A Missouri federal court recently found that Kansas City Life Insurance Company (“KC Life”) wrongfully rejected a certified nurse anesthetist’s claims for both short-term disability (STD) and long-term disability (LTD) benefits.
For over 25 years, Ronald Bernard enjoyed a successful career with Mid-Missouri Anesthesiologists. However, on October 6, 2017, Mr. Bernard was seen using syringes at work and, upon admitting that he had been using Fentanyl, was immediately terminated. Shortly thereafter, Mr. Bernard met with his physician and an addiction specialist who noted that he had suffered from substance abuse disorder since 2000, first relapsed in 2015, and received treatment including psychotherapy, Alcoholics Anonymous, and Narcotics Anonymous.
With the support of his physicians and based on his past diagnoses and treatment for his condition, Mr. Bernard filed a claim for STD and LTD benefits after the October 2017 relapse. KC Life denied both claims, explaining that it considered Mr. Bernard’s termination to have been due to him failing a drug test and not the result of a disability.
With the help of an attorney, Mr. Bernard appealed both denials and emphasized that he had suffered from opioid addiction for many years before his October 6, 2017 relapse. In response, KC Life noted its position that Mr. Bernard had performed his own occupation satisfactorily for years until he was terminated for testing positive for Fentanyl and denied his appeals. Mr. Bernard’s attorney then filed a federal lawsuit on his behalf.
The Court’s Review of Mr. Bernard’s Claims
Standard of Review
Like most claims for disability benefits, Mr. Bernard’s claims were governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). Generally, if you are eligible for disability benefits through your job, it is likely governed by ERISA.
Most disability policies contain discretionary language. This means insurance companies, including KC Life, have discretion to determine if someone meets their definition of disability. Under ERISA, if a plan document includes discretionary language, the court will apply an arbitrary and capricious standard of review. Under this standard, the court can only rule in your favor if it finds the insurance company had no reasonable basis to deny benefits. This is a difficult standard to meet.
The Court’s Decision
The court found that KC Life’s decision to deny Mr. Bernard’s claims for disability benefits was wrong because:
- No reasonable person could find that a nurse anesthetist so addicted to Fentanyl that he injects himself at work while his colleagues are nearby is capable of performing the duties of his job;
- The fact that Mr. Bernard’s employer did not notice his impairment for some period of time does not mean that he was not impaired; and
- Nothing in Mr. Bernard’s disability policies states that if your disability causes you to be fired, you are not qualified to receive STD and LTD benefits.
Quoting a 2008 U.S. Supreme Court decision, the judge in Mr. Bernard’s case concluded her opinion by reminding KC Life that:
ERISA imposes higher-than-marketplace quality standards on insurers, requiring that the administrator discharge its duties in respect to discretionary claims processing ‘solely in the interests of the participants and beneficiaries’ of the plan.
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