Marcia L. Smith (“Smith”) worked as a property manager for Arlington Properties, Inc., and starting on March 1, 2016, she was covered under a long-term disability plan administered by United of Omaha Life Insurance Company and Mutual of Omaha Insurance Company (collectively, “United”).
The plan provided the following as part of its exclusions:
“We will not provide benefits for Disability:
- caused by, contributed to by, or resulting from a Pre-Existing Condition; and
- which begins in the first 12 months after You are continuously insured under this Policy.
A Pre-existing Condition means any Injury or Sickness for which You received medical treatment, advice or consultation, care or services including diagnostic measures, or had drugs or medicines prescribed or taken in the 3 months prior to the day You become insured under this Policy.”
Three months after her coverage start date, Smith was diagnosed with metastatic ovarian cancer. This diagnosis involved having to have surgery, including exploratory laparotomy and major tumor debulking, as well as chemotherapy. On June 30, she requested short-term disability benefits, which were granted for twenty-six weeks. When filing for long-term disability benefits, her claim was denied because her “current disabling condition is considered a Pre-existing Condition and excluded under the policy.” Smith filed for an administrative review but was again denied on March 14, 2017.
At that point, Smith filed the instant suit, asking for a judicial review of United’s denial under 29 U.S.C. § 1132(a)(1)(B) so that she might attempt “to recover benefits due to [her] under the terms of [her] plan, to enforce [her] rights under the terms of the plan, or to clarify [her] rights to future benefits under the terms of the plan.” The district court ruled in favor of Smith and against United, citing abuse of discretion on United’s part.
United then filed an appeal relating to that decision.
Now, the present court seeks to review the district court’s decision de novo. The standard that a court is looking for regarding the abuse of discretion is whether the party acted arbitrarily and capriciously. “When, as here, the language of the plan grants discretion to an administrator to interpret the plan and determine eligibility for benefits, a court will reverse an administrator’s decision only for an abuse of discretion.” “A plan administrator’s decision to deny benefits is arbitrary and capricious when it is made without a rational connection to the facts and evidence.”
United does not dispute that Smith had not been diagnosed with cancer until June 1, 2016, which was three months after the “look-back” or pre-existing condition exclusion period. However, United argues that Smith was treated for a pleural effusion during the look-back period and that such a pleural effusion is a symptom of ovarian cancer.
Smith does not dispute that her cancer caused the pleural effusion. Yet, Smith does argue that her condition itself is not the pleural effusion but is instead metastatic ovarian cancer. Because she did not receive treatment specifically for cancer during the look-back period, she argues that United should not have denied her claim.
The court agrees with Smith. In one case, the court rejected a defense that was similar to the instant case:
“Since the heart defect was not diagnosed during [Plaintiff’s] first week, the advice and treatment that she received at the time could not have been for that condition; rather, pulmonary hypertension was the only condition diagnosed and treated at that time. Thus, the plain language of the clause leads to the conclusion that it does not exclude coverage of the heart defect.”
Further, the court wanted to be clear that there did not need to be a preliminary diagnosis for there to be a pre-existing condition. Instead:
“Our holding is not to be interpreted to say that diagnosis is always required in order for the underlying condition to be treated, but there is at least a reasonable argument that . . . treatment for a specific condition cannot be received unless the specific condition is known. One who has been treated for chickenpox has not necessarily been treated for smallpox.”
Further, “For the purposes of what constitutes a pre-existing condition, it seems that a suspected condition without a confirmatory diagnosis is different from a misdiagnosis or an unsuspected condition manifesting non-specific symptoms.” The court held that medical care for a symptom of a pre-existing condition can be a reasonable basis to deny coverage if there is “intent to treat or uncover the particular ailment which causes that symptom (even absent a timely diagnosis), rather than some nebulous or unspecified medical problem.”
In addition, the court explained that “The problem with using [an] ex post facto analysis is that a whole host of symptoms occurring before a ‘correct’ diagnosis is rendered, or even suspected, can presumably be tied to the condition once it has been diagnosed.” In that case, the condition must have been reasonably suspected to have existed.
In this case, Smith had “medical treatment, advice or consultation, care or services, including diagnostic services” during the look-back time. Although the cancer caused Smith’s pleural effusion, other possible medical issues could cause a pleural effusion. Further, the symptoms were not only specific to metastatic ovarian cancer but her medical records and providers did not appear to believe that the pleural effusion was caused by cancer.
Therefore, it is not likely that United would have been able to reasonably decide that she had been treated for metastatic ovarian cancer during the look-back period. Because of this, the court believed that United had acted arbitrarily and capriciously. As a result, the court chose to rule in favor of Smith and against United.
[Note: the Ortiz Law Firm did not handle this claim. It is merely summarized here to help claimants better understand how Federal Courts handle long-term disability insurance claims.]Here is a copy of the decision in PDF: Smith v. United of Omaha