Recently, a lawsuit was filed at the District Court for the District Of Kansas against the Reliance Standard Life Insurance Company (Reliance) by a Kansas disability attorney on behalf of a client who became disabled while working at HF Rubber Machinery, Inc. In Justin G Hutton Vs Reliance Standard Life Insurance Company, it was alleged that Reliance had wrongfully denied the plaintiff‘s claim for disability benefits based on an arbitrary and capricious determination that the plaintiff’s disability was a pre-existing condition. Let us examine the case in more detail.

The Nature of the Complaint Against Reliance Standard

The plaintiff Justin G Hutton was employed as a Machinist for HF Rubber Machinery, Inc. on May 4th 2009. Prior to the plaintiff’s employment at HF Rubber Machinery, Inc., the plaintiff’s employer on June 1st 2005 had entered into a Group Long-Term Disability Insurance Policy with Reliance to provide long-term disability benefits to HF Rubber employees. Hence, after 30 days of continuous employment, beginning from May 4th 2009 to June 3rd 2009, the plaintiff became an insured beneficiary under the Policy as well.

On July 27th 2009, while still employed with HF Rubber Machinery, Inc., the plaintiff became disabled within the definition specified in the policy. He was diagnosed by a board-certified rheumatologist as suffering from avascular necrosis (AVN) in both his hips. The plaintiff contended in the lawsuit that he is still totally disabled since July 27th 2009 and had been unable to engage in any gainful employment to date. In the lawsuit, it was stated that the plaintiff’s Total Disability status was never challenged by Reliance.

Claim for LTD Benefits and Pre-existing Condition Clause

On October 2nd 2009, the plaintiff filed a claim for long term disability (LTD) benefits under the above mentioned policy. The policy provided for a monthly disability benefit upon an insured becoming totally disabled.

Nevertheless, on December 16th 2009, the plaintiff was informed by Reliance that it was denying the plaintiff his claim for LTD benefits. Reliance argued that the plaintiff’s AVN was:

“caused by, contributed to by and related to [his Pre-existing Condition of systemic lupus erythematosus] alone or by high doses of corticosteroids used to treat the disease.”

Under the terms of the policy, coverage for total disability is excluded if it is:
“caused by; contributed to by; or resulting from a Pre-existing Condition” .

The Policy defined “Pre-existing Condition” as:

“Any Sickness or Injury for which the Insured received medical treatment, consultation, care or services, including diagnostic procedures, or took prescribed drugs or medicines, during the 3 months immediately prior to the Insured’s effective date of insurance.”

“Sickness” under the policy was defined as:

“illness or disease causing Total Disability which begins while insurance coverage is in effect for the Insured.”

In response to the denial, the plaintiff made a timely appeal to Reliance on June 10th 2010 stating that:

  • The plaintiff’s AVN is not a pre-existing condition.
  • The plaintiff’s SLE did not cause his AVN.
  • The prescription drug use is not a Pre-existing Condition.

On September 1st 2010, again denied the plaintiff’s appeal and argued that:

“treatment through prescribed medications during the [look-back period]… contributed to his disabling diagnosis” of AVN.

According to the lawsuit, the plaintiff has suffered from the autoimmune condition systemic lupus erythematosus (SLE) since 1996. However, the plaintiff argued that Reliance’s determination of his total disability status as caused by a pre-existing condition was not supported by:

  • The terms of the policy
  • The plaintiff’s medical history
  • Medical evidence of the Plaintiff’s medical condition

The plaintiff contended that Reliance’s denial of his appeal was erroneous, arbitrary and capricious because Reliance had, among other things, applied the wrong standard under the Policy.

The Terms Of The Policy

The plaintiff argued that the terms of the policy did not exclude the pre-existing usage of a prescription drug but rather the Policy excluded:

“any Sickness or Injury for which the Insured received medical treatment, consultation, care or services, including diagnostic procedures, or took prescription drugs or medicines, during the 3 months immediately prior to the insured’s effective date of insurance”.

The plaintiff contended that Reliance did not establish, by citing evidence, that the Plaintiff’s AVN was “any Sickness or Injury for which the Insured received medical treatment, consultation, care or services, including diagnostic procedures,…” during the relevant three month look-back period under the Policy.

The Plaintiff’s Medical History

The plaintiff argued that his AVN which resulted in him becoming totally disabled was not a pre-existing condition as defined in the Policy. The plaintiff argued that he was never diagnosed or treated for AVN during the three-month look-back period prior to the Policy’s effective date. The plaintiff also argued that he did not have any symptoms of AVN during the look-back period. The plaintiff was only diagnosed and received treatment for AVN on and after July 27th 2010 which by then, was already the effective period for the plaintiff’s coverage under the above mentioned policy.

Medical Evidence of the Plaintiff’s Medical Condition

The plaintiff alleged in the lawsuit that Reliance’s decision to deny his claim for LTD benefits was arbitrary and capricious. This is because the plaintiff’s treating physician who is a board-certified rheumatologist had determined that the plaintiff’s AVN was not a result of any pre-existing condition experienced by the plaintiff. The plaintiff’s treating physician found that the plaintiff’s SLE and AVN medical conditions are distinct and separate. It was also confirmed by the plaintiff’s treating physician that plaintiff’s first diagnosis of AVN happened on July 27th 2009 which was after the expiry of the look-back period.

It was alleged in the lawsuit that Reliance had “…ignored or improperly disregarded the sworn testimony of Plaintiff’s treating physician, who determined that in Plaintiff’s specific case, Plaintiff’s AVN was not caused by his pre-existing SLE, or even by the treatment of it.”

The plaintiff argued that Reliance did not:

  • Produce any evidence showing that the plaintiff’s AVN was caused by his SLE,
  • Provide any evidence that the plaintiff was diagnosed with AVN during the look-back period.
  • Show that the plaintiff had received treatment for AVN during the 3 months look-back period.

Claim for Relief in the Lawsuit – Recovery Of Plan Benefits

The plaintiff alleged that Reliance had improperly denied the plaintiff benefits in violation of the provisions of both the Policy and ERISA. Having exhausted all his administrative remedies, the plaintiff is bringing this legal action against Reliance under ERISA and is seeking from the Court the following relief:

  • A determination and declaration that the plaintiff is entitled to disability benefits under the Policy.
  • Recovery of the plaintiff’s past-due Policy benefits according to proof.
  • A declaration, injunction and judgment requiring Reliance to pay Plaintiff all future disability benefits as set forth above and as required by the Policy.
  • An award of attorney’s fees and costs of this action
  • Any other relief as the Court deems just and equitable.

Designation Of Place Of Trial

The plaintiff also requested a trial on all issues triable, and designates Topeka, Kansas as the place of trial for his action.