Disability Insurance Blog

Court Finds Liberty Life Abused Its Discretion


Wednesday, June 27th, 2012

A New York Federal Court has determined that Liberty Life abused its discretion in denying benefits to a long term disability insurance claimant who suffered from both cardiac problems and secondary depression. The Court reviewed a report and recommendation from the Magistrate Judge and upheld the recommended decision to award benefits to a claimant, whose benefits were denied.

The Court took issue with Liberty Life’s failure to have the claimant evaluated regarding his mental health claim, despite the recommendation for such an evaluation by a doctor hired by Liberty Life to examine the claimant. This was one factor leading the Court’s decision. The Court determined that “exclusive reliance upon second-hand opinion suggests that a claim administrator’s decision is less than fair” even if not per se wrong for an administrator to rely upon such reports. The Court thus determined “this practice seriously undermines a reviewing court’s confidence in such opinions where they appear to be unsupported and arbitrary rejections of the opinions of treating physicians as well as objective indications of disability.”

The Court thus ordered the claimant’s own occupation long term disability insurance benefits to be paid, with interest, and remanded the consideration of his any occupation claim to Liberty Life.

The practice of second hand opinions from non-examining physicians is a pervasive problem in ERISA long term disability insurance claims. If your claim has been denied or terminated on the basis of one of these second hand opinions from hired doctors who have never evaluated a claimant, we can help.

Donachie v. Liberty Life