Disability Insurance Blog

Aetna Is Defeated In First Circuit On Arbitrary And Capricious Denial Of Claim

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Friday, September 6th, 2019

Frankel & Newfield has represented more than a few Aetna disability insurance claimants where the court has noted the conflict of a company that serves as reviewer and payor of claims. In this case, Aetna suffered defeat at the First Circuit Court of Appeals, where it was the Appellant, seeking to have the Circuit Court overturn a prior decision which had ruled against the disability insurance company.

Aetna had sought to deny coverage to a claimant on the alleged grounds that the claim was barred by the pre-existing limitations clause within the policy.

Aetna performed a pre-existing review of the claim through an internal clinical consultant, who appeared to address the issue favorably to the claimant. The claim adjuster then noted the claim for approval, due to the non-application of the pre-existing condition.

Only days later, however, a supervisor indicated in the file that the very same claim adjuster determined that treatment during the appropriate look-back period would support application of the pre-existing condition limitation to bar coverage.

On appeal, another medical review seemed to support the claimant, and the same claim adjuster recommended overturning the prior decision.

Again, a note added to the file from the appeal triage team indicated that the condition was still subject to the pre-existing limitation. Aetna also manipulated the onset date of the policy coverage, to allow it to further encompass records to support its pre-existing limitation application and analysis.

When considering the issues, including whether Aetna acted in an arbitrary and capricious manner, the Court took account of the structural (financial) conflict of interest existing with Aetna’s dual role as both claim payor and claim decider.

On review of the record, the Court determined that Aetna’s conflict “played a role in its handling” of the claim. One factor supporting the Court’s determination was Aetna’s apparent “hunt for a reason to deny”. The Court also noted that “Aetna’s claim file … looks very little like one would expect it to look were Aetna proceeding without regard to its own interest.”

The Court summarized its concerns by noting “cumulatively, the foregoing record of internally inconsistent positions, changing rationales, missing explanations, and regulatory violations paints a picture that starts to look quite like the procedural unreasonableness cited by Glenn as an important factor for our consideration.” Thus, the Court decided that the company’s decision “does not pass muster under the arbitrary and capricious review.”

Because of Aetna’s conduct, the Court took the step of awarding some period of benefits to the claimant. The Court went further than typical however, in awarding benefits for periods of time for which no proof of loss was provided.

The Court supported this by determining that the continuation of the condition would support the benefits. The Circuit Court thus instructed the District Court to extend its award of back benefits through the Court’s mandate.

The Court also denied Aetna’s efforts to challenge the award of interest to the claimant.

If you have a disability policy with Aetna, or with Hartford, which now owns Aetna, and your claim is being denied or delayed, we invite you to contact the firm at 877-583-2524 to discuss your case and how our firm can help.

Lavery v. Restoration Hardware

Justin C Frankel

Written By:

Justin C. Frankel

Disability Insurance Attorney