How Do Disability Insurers Use Medical and Vocational Experts to Deny Claims?

Disability insurers are incentivized to deny claims in order to protect their profits. One of the ways insurers justify their claim denials is to hire medical and vocational professionals to review claims and issue opinions on whether an employee is disabled pursuant to the terms of the disability policy. 

One example of how an insurer unsuccessfully relied on its claim professionals to deny a claim is Logan v. Prudential Ins. Co., No. 2:20-01742, 2022 WL 16836642 (E.D. Cal. Nov. 9, 2022).  The employee in Logan was a claims adjuster, working for an insurance company, who fractured her ankle after falling from a ladder.  She ultimately had surgery on the ankle. However, the employee soon realized her ankle was not healing properly.  Soon the employee experienced chronic knee pain, which led to her doctor instructing her to stop spending extended time sitting, standing, walking, driving or working. 

The employee in Logan submitted a claim to Prudential, however, Prudential denied the claim. One of the medical reviewers that assessed the employee’s claim was a nurse hired by Prudential. The nurse reviewed the employee’s claim and medical records and then formed an opinion regarding whether the claim was justified. The nurse concluded that it would be reasonable to expect someone in the employee’s situation to have no capacity for work for the three months following surgery and then limited capacity for an additional two months. Beyond that, the nurse concluded that the employee would be able to return to work.

Meanwhile, Prudential also hired a vocational expert who determined the employee’s occupational duties were sedentary. This determination appeared to conflict with a description of the employee’s job duties which, as a claims adjuster, included consulting with customers, creating claim files, attending mediations, settlement conferences and trials. 

Relying on the conclusions of its professionals, Prudential denied the employee’s disability claim. Prudential advised the employee that “it doesn’t appear your condition would prevent you from performing the material and substantial duties of your regular occupation.”  The employee, exercising her rights under ERISA, sued Prudential. 

The court, after reviewing the record evidence before it, did not give much weight to the conclusions of Prudential’s nurse.  As the court explained, there was no evidence showing the nurse had “training or experience diagnosing or treating injuries like” those sustained by the employee.  The court found it significant that the nurse did not meet or examine the employee. Better still, the court was critical of the nurse’s conclusion that it was reasonable for the employee to return to work. Finally, the court noted that the nurse was an employee of Prudential, “so she faced an incentive to give an opinion in Prudential’s favor.” 

Ultimately, the court found that Prudential wrongfully denied this employee’s disability benefits. The court’s view regarding the opinions of Prudential’s employees was just one of many factors the court relied upon to reach its decision. Still, the ruling illustrates the inherent conflict insurers have when relying on internal employees to make what are supposed to be unbiased decisions regarding coverage under a disability policy.