Disability Insurance Blog

Federal Court Finds Mutual Of Omaha Arbitrary And Capricious In LTD Denial


Thursday, February 4th, 2016

A Federal Court in Wisconsin has determined that a claimant should be entitled to pursue her Long Term Disability insurance benefits and that Mutual of Omaha improperly denied the claim on the basis of a pre-existing condition limitation in the policy.

The claimant originally injured her shoulder while shoveling snow, and began treatment for these difficulties. After continued medical workup of her shoulder problems, an MRI revealed lesions that were likely representing metastatic disease potentially from breast or lung cancer. Ultimately, she was diagnosed with lung cancer.

During the claim review process, Mutual of Omaha considered and determined that the claimant was actually treated for lung cancer during her look back period for potential application of the pre-existing limitation. Mutual of Omaha continued to advance this position, based upon the fact that her shoulder pain was in fact due to the cancer which had spread. On its appeal consideration, Mutual of Omaha relied upon one of its in-house medical directors, Dr. Reeder, to decide the claim. The Court was particularly troubled by Dr. Reeder’s “self-serving letter” to the claimant’s doctor, seeking a sign off on his characterization of the record.

In litigation, the Court’s consideration of the issues centered around whether the treatment for her shoulder injury, including medication, and physical therapy were for her cancer.

Because there was no record evidence that any of the claimant’s treating providers suspected cancer as a diagnosis, as the Court noted “was not even on the radar screen,” the retrospective effort by Mutual of Omaha to attribute her impairment to the pre-existing condition limitation failed.

Predicated upon Mutual of Omaha’s claim handling conduct and the success achieved in litigation, the Court permitted the claimant to pursue her attorney’s fees.

Kaiser v. United of Omaha Life Ins. Co.