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Health and Disability & Life Insurance Law

The Northern District of Texas Reaffirms the Right to Rely on an Opinion by a Non-Treating Specialist in ERISA Long-Term Disability Cases

By Adam Reich and Katie Derrig
Health and Disability & Life Insurance Law

Health and Disability & Life Insurance Law

Fall 2020

In Ingerson v. Principal Life Ins. Co., No. 2:18-CV-227-Z-BR, 2020 WL 3118693 (N.D. Tex. June 12, 2020), an ERISA-governed long-term disability case, the U.S. District Court for the Northern District of Texas reaffirmed Fifth Circuit precedent allowing for independent physicians to give expert testimony based on their review of medical records rather than requiring them to examine a claimant personally.

On March 13, 2015, the plaintiff was terminated from his position as a sales manager.  Ten days later, the plaintiff filed a claim for short-term disability benefits under a long-term disability (“LTD”) policy issued by Principal.  The plaintiff listed narcolepsy and “sleep disorder” as the qualifying conditions for the disability claim, and listed the date of occurrence as March 13, 2015.  Principal initially approved short-term disability benefits based on the plaintiff’s stated inability to perform his job and a statement by his physician that he suffered from “narcolepsy, difficulty staying awake, and extreme daytime fatigue.”

Two months later, plaintiff’s former employer informed Principal that the plaintiff had been terminated for performance issues.  Principal then requested that the plaintiff provide medical records from his physician to support his disability claim.  The plaintiff failed to provide these records by the deadline. Principal then notified the plaintiff it was denying both continuing short-term disability benefits and LTD benefits due to insufficient evidence of an alleged disability or inability to work.

The plaintiff appealed, submitting a letter from his physician stating that plaintiff was in treatment for narcolepsy.  He also submitted two letters from his former employer explaining how the plaintiff’s medical condition prevented him from fulfilling his job duties.  Principal then sought a peer review of the claim with a specialist in pulmonary and occupational medicine.  That physician found that the plaintiff was capable of performing his job on a full-time basis with several restrictions and limitations in place.

After reviewing this additional information, Principal reinstated the plaintiff’s benefits, requiring that he provide periodic updates on his status and treatment, and that he remain “unable to perform the majority of the Substantial and Material Duties of his Own Occupation.”

Although it approved benefits, Principal continued its evaluation of the claim.  After an extensive interview of the plaintiff by a third-party investigator and an examination by an independent neuropsychologist, who stated that he believed the plaintiff “could function without limitation in the workplace,” Principal determined that the plaintiff was no longer eligible for short-term or LTD benefits.  

The plaintiff appealed the decision, providing additional records documenting his treatment.  In response, Principal requested an examination of the plaintiff by either a sleep specialist or an occupational medicine specialist, but the plaintiff did not respond.  Principal then sought a panel review by specialists in internal medicine and sleep medicine who conducted a peer-to-peer call with the plaintiff’s physician.  The peer review report found that the plaintiff could perform his job duties without restriction or limitation.  

Another report issued by Dr. Newman, a pulmonary disease and sleep medicine specialist, affirmed this finding, concluding that the plaintiff could perform his job duties for the relevant period without restriction.  Dr. Newman’s report relied on the plaintiff’s medical records, noting that the plaintiff had not undergone a sleep study since 1999, the narcolepsy was mild, the plaintiff had failed to utilize treatments that would help the condition, and the plaintiff needed to see a sleep disorder specialist.  Based on these reports, Principal affirmed its denial of the plaintiff’s claim for LTD benefits.

The plaintiff then brought suit in federal court to recover disability benefits and attorney’s fees under ERISA section 1132(a)(1)(B), claiming Principal abused its discretion in denying his disability claim.  Principal denied liability and filed a counterclaim seeking attorney’s fees.  A magistrate judge tried the case on the administrative record and briefings, and found that the plaintiff had failed to meet his “burden to show his narcolepsy prevented him from performing the majority of the substantial and material duties” of his job from the time his benefits were denied through June 12, 2017.  In making this determination, the magistrate reviewed the persuasiveness of each party’s case de novo to determine if the plaintiff sufficiently established his disability under the policy. 

The magistrate relied heavily on the opinion of Dr. Newman, finding it to be one of the few persuasive pieces of evidence.  She found the report compelling because Dr. Newman: (1) was a sleep specialist and based his opinion on records relevant to the time period at issue; (2) considered the plaintiff’s explanation of his duties and the letter from Saiz stating the plaintiff was terminated due to his health issues; and (3) cited reasons for his findings which were supported by the record.  Because the report was one of the few opinions the magistrate found persuasive, and it indicated that the plaintiff was fully able to complete his job duties without restriction, the judge recommended a judgment in favor of Principal.

In an unusual twist, the magistrate also awarded attorney’s fees to Principal.  The judge reasoned that attorney’s fees are awardable under ERISA, and fees can be awarded where “the court can fairly call the outcome of the litigation some success on the merits” for the party seeking the award.  Because Principal had achieved success on the merits, the magistrate awarded it attorneys’ fees.

The plaintiff objected to the magistrate’s findings, claiming it was error for the judge to rely on Dr. Newman’s report where he did not personally examine or test the plaintiff and objecting to the finding of attorney’s fees for Principal.  In rejecting the first argument, the court relied on both Supreme Court and Fifth Circuit precedent holding that physicians may rely on reports from other physicians to develop their own opinions without needing to examine the claimant personally.  

More specifically, the court cited to Anderson v. Cytec Indus., Inc., 619 F.3d 505 (5th Cir. 2010), which held that expert evaluations of a psychiatrist and a psychologist based solely on a review of the claimant’s medical records could not be invalidated merely because they did not personally examine the claimant.  To come to this conclusion, both the court in Anderson, 619 F.3d 505 and Ingerson relied on Supreme Court precedent that held there is no requirement for plan administrators to “give special deference to the opinions of treating physicians.”  Because there is no requirement to give deference to treating physician opinions, the court reasoned that a “medical report not based on direct examination” could not be invalidated solely on that basis.

The district judge also denied the plaintiff’s objection to the award of attorney’s fees to Principal.  In his objection, the plaintiff pointed to the five-factor test of appropriateness of an attorney’s fees award found in Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255 (5th Cir. 1980); he claimed that two of the factors weighed in his favor, and so the magistrate erred in recommending the award of fees to Principal.  The district judge rejected this argument, noting that it is within the magistrate’s discretion to award fees, and they have no requirement to consider the Bowen factors.  The court further found that the magistrate has discretion to award fees where the claimant has shown “some degree of success on the merits.” Id.  Because the only requirement to award fees is a showing of some degree of success on the merits, the district judge held that the factors in Iron Workers Local No. 272, 624 F.2d 1255 could not be construed as a strict requirement and upheld the fee award.  

Adam Reich

Litigation Associate - Lewis Roca Rothgerber Christie

Adam Reich is a litigation associate at Lewis Roca Rothgerber Christie where he focuses primarily in the areas of commercial litigation, construction, and insurance bad faith. Throughout his career, Adam has litigated matters in state and federal courts throughout the United States in a variety of areas, including catastrophic personal injury and wrongful death, claims under the Federal Employers Liability Act, and commercial disputes. Adam graduated magna cum laude from the Sandra Day O’Connor College of Law at Arizona State University in 2011 and is licensed to practice in Arizona.

Katie Derrig

3L at the University of Arizona James E. Rogers College of Law and the Editor-in-Chief of Arizona Law Review

Katie Derrig is a 3L at the University of Arizona James E. Rogers College of Law and the Editor-in-Chief of Arizona Law Review. She graduated in 2015 from Arizona State University with her B.A. in Russian Language and has studied and taught English in Russia. Prior to law school, Katie worked as a Plan Documents Specialist for a retirement plan third-party administrator, where she was certified as both a Qualified Pension Administrator and Qualified 401(k) Administrator through the American Society of Pension Professionals & Actuaries. Katie has accepted a post-graduate job offer with Lewis Roca Rothgerber Christie LLP, expected Fall 2021.

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