Premature Termination of Long Term Claims

Many long term disability clients of the O’Ryan Law Firm were paid disability benefits for several years until the insurance company abruptly terminated those benefits. Recently, we represented an individual in a claim against Unum where Unum had paid long term disability benefits under the policy without interruption for nearly eleven years between 2001 and 2011. Unum paid our client for 3 years under the “own occupation” standard and more than 7 years under the “any occupation” definition while regularly reviewing and approving the continuation of payment of her disability benefits. For more than 10 years, Unum found that the medical evidence supported our client’s claim until November 2011 when Unum abruptly terminated the claim arguing that our client was now “better.” It is not uncommon for insurance companies to pay disability benefits for years and then somehow conclude that the client is miraculously able to return to work.

Our approach in combating the wrongful termination of benefits is to show that the client’s medical records, just prior to the termination, establish that the client continued to actively and diligently seek treatment in an effort to relieve their symptoms and pain. We encourage our long term clients to continue to actively seek medical treatment, as required by the disability policy; otherwise it becomes all too easy for the insurer to find that the “medical evidence does not support continuing functional impairment.”
For individuals who have been receiving benefits well past the “own occupation” time period, the insurance company must have substantial medical evidence showing that the person’s medical condition has improved. Without this proof, the insurance company does not have a legitimate basis for terminating the claim.

The Seventh Circuit has repeatedly held that the termination of benefits without such proof of improvement constitutes an abuse of discretion on the part of the insurer. In Ladd v. ITT Corp., 148 F.3d 753 (7th Cir. 1998) the Court held that MetLife abused its discretion in terminating disability benefits paid to a claimant whose orthopedic condition had not improved. And in Hackett v. Xerox Corp. Long-Term Disability Income Plan, 315 F.3d 771, 776 (7th Cir. 2003), the court deemed Xerox Corporation’s termination of disability benefits that were paid to a claimant suffering from a psychiatric condition an abuse of discretion in the absence of evidence showing medical improvement. In Leger v. Tribune Co. Long Term Disability, 557 f.3d 823, 832 (7th Cir. 2009), the court held that termination of benefits without a showing that the medical evidence had altered in a significant way was an indicator that the claims administrator had abused their discretion. See also, Majeski v. Metropolitan Life Ins. Co., 590 F.3d 478, 485 (7th Cir. 2009) (termination of benefits without showing of improvement a factor to consider when analyzing whether the insurance company abused their discretion).

In order to be employable, as Oates v. Discovery Zone, 116 F.3d 1161, 1171 (7th Cir. 1997) points out: “It almost goes without saying that an employer has a legitimate interest in insuring that each employee’s work continues at a steady pace. . . . Reliability and promptness are important considerations in maintaining a work force.” Additionally, the Seventh Circuit has recognized that most employers are reluctant to hire an employee who is only sporadically available to work; similarly, it is reasonable to assume employers would be reluctant to hire an employee they know cannot work at a competitive pace. See also Rush v. McDonald’s Corp., 966 F.2d 1104, 1115 (7th Cir. 1992).

Without medical evident establishing that a claimant’s condition has improved allowing them to be a reliable employee, able to return to a 40 hour workweek and maintain a competitive pace, the termination of benefits is improper. At the O’Ryan Law Firm we have represented many clients who were receiving benefits for 3, 5, 10 and even 28 years when their benefits were terminated without a legitimate basis for the termination. Please contact the O’Ryan Law Firm if your long term disability benefits have been prematurely terminated by your insurance company.