Liberty Wrongly Denied Disability Benefits to HR Manager in New Jersey

A New Jersey District Court held that Liberty Life Assurance Company of Boston (“Liberty”) wrongly denied a Human Resources Manager’s claim for disability benefits and sent the case back to Liberty for a new disability determination in accordance with the court’s opinion.

Mr. Morrison’s Disability and Claim for Benefits

John Morrison, an HR Manager at PNC Financial Services, underwent successful treatment for coronary artery disease (“CAD”) in 2009 with heart catheterization and the placement of a stent. In August 2011, Mr. Morrison was hospitalized with a very low heart rate and advised to wear a heart monitor. When the monitor flagged an issue the following month, he was readmitted to the hospital and diagnosed with nonsustained ventricular tachycardia (“NSVT”). Based on this diagnosis, Mr. Morrison received a surgically installed pacemaker and was placed on beta blockers to suppress his arrhythmia.

Unable to return to work, Mr. Morrison filed a claim for long-term disability benefits and was denied on the grounds that his condition did not meet the definition of disability under his policy. Mr. Morrison appealed the denial, arguing that Liberty had mischaracterized his occupation and understated the stress level by failing to account for his management responsibilities.

Liberty denied Mr. Morrison’s claim a second time on the same grounds but also on the additional new basis that even if he did qualify, his disability was a pre-existing condition that his policy did not cover. Eventually, Mr. Morrison was forced to exercise his rights under ERISA to file a lawsuit and recover his disability benefits.

The Court’s Decision

In holding that Liberty’s denial of Mr. Morrison’s claim for disability benefits was arbitrary and capricious, the court explained that:

  • Liberty’s failure to properly consider the medical relevance of stress to Mr. Morrison’s diagnosis and his specific job requirements support a finding that the denial was arbitrary and capricious;
  • Liberty was not entitled to cherry-pick among medical reports, including among its own consulting physicians, disfavoring Mr. Morrison at each crossroads; and
  • The record did not support Liberty’s finding that Mr. Morrison’s disability was a pre-existing condition because he did not receive treatment, consultation, or care for the NSVT that was not diagnosed until after the look-back period.

Although the court felt compelled to give Liberty another chance to properly evaluate the claim, it did find that Mr. Morrison was the prevailing party in the lawsuit and, therefore, granted his request to file a petition for attorney’s fees and costs.

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