Arkansas Court Holds USAble Life Insurance Failed to Properly Review a Mental Health Therapist’s Claim for Disability Benefits

A federal court in Arkansas found USAble Life failed to properly review a mental health therapist’s claim for disability benefits.

Prior to her disability, Mrs. Reyes was employed as a mental health therapist with Western Arkansas Counseling & Guidance Center. Following a fall, Ms. Reyes developed chronic and widespread pain. She was no longer able to work in her occupation and filed a claim for long-term disability benefits.

Prior to its initial denial of benefits, USAble determined that Ms. Reyes’ occupation was performed at a sedentary level of physical demand. USAble then relied heavily on a paper based review of the medical record performed by its consulting physician to deny her claim for disability benefits.

Ms. Reyes appealed the denial of benefits and introduced more evidence of her disability. USAble again relied on a paper based review to deny her appeal. Thus, Ms. Reyes brought a lawsuit against USAble for her disability benefits.

The Court’s Review of Ms. Reyes’ Claim

Standard of Review

Like most claims for disability benefits, Ms. Reyes’ claim was governed by the Employee Retirement Income Security Act of 1974 (ERISA). Generally, if you are eligible for long term disability benefits through your job, it is likely governed by ERISA.

Most long-term disability policies contain discretionary language. This means that the insurance company, like USAble here, has full discretion to determine if someone is disabled. 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 rule in your favor only if it finds the insurance company had no reasonable basis to deny benefits. This is a difficult standard to meet.

However, Arkansas passed a law banning discretion. The court recognized that any policy issued after March 01, 2013, could not contain a discretionary clause. This meant the judge did not need to afford discretion to USAble in this case, greatly increasing Ms. Reyes’ chances to prevail in this lawsuit.

Failure to Conduct a Full and Fair Review as required by ERISA

The long-term disability policy defined disability as follows:

  • An injury, sickness, or pregnancy that requires you to be under the regular care of a physician, and prevents you from performing at least one of the material duties of your regular occupation

The court found that USAble failed to identify any “material” duties of Ms. Reyes’ occupation and failed to follow its own definition of disability. Thus, the court concluded that USAble failed to conduct a full and fair review as required by ERISA.

The court remanded this case to USAble and demanded that USAble properly review Ms. Reyes’ claim. Given USAble’s unreasonable behavior, the court awarded Ms. Reyes her reasonable attorney’s fees and costs.

Help from a Lawyer with Expertise in Disability Insurance

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Hiring an experienced disability attorney is important. Because federal law applies to most disability insurance claims, our lawyers do not have to be located in your state.

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