When the Disability Insurer Has a Conflict of Interest
When an insurance carrier decides long-term disability benefit claims as a plan administrator and pays disability benefits from its own funds, there exists an obvious inherent structural conflict of interest. Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 965.
The presence of a conflict of interest requires the court to weigh that conflict to decide “how much or how little to credit a plan administrator's reasons for denying insurance coverage.” Id., at 968. If the conflict is unaccompanied by evidence of “malice, of self-dealing, or of a parsimonious claims-granting history,” there may be little or no reason to suspect that the insurer's conflict of interest impacted its denial decision.
On the other hand, if “the administrator provides inconsistent reasons for denial, fails adequately to investigate a claim or ask the plaintiff for necessary evidence, fails to credit a claimant's reliable evidence, or has repeatedly denied benefits to deserving participants by interpreting plan terms incorrectly or by making decisions against the weight of the evidence in the record,” the court may weigh the presence of a conflict more heavily. Id., at 968-69.
“[T]he existence of a conflict [is] a factor to be weighed, adjusting the weight given that factor based on the degree to which the conflict appears improperly to have influenced a plan administrator's decision.” Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 631 (9th Cir. 2009). Additional factors the court may consider in determining whether a plan administrator or fiduciary abused its discretion include “the quality and quantity of the medical evidence, whether the plan administrator subjected the claimant to an in-person medical evaluation or relied instead on a paper review of the claimant's existing medical records, whether the administrator provided its independent experts with all of the relevant evidence, and whether the administrator considered a contrary SSA disability determination, if any.” Id.
Did the plan administrator “cherry-pick” critical evidence? Did it engage in “meaningful dialogue” with the insured, including whether the insurer explained what additional information was required to support his claim? Did the insurer shift its reasons to deny benefits? Did the insurer demand objective evidence for subjective symptoms? These are all important areas of inquiry. However, the presence of a conflict of interest, even if it is a serious conflict, does not change the standard of review. It remains an abuse of discretion standard. Abatie, at 968-69.