Schwarz v. Hartford Life and Accident Insurance Company

Background

Lisa Schwarz sought long-term disability benefits under an employee benefit plan governed by the Employee Retirement Income Security Act (ERISA). She had received benefits from Hartford Life and Accident Insurance Company beginning in 2017. Hartford denied her claim effective August 30, 2018, and upheld the denial on appeal on April 9, 2019. Schwarz sued Hartford and the YP Holdings LLC Welfare Benefit Plan, seeking unpaid benefits, future benefits while disabled under the plan, and attorneys’ fees.

Schwarz moved to expand the administrative record or, alternatively, to stay the court case and remand the matter to the plan administrator for reconsideration. She argued that Hartford failed to provide two medical file reviews before making its final appeal decision. She also argued that Hartford failed to investigate her psychiatric condition adequately and omitted or overlooked relevant medical information.

Court’s analysis

The court held that Hartford violated ERISA’s requirement that a disability-benefit claimant receive new or additional evidence considered on appeal early enough to have a reasonable opportunity to respond. Hartford sent its medical reviews to Schwarz’s treating providers and told her lawyer that the reviews existed, but it did not provide the reviews to Schwarz or her legal representatives before the final decision. The court concluded that this did not substantially comply with ERISA’s procedural requirements because Schwarz had no opportunity to evaluate or rebut the reviews.

The court identified omissions that made the missing opportunity significant. The psychiatric review did not address treatment records from certain periods, and the oncology review omitted context concerning Schwarz’s activity level and the results of her surgery. The court concluded that Schwarz could have submitted additional records or a rebuttal had she received the reviews before the decision. It therefore found that Hartford deprived her of the full and fair review required by ERISA.

The court also held that Hartford had further failed to meet its fiduciary duty to adequately investigate the claim. Hartford’s initial reviewer identified significant anxiety and depression and suggested obtaining a psychiatric review, but Hartford did not do so. During the appeal, Hartford also failed to address treatment records showing that Schwarz had been seeing a therapist beginning in March 2018, despite having information indicating that treatment timeline.

Disposition

The court stayed the proceedings and granted Schwarz’s request to remand the matter to the plan administrator for reconsideration with the benefit of a full record. The court concluded that remand would not be a useless formality because the record could be supplemented with omitted psychiatric records and possibly rebuttal reports that might materially affect Hartford’s decision.

The court stated that its order disposed of Docket No. 35. It also denied Hartford’s request to sanction Schwarz by excluding medical records as moot, but without prejudice.