California Court Rules that Lincoln Cannot Argue a New Reason for its Denial of LTD Benefits to a Disabled Insurance Sales Agent If that Reason Was Not Presented During the Claims Process

A California court ruled that Lincoln cannot argue a new reason for its denial of LTD benefits to a disabled insurance sales agent if that reason was not presented during the claims process. In this case, Ms. Collier worked as an insurance sales agent for “AAA.”

When she began to experience pain in her neck, shoulders, upper extremities, and lower back that limited her ability to type and sit, she underwent surgery on her right shoulder. However, when she returned to work she continued to suffer from chronic pain despite receiving injections, taking prescription medication and going to physical therapy.

Ms. Collier applied for worker’s compensation in April 2018. The representative for worker’s compensation recommended some workplace accommodations. But even with the accommodations, her pain persisted.

Ms. Collier then submitted a long-term disability (“LTD”) claim through her employee-purchased plan from AAA to Lincoln around February of 2019.

In May of 2019, Lincoln denied Ms. Collier’s LTD claim relying on its own doctor who stated Ms. Collier could work full-time without restrictions.

Ms. Collier timely appealed the denial of her benefits and enclosed additional evidence of her appeal such as a Functional Capacity Evaluation (“FCE”) and reports from her treating doctors. During the review of Ms. Collier’s appeal, Lincoln sent Ms. Collier to an medical examination.

Lincoln’s medical examination concluded Ms. Collier could work full time with restrictions. Lincoln then denied Ms. Collier’s appeal based on the examination.

Ms. Collier filed a lawsuit in federal district court. The district court ruled in Lincoln’s favor based on the arguments Lincoln made during the bench trial. Lincoln argued that Ms. Collier was not credible and that she did not provide objective evidence of her disability.

This was the first time this argument was raised — Lincoln had never mentioned these reasons for denial to Ms. Collier during the claim or appeal process.

Ms. Collier appealed the district court’s ruling to the Ninth Circuit, United States Court of Appeals.

The Ninth Circuit ruled in favor of Ms. Collier. The appellate court held that the lower court erred by ruling in favor of Lincoln because Lincoln made a new argument that was not presented to Ms. Collier during the claim and appeals review. This type of behavior violates ERISA because the claimant is not given an opportunity to respond if it is first presented after denial and during litigation.

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