Employees in Chicago and the Midwest have mostly heard about insurance companies, especially ERISA long-term disability insurers, employing video surveillance when evaluating claims. Insurers have created this mass misconception that disability applicants get caught in the act of performing activities wildly inconsistent with the claimant’s asserted limitations. But the truth is the insurers use the surveillance in many cases, and these so called “inconsistencies” are far more subtle than the insurers would have many believe.
In a recent case, Life Insurance Company of North America (“LINA”) terminated the long-term disability benefits of a claimant because it captured her on video surveillance removing groceries from her trunk in September 2007, and during January 2008 walking with a cane and test-driving a vehicle. Hunter v. Life Ins. Co. of N. Am., No. 10-1244, 2011 U.S. App. LEXIS 13598, at *4-6 (6th Cir. Jun29, 2011). Hunter had been diagnosed with degenerative joint disease, degenerative arthritis, rheumatoid arthritis, osteoarthritis, scapular pain, fibromyalgia, spondylolithesis, and spinal stenosis. She had been a Revenue Cycle Manager at a hospital. Her long-term disability insurance policy defined “disabled” as “unable to perform all the material duties of . . . her regular occupation . . . .” Because LINA classified Hunter’s job as sedentary, and viewed her doing things that it claimed were consistent with being able to do sedentary work, LINA terminated Hunter’s benefits.
A district court upheld LINA’s decision, but the Court of Appeals for the Sixth Circuit overruled the district court, and ordered LINA to pay the benefits. LINA never considered the description of Hunter’s “regular occupation,” and whether she could perform all the material duties of her regular occupation. Instead, it merely claimed she could do sedentary work. The Court of Appeals also found several other troubling indications of a conflict of interest in the record, and held that LINA had acted arbitrarily and capriciously in terminating Hunter’s benefits.