District court upholds insurer’s denial of LTD benefits agreeing with the insurer’s file reviewer that there are no objective findings from a psychiatric standpoint that indicates the Claimant is mentally, cognitively and/or behaviorally impaired.

In Gailey v Life Insurance Company of North America, 2016 WL 6082112 ( M.D. Penn. October 17, 2016), the Claimant was a 48 year old office manager for many years with a history of anxiety and depression. On July 15, 2013 she reported having an emotional breakdown at work and left the office crying, shaking, and suffering a panic attack. She was unable to return to work so Gailey’s regular therapist admitted her to an outpatient treatment program at Philhaven from August 6 through October 10, 2013. Philhaven’s website describes that the Day Hospital/Intensive Outpatient Program provides persons the opportunity to participate daily in a structured and comprehensive program combining individual, group and activity therapies. Services are typically provided six hours each day, Monday through Friday.

Gailey did not return to work after her treatment at Philhaven and the treating therapist opined on October 18, 2013, that Gailey could not multitask, has a poor response to stress, and cannot work at present.

She sought ERISA-governed disability benefits, which had a 24 month limitation for mental/nervous disability, relying on a diagnosis from her therapist. Life Insurance Company of North America (LINA) granted disability benefits while Gailey attended in-patient therapy. However, on November 21, 2013, a representative of LINA told Gailey that her benefit claim was being denied. Gailey responded that she was going to kill herself using her husband’s gun. The next day Gailey was admitted to Philhaven for inpatient treatment with diagnoses of major depressive disorder and generalized anxiety disorder. Philhaven’s website notes that adults “needing these services have significant difficulty functioning in their homes, employment or communities. They may also be at high risk for harming themselves and/or others. They may be unable to attend to normal routines or expectations due to depression, anxiety or other mental health problems.”

On November 26, 2013, she was released from Philhaven. The discharge summary noted appropriate affect and denied suicidal ideations. Gailey received an official written denial letter of her claim on November 25, 2013.

During Gailey’s administrative appeal, LINA had her claim reviewed by Genex Services, LLC. Genex hired Fred Moss, a board-certified psychiatrist to review Gailey’s medical records. On December 28, 2014, Moss concluded Gailey had “no objective findings” that she was mentally, cognitively, and/or behaviorally impaired as of November 26, 2013. Moss noted she did have “subjective complaints” supporting the diagnosis of Major Depressive Disorder. Mental examination findings indicated, however, Gailey was psychiatrically stable with no impairments. Thus, Moss assigned no work activity restrictions medically required due to a psychiatric condition.

Of note, the Social Security Administration awarded disability benefits to Gailey but LINA affirmed the claim denial on January 9, 2015, citing that it had more recent information to consider that warranted a different outcome. While the information it considered was not specified in the court’s opinion, LINA cited there had been no increase in the level of care, no changes in mental status, and no additional treatment modalities to indicate Gailey was impaired after November 26, 2013. While LINA acknowledged that Gailey attended regular weekly appointments with her therapist for “emotional regulation,” LINA deferred to the opinions of the psychiatrists that treated Gailey in Philhaven and Moss’s peer review.

Gailey filed suit and on October 17, 2016, resolving the parties’ cross motions for summary judgment, LINA’s denial of benefits was upheld by the court. Applying a deferential standard of review the court rationalized that LINA “cited to a multitude of evidence that it considered in finding that Gailey was not ‘disabled’ under the Plan…” This included the board-certified psychiatrist report confirming there was no objective evidence of impairment from the diagnosable mental condition, the rise of stability upon her discharge from inpatient treatment at Philhaven, an office note from the therapist indicating she was continuing to improve, another office note from the therapist noting Gailey’s communications skills were improving, and Moss’s peer review conclusion that Gailey was not disabled.

This decision is troubling for many reasons. First, the court deferred to LINA’s position that the unidentified board-certified psychiatrist, presumably the physician at Philhaven, reported to the rise of Gailey’s psychological stability upon her discharge. However, a rise in stability is to be expected as Philhaven aptly describes that the “focus of [inpatient] treatment is to address the crisis or behaviors which led up to the hospitalization. Attention is given to diagnosis, assessment and the selection of treatment interventions that will help to stabilize the person’s behavior or condition quickly.” Yet there is no indication that her depression and anxiety were no longer present upon discharge nor did LINA cited to any objective signs the court found present.

Further, the court never cited either the objective or subjective signs of depression and anxiety exhibited by Gailey. Instead, the court relied on LINA’s rationale that there had been on increase in the level of Gailey’s care, no changes in mental status, and no additional treatment modalities to indicate she was impaired. LINA never describes what increase in care or additional treatment modalities it expected from Gailey yet LINA views these as necessary to demonstrate mental impairment. It is doubtful the plan requires Gailey to do so, and most mental health practitioners would find continued weekly therapy as sufficient indicia to conclude she suffers from ongoing depression and anxiety.

Lastly, while both LINA and the court seem to rely heavily upon the Gailey’s rise in stability as an indication she is not disabled, this overlooks the significance of her participation in nearly two months of daily outpatient care at Philhaven prior to receiving inpatient care after becoming suicidal. The longitudinal picture of Gailey, who suffered from depression and anxiety for many years, is one far more complicated than simply a rise in stability after hospitalization. Both the daily outpatient care at Philhaven and inpatient course of treatment were increases of additional care and new modalities of treatment entirely overlooked by LINA as supportive of disability due to mental instability. Of note, the Social Security Administration would credit both the inpatient and outpatient treatment as periods of decompensation sufficient to count towards evaluation of the criteria of the medical listing of mental impairments. While LINA’s plan does not require it to reach the same conclusion, the total disregard for these periods of intensive treatment is suspect in it’s determination that Gailey is not disabled.

In summary, in the middle district of Pennsylvania both claimants and practitioners are on notice that establishing disability due to mental impairments requires thorough documentation evidencing objective indications of reduced mental functioning.