Schizophrenia Disability Exclusion - What Does It Include?
Schizophrenia disability is one of the exceptions to the mental and nervous condition exclusion found in long term disability plans. However, what exactly does schizophrenia disability cover?
Like many mental disorders, there is a spectrum of schizophrenia. Someone can be diagnosed with a mental disability that falls under the spectrum. But them may not actually being diagnosed with schizophrenia.
In a recent case against MetLife, the claimant, Ms. Duncan, was diagnosed with schizoaffective disorder. This disorder falls under the spectrum of schizophrenia.
Unfortunately, when Ms. Duncan filed for long term disability benefits under her employer’s plan, she was denied. MetLife held that the schizoaffective disorder does not fall under the exclusion to the mental and nervous condition exclusion in her policy.
Ms. Duncan was ultimately forced to file a lawsuit under ERISA. One of her main arguments was that schizophrenia disability was not defined in the disability insurance plan. The plan in this case gave MetLife the ability to interpret the terms. However, they must interpret the terms in a reasonable way and in good faith.
When the Court reviews the case, they have to determine the reasonableness and good faith of MetLife. One of the many factors they consider is a conflict of interest.
In this case, MetLife was the plan administrator and funds the plan. Thus they have a direct conflict of interest. It is to their financial benefit to deny claims. MetLife argued that there was no conflict of interest. They said they hired outside doctors to review the records and examine Ms. Duncan.
However, there is no dispute as to the diagnosis of schizoaffective disorder. The dispute lied in whether it falls under schizophrenia and under the exclusion. The doctors were not hired to interpret schizophrenia and schizoaffective disorder.
Under ERISA the court has to determine if a term is ambiguous. Then they have to determine if the plan administrator interpreted the term fairly. The court analyzed the definition of schizophrenia and schizoaffective disorder as defined by the Diagnostic and Statistical Manual of Mental Disorders (“DSM 5”).
The DSM 5 uses schizophrenia to define actual schizophrenia and the spectrum of disorders that falls under it. After analyzing the definition under the DSM 5, the court found that the term schizophrenia in the policy’s exclusion was ambiguous. Therefore the court had to determine if MetLife interpreted and applied the term fairly.
The court ultimately found that MetLife’s decision was unreasonable and not made in good faith. The court held that Met Life’s literal interpretation of schizophrenia is overly restrictive.
That kind of interpretation would exclude anyone who fell on the schizophrenia spectrum without a diagnosis of schizophrenia. The case was sent back to MetLife to reevaluate the claim for long term disability benefits in line with the court’s decision.