Employee Entitled to Long Term Disability Benefits After Plan Administrator Failed to Have Employee Examined By a Doctor

When an employee seeks disability benefits under an employer-sponsored disability plan, the disability policy often allows the insurer to have the employee subjected to an independent medical exam, or “IME.”  Insurers are not required to have an employee examined by a doctor. However, when an insurer denies an employee disability benefits, courts take note of whether the insurer took the time to have the employee examined. This article looks at a case where a claims administrator denied a claim without ever having the employee examined, and how a court recognized this insured’s lapse when awarding benefits to the employee.

A fifty-seven year old bank manager was injured while vacationing on a cruise ship.  While walking down a flight of stairs, the employee slipped and fell, sustaining multiple ankle fractures and ultimately requiring four surgeries. At the time of her injuries, the employee was insured under a long-term disability plan through her employer, PNC Financial. The plan was administered by Lincoln Financial Group, a third party claims administrator.

After surgery, the employee began sixteen months of physical therapy. Lincoln approved the employee’s long term disability benefits three months after her initial injury.  Under the plan, the employee was required to seek Social Security benefits. The Social Security administration determined she was unable to engage in gainful activity and awarded her disability benefits retroactive to her eligibility date. 

Approximately one year after her injury, the employee was assessed by a rehabilitation counselor who completed an occupational assessment. He concluded that the employee’s job was sedentary as she spent most of her time standing and walking. He also concluded she had severe vocational limitations and was not a candidate for vocational rehabilitation.  The employee’s treating doctor concluded she was “unable to stand or walk for a substantial amount of time.” The doctor also concluded that the employee had a “unclear prognosis.”

Twenty months after the employee’s initial injuries, the claims administrator had the employee’s medical records reviewed by one of its doctors. Even though the doctor never examined the employee he concluded, based on the file documents, that she had “limited impairment” and could stand or walk for brief periods of time. Even though the reviewing doctor did not offer an opinion on whether the employee could walk or stand throughout the workday, the claims administrator decided to terminate her long term disability benefits.

The employee appealed the administrator’s decision, however, the administrator denied the appeal so the employee sued her employer, PNC, in federal court claiming a wrongful denial of benefits. After reviewing all of the evidence, the court found that the claims administrator had abused its discretion and the employee was entitled to benefits. The court gave several reasons for its decision, however, one important factor that weighed in the employee’s favor was the claim administrator’s failure to have the employee examined by a doctor.

In ruling for the employee, the court noted “the administrative record also reflects Defendant’s election to rely on purely paper reviews rather than obtain an Independent Medical Examination. The court also recognized how the employee requested an independent medical exam and that such examinations are preferred when an insurer or claim administrator questions the employee’s reports of pain. By failing to conduct an actual examination of the employee, the reliance on a “paper review” of an employee’s medical history “raises questions about the thoroughness an accuracy of the administrator’s benefits decision.”  Relying solely on a file review, the court found, was “wholly inappropriate” where the administrator questioned the credibility of the employee’s pain complaints.

The takeaway from this case is clear – if a disability insurer or claim administrator wants to terminate benefits based on a challenge to the employee’s subjective pain complaints, courts will scrutinize whether the insurer took the time to have the employee examined. Failure to have an employee examined may in certain circumstances lead to a reversal of the insurer’s claim denial.  

You can read the full decision on the court’s docket.  See Hawks v. PNC Fin. Services Group, Inc., No. 2:21-cv-00612, 2022 WL 6218781 (W.D. Pa. Aug. 29, 2022)