschedule the IME. The insurer reinstated benefits for part of the period at issue, but otherwise affirmed its decision terminating benefits based on independent peer reviews from a physician board certified in occupational medicine and a physician board certified in oncology. When the matter returned to the trial court, the court remanded the matter to the insurer a second time after determining that the peer reviews were inadequate and that the insurer failed to conduct a full and fair review. After the second remand the insurer again affirmed the decision that the insured was not totally disabled. The trial court subsequently found that the insurer engaged in meaningful review, that the insured failed to prove that she remained disabled, and dismissed the insured’s claims. On appeal, the appellate court reversed, and remanded with the instruction that the insurer pay benefits to the insured for the period in question. Applying the arbitrary and capricious standard of review, the appellate court determined that the insurer acted inappropriately by selectively considering parts of the insured’s medical records. The court discredited all of the insurer’s expert reports, but found persuasive the insured’s expert report which established the insured’s right to benefits. Jordan v. Reliance Std. Life Ins. Co., No. 22-5234, 2023 WL 5322417 (6th Cir. Aug. 18, 2023).
4. Can a court determine that an insurer provided a full and fair review where it failed to provide a copy of a vocational assessment to an insured and give the insured an opportunity to respond? Yes, if the insured fails to prove that he suffered prejudice as a result. Insured was a systems engineer who received short term disability benefits after experiencing severe bouts of abdominal pain, diarrhea and nausea. In reviewing the insured’s request for LTD benefits, the insurer obtained an independent medical review and occupational analysis that determined that the insured was able to work. The insurer determined that the insured had not met his burden to establish that he met the definition of disability, and denied his claim for benefits. On appeal, the insurer commissioned another vocational analysis which determined that the insured was able to work. After the insurer denied the insured’s appeal, the insured filed a claim arguing that the insurer failed to conduct a full and fair review and that the court should apply the de novo standard and determine that the insurer’s conclusion was incorrect. The insured’s full and fair review argument was that the insurer failed to provide him with a copy of or the opportunity to respond to one of the vocational reports. The court rejected the argument because the insured failed to demonstrate prejudice, and specifically that the insured failed to identify what evidence he would have provided to rebut the vocational report. The court rejected the insured’s argument that the de novo standard of review should apply, and instead applied the arbitrary and capricious standard. The court then determined that the insurer reasonably determined that the insured did not meet his burden to prove that he was entitled to benefits, and awarded summary judgment in favor of the insurer. Hughes v. Lincoln National Life Ins. Co., No. 2:22-cv-00098-NT, 2023 WL 5310611 (D. Me. Aug. 17, 2023).
5. Will a court permit discovery to supplement the administrative record when an insured alleges that an insurer has terminated benefits based on bias or bad faith? No, if the court believes that its de novo review of the administrative record will remove any subjective factors underlying the decision. The insured was an attorney receiving LTD benefits due to the side effects of chemotherapy. On July 13, 2020, the insurer recertified his LTD benefits and informed him that his claim would not be reviewed for another year. The insurer, however, transferred the claim to a different unit the next month which further investigated the claim and terminated the insured’s LTD benefits on December 10, 2020. After his internal appeal was denied, the insured filed a lawsuit seeking reinstatement of LTD benefits, and sought discovery as to why the insurer “changed its position in a matter of weeks” regarding his claim. The insured argued that the discovery may reveal bias or bad faith as to why the claim was transferred within the insurer after a statement that the claim would not be reviewed for a year. The court determined that good cause did not exist to justify permitting discovery because “the Court will be reviewing the matter de novo, thereby removing from the analysis such an employee’s subjective attitude.” The court did permit the insured to discover emails from within the insurer identified on a privilege log because they predated any adversarial relationship with the insured and were therefore appropriately disclosed pursuant to the fiduciary exception to the attorney-client privilege. Hardy v. Unum Life Ins. Co. of Am., No. 23-cv-563, 2023 WL 4841952 (D. Minn. July 28, 2023).