SAN FRANCISCO — MetLife has been found liable after denying a transition in Daniel Demer's benefits in Demer v. IBM Corporation LTD Plan, which was filed in the Ninth Circuit Court of Appeals in San Francisco, California. 

Roberts Bertolic LLP attorneys Michelle Roberts and Barry Kirschner argued the case in front of circuit judges Jay S. Bybee and Morgan Christen, and district judge Edward M. Chen. Demer was employed by IBM as a lead internal auditor. He began to suffer from severe degenerative disc disease and took pain medication, which meant he could no longer perform the necessary functions of his job at the company anymore. MetLife paid long-term disability (LTD) benefits for what's called "own occupation," but denied him on the transition to "any occupation" benefits due to an opinion from an independent physician consultant (IPC). Dr. Elyssa Del Valle, an internal medicine specialist, conducted a paper only review of Demer's condition. Demer appealed and MetLife again denied based on two more paper only reviews by other IPC doctors, Marcus Goldman and Dennis Gordan. 

It was discovered after Demer filed suit that in 2009 and 2010, Del Valle performed 250 such paper reviews, earning her more than $250,000 each year. In the same period, Gordan also performed somewhere between 200 and 300 paper reviews and earned more than $175,000 each year. 

The district court initially accepted MetLife's arguments for the steps taken to reduce a structural conflict. Eventually, the appeals court sided with Demer that the IPC results were not credible because of their lack of specific detail and the proof of financial gain. 

Roberts said the main theories of defense in MetLife's case relied heavily on these paper reviews. 

"MetLife relied significantly on the 'paper reviews' conducted by its allegedly independent physician consultants," Roberts told the Northern California Record. "The doctors claimed that there was no evidence of any impairment that would prevent Demer from working full time in an occupation for which he is reasonably qualified. In so doing, MetLife gave short shrift to his pain complaints and to the side effects of his narcotic pain medication. In litigation, Metlife argued that Demer’s denial of Social Security disability insurance (SSDI) benefits was evidence that its termination of his long-term disability benefits was reasonable. However, at the time, Demer had yet to have a hearing before a Social Security administrative law judge (ALJ). MetLife represented to Demer during the claims process that his SSDI benefit would likely be denied until he went before an ALJ. MetLife also did not inform Demer that his SSDI denial would be used against him as it attempted to do in litigation."

Though the plaintiff never filed a 30(b)(6) deposition and the defendant never relied on witnesses for the structural conflict argument, the main caveat that played in favor for the defendant in this case was the court's opinion that Demer's evidence was sufficient to meet a burden of proof against MetLife for a conflict of interest argument, Roberts said. 

"Early in the case, the plaintiff expressed an intention to take a Rule 30(b)(6) deposition, but did not pursue one because MetLife never disclosed any witnesses that it would attempt to rely on to demonstrate that its claim decision was not impacted by its conflict of interest," Roberts said. "At summary judgment, MetLife at the last minute produced declarations from two of its employees that purported to demonstrate that MetLife takes steps to minimize its conflict of interest. The district court accepted and considered these declarations, rather than striking them for nondisclosure. The Ninth Circuit did not explicitly address whether or not the district court’s consideration of these declarations was appropriate. Instead, the court took the position that Demer had provided enough evidence to suggest a conflict (i.e., reliance on IPCs who are paid a lot of money) and thus, the burden shifted back to MetLife to show that it was not conflicted. But, it hadn’t done so."

Roberts said conflicts being reputed to insurance providers will be a winning strategy for future ERISA cases. 

"At least in the Ninth Circuit, statistical data about IPCs will become important discovery in ERISA disability benefit claims litigation," Robert said. "If an IPC is financially conflicted, that conflict will be imputed to the insurance company and will decrease any deference afforded to the insurance company under the abuse of discretion review standard."

MetLife is remanded to "do what it should have done six years ago" and reevaluate Demer's claim, though they will still be able to possibly retrospectively reassess his condition. Other assessments that conflicted with the IPCs in the record found that his condition may have deteriorated over time, the court found. 

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