When disability occurs within the first year of employment, a pre-existing condition investigation is a near certainty. But what may seem to be “pre-existing” sometimes proves to be otherwise, and, as always, claimants need to be on guard against over-zealous insurers trying to save money and boost their profits.
John Lavery was diagnosed with a malignant melanoma on June 19, 2014, less than three weeks after his group long-term disability coverage became effective. When he stopped working a few months later, his company’s LTD insurer (Aetna) launched a pre-existing condition investigation, ultimately pointing to an April 14, 2014 visit with his primary care physician (during which Mr. Lavery sought treatment for a lesion on his back) as evidence that the condition responsible for Mr. Lavery’s disability was pre-existing.
His LTD claim having been denied on that basis, Mr. Lavery sued in federal court in Massachusetts, where a district court judge ruled in his favor. On appeal to the First Circuit Court of Appeals (before a panel that included retired Supreme Court Justice David Souter), Aetna pressed two (2) arguments. First, echoing the position it had articulated when it denied the claim, Aetna asserted that at the primary care office visit, either the melanoma was “diagnosed or treated” or Mr. Lavery “received services” treatment for it. The problem with that, however, is that while Mr. Lavery received treatment for a skin legion, it wasn’t until two months later that the legion was determined to be malignant. Finding the subject plan language ambiguous, and calling Aetna out for various signs of partiality in its claims handling, the First Circuit sided with Mr. Lavery.
Next, Aetna argued that Mr. Lavery’s LTD coverage actually began on July (not June) 1, which meant that the “look-back” period includes June 19, the date on which the melanoma was diagnosed. To that seemingly formidable point, the First Circuit responded “not so fast,” observing that because Aetna had taken the position throughout the claim and administrative appeal stages that coverage began on June 1, it is disingenuous (to say the least) for it to now assert otherwise. In fact, held the First Circuit, to allow Aetna to change its tune would be to subvert Mr. Lavery’s ERISA-guaranteed right to administrative review, something the court would not tolerate, especially since it runs afoul of the Department of Labor regulations.
Mr. Lavery prevailed across the board and the court’s decision reminded Aetna that it’s supposed to act as a fiduciary to the claimant, not simply in its corporate self-interest. If you are having difficulty with or need advice concerning your long term disability claim, do not hesitate to contact us.
Lavery v. Restoration Hardware Long Term Disability Benefits Plan (1st Cir. Sep. 3, 2019)
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack