In the case of James E. Mugan Vs Hartford Life Group Insurance Company, the plaintiff was a participant in the Cantor Fitzgerald employer sponsored long term disability. Mr. Mugan suffered from a heart condition and cognitive impairment. The plaintiff brought a disability lawsuit through his New York Disability lawyer under the Employee Retirement Income Security Act (ERISA) alleging that the Hartford’s decision to terminate his benefits was arbitrary and capricious and was motivated by conflict of interest. The New York District Court however, held that:

  • Hartford’s decision to terminate LTD benefits was not arbitrary and capricious.
  • While structural conflict of interest existed, it was not significant factor in administrator’s decision.
  • The administrator could counterclaim for alleged overpayment of benefits.

Let us examine the case more closely.

The Facts of the Case against Hartford

The plaintiff was employed at Cantor Fitzgerald as an equities trader. While employed with Cantor Fitzgerald, the plaintiff participated in a Group Long Term Disability Insurance Plan which was administered by the Hartford Life Group Insurance Company (Hartford). Under the terms of the Plan, Hartford has discretion to interpret the Plan’s terms and to make eligibility determinations. On January 27th 2005, the plaintiff suffered a heart attack. In March of 2006, on advice of his attending physician, the Plaintiff stopped working for Cantor Fitzgerald.

Plaintiff’s Claims for Disability Benefits

In March of 2006, the plaintiff filed a claim for disability benefits. Later in August of 2006, the plaintiff filled out a Long Term Disability Options and Reimbursement Agreement which states:

“[t]he policy issued by [Hartford] provides that Long Term Disability (LTD) benefits will be reduced by the amount of any Other Income Benefits which you are eligible to receive…. We understand that you have applied for the Other Income Benefits shown below … If your LTD benefits are calculated without a reduction for Other Income Benefits and those benefits are later awarded on a retroactive basis, a sizeable overpayment … could result.”

The plaintiff in that agreement, elected to receive the Plan benefits “with no reduction for estimated Other Income Benefits.” The plaintiff also indicated on the form that he understood that this option may result in an overpayment of disability benefits and that he would be required to refund to Hartford in a lump sum.

On September 12th 2006, Hartford approved the plaintiff’s claim for long term disability benefits. The plaintiff was requested to update Hartford if he were granted social security disability benefits as the receipt of social security disability benefits could result in an overpayment of Plan benefits. In January of 2007, the plaintiff was informed by the Social Security Administration that his claim for Social Security Benefits was denied as the plaintiff was “not disabled under our rules.”

In February of 2008, the plaintiff advised Hartford that it had miscalculated his long term disability benefits and that he had been underpaid by approximately $500 per month. Hartford agreed that it had miscalculated the plaintiff’s benefits and on March 3rd 2008, Hartford informed the plaintiff that his benefits would be adjusted upward.

On March 7th 2008, Hartford informed the plaintiff that his claim was under review due to the upcoming disability test change on September 2008. Upon concluding the review, Hartford informed the plaintiff that it would terminate his benefits on September 2nd 2008, the date of the test change. The notification letter stated that:

“[w]e have concluded from the combination of all the medical information in your file that you are able to perform full time sedentary work which includes sitting 8 hours, standing 1–2 hours, walking less than one hour per day … Using this information, a Vocational Rehabilitation Clinical Case Manager performed an employability analysis which showed that there are a number of occupations for which you are qualified that are within your physical capabilities.”

Mugan’s Appeal to Hartford

On December 10th 2008, the plaintiff through his disability attorney appealed Hartford’s decision with supporting documentation and medical reports. Hartford assigned an appeal specialist to review the plaintiff’s claim. In the months that follow, the plaintiff submitted additional information to the appeal specialist. The appeal specialist was also informed that the Social Security Administration had reversed its previous decision denying the plaintiff’s his claim for social security disability benefits.

In March 2009, Hartford submitted the plaintiff’s claim to an independent review. Hartford contacted a medical consulting services company MES Solutions, to provide two consultants to review the plaintiff’s record.

On April 14th 2009, Hartford informed the plaintiff of its denial of the plaintiff’s appeal. In the denial letter, Hartford concluded that the record lacked specific evidence of a disabling cognitive impairment. Hartford also advised the plaintiff that he had exhausted all administrative remedies and that he was entitled to file a civil action under ERISA.

Filing of Civil Action by New York Disability Lawyer under ERISA

The plaintiff filed his complaint on July 29th 2009. The plaintiff argued that argues that he is entitled to long term disability benefits and requests that the Court award him the unpaid benefits. On January 11, 2010, Hartford, on January 11th 2010, filed an answer and a counterclaim seeking to recover $86,016 which represented the amount of disability benefits overpayment.

The Summary Judgment

In summary, the court ruled that the Hartford’s decision to deny the plaintiff his claim was not arbitrary and capricious. The court concluded that Hartford had considered all the information in the plaintiff’s claim in a principled manner before it made its decision to deny the plaintiff’s claim.

The Court also rejected the plaintiff argument that the reviewer reports commissioned by the Hartford was not credible and the reliance by the defendant on these reports to guide it in its decision making process was not unreasonable. The Court stated that:

“When faced with a conflict between the opinion of the treating physician and the opinions of reviewing doctors and independent consultants, it is not arbitrary and capricious for the plan to prefer the reviewing doctors.”

The court also ruled that Hartford is entitled to sue for the recovery of benefits overpayment under the provisions of ERISA.

Read more about the Hartford disability appeal on this page.