Yesterday, the Seventh Circuit Court of Appeals affirmed that CIGNA acted in bad faith when it rejected a long term disability (“LTD”) claimant’s award of Social Security Disability (“SSD”) benefits. The decision, entitled Raybourne v. CIGNA Life Insurance Company of New York, can be found at http://courtlistener.com/ca7/5atS/edward-raybourne-v-cigna-life-insu/.
As part of its practice and pattern for wrongfully denying and terminating LTD claims, CIGNA supports a finding of disability before the Social Security Administration (“SSA”) when it financially benefits CIGNA, and then disregards the SSA's finding of disability when it disadvantages CIGNA. The Seventh Circuit said CIGNA did so in order to harass its opponent instead of acting in good faith.
The Court ruled that CIGNA’s professed reasons for rejecting the SSA’s awarding of SSD benefits were arbitrary and capricious. First, CIGNA claimed that its definition of disability was different from the SSA definition of disability. The Court rejected that argument, ruling that the two definitions are “functionally equivalent.” CIGNA’s termination and denial letters fail to draw any meaningful distinction between the two standards, and instead, dogmatically assert in conclusory language that the standards are different. With Raybourne, CIGNA can no longer do so.
Next, CIGNA argued that the SSA applied the SSD regulations, including treating physician rule that requires giving greater weight to the opinion of the claimant’s physicians, do not apply to LTD claims governed under ERISA. The Court rejected that argument on the grounds that the regulations with treating physician rule “was not determinative to the disability finding.” Rather, the Court said the SSA decision was based on the claimant’s need for narcotic pain medications, compliance with medical treatment, willingness to undergo surgery, good work history, and credibility.
Third, the Court said that CIGNA’s failure to explain why it rejected the SSA’s final decision, which found the claimant to be disabled, as opposed to the SSA’s earlier decision, which did not, was evidence that CIGNA had a “predisposition to reject the claim regardless of the facts.” This is an argument that I have regularly made about CIGNA, and Raybourne provides added evidence demonstrating CIGNA’s history for biased claim adjudication.
CIGNA’s final argument was that the SSA made its decision without having a report by a CIGNA doctor who reviewed the medical records. The Court concluded that CIGNA did not make its report available to the SSA because CIGNA wanted the SSA to award SSD benefits, thereby allowing CIGNA to reduce its LTD payments by the amount of the SSD benefits. The Court found that CIGNA then relied on its doctor’s report after the SSD award in order to terminate LTD benefits; that is, only when it became financially advantageous for CIGNA. The Court held that CIGNA’s selecting its one doctor’s opinion over all of the contrary evidence was arbitrary and irrational.