The value of an insurance carrier obtaining an independent review of an insured’s medical records is two-fold. As discussed below, such reviews support the carrier’s obligation to decide claims fully and fairly without a minimum of bias. There is also measurable value in the carrier relying upon the professional judgment of board-certified independent reviewers.
Under the courts’ ongoing scrutiny of the insurance carrier’s inherent and actual conflicts of interest/bias, it may not be enough for an insurer to rely upon a file review or assessment without taking reasonable measures to ensure that the final written report is truly unbiased. Broadly speaking, the insurer who both decides claims and pays benefits from its own reserves operates under an inherent conflict of interest given that approving an insured’s claim theoretically reduces the amount of its profits (and conversely, denying a claim increases profits). Although this conflict cannot be eliminated, the carrier can take proactive measures – such as relying upon independent reviews – to minimize such conflicts.
An actual conflict, on the other hand, can exist where the carrier puts its financial interests ahead of the insureds’ interest and consequently those interests are deemed to have unfairly influenced the company’s claim denial. Historically, courts have applied a higher degree of proof to a claim decision where the carrier’s process reflects a lack of independence, and therefore, bias. Examples include reliance on an internal physician to opine on a medical condition that is outside the scope of his or her expertise; allowing non-medical employees to offer medical opinions; and improperly incentivizing medical reviewers to find the insured able to work or fit for duty.
The court decisions upholding the goal of minimizing an insurance carrier’s conflict of interest in disability ERISA-governed claims has now been embodied into new U.S. Department of Labor rules, which govern any ERISA disability claim filed as of January 18, 2018. One of the rules – described as “Independence and Impartiality” – requires that a carrier administering a plan has ensure that all individuals involved in reviewing and deciding a claim (including medical and vocational experts) cannot operate under any arrangement or incentive which would increase the “likelihood that the individual would support the denial of benefits.” Although the rule applies to disability plan administrators, outside medical review organizations (and the individual reviewers) will need to adopt policies to affirm that the administrator is complying with this rule when it retains the reviewer.
One practical way for an insurance carrier to minimize a conflict of interest is to institutionalize arm’s length arrangements with certified, qualified and independent professionals such as R3. The R3 panel and internal professionals apply their own judgment and experience to each claim within the scope of their expertise, and their opinions are based upon the totality of the insured’s relevant medical and personal history. Equally important, these reviewers have active clinical or educational practices; have no role in the decision-making process, and are not employees of the insurance carrier. Nonetheless, judges and juries are still entitled to inquire whether an independent review is influenced by bias. To rebut the effect of such questioning, R3’s retains highly-qualified physicians and psychologists whose primary objective is to provide supportable medical/behavioral health opinions.
A second means of promoting independence and reducing potential bias, in part to support the carrier’s obligation to comply with the new ERISA rules, is for insurance carriers to continually improve their internal processes regarding use of medical professionals. Why, one might ask, does this matter so long as the insurer can defend each aspect of the reviewer’s report? It matters because insurers may be required to show that every claim is fully and fairly reviewed, and also that its internal processes reflect its commitment to deciding claims correctly. As a practical matter, creating and following such processes is a key discussion point of many litigated claims. By way of example, R3 reviews the draft report of every panel physician and psychologist and sometimes subjects the draft to a peer review discussion. That type of quality control further supports the reasonableness of the insurer’s decision.
Lastly, it should be noted that insurance carriers utilizing independent reviews risk the possibility that the reviewer may disagree with a prior assessment of the insured’s condition. Ultimately, however, the insurance carrier should strive to conduct an independent review (which may include an independent reviewer) of each claim.
About the Author: William D. Hittler (Bill) helps his clients carry out their responsibilities better. He is competitive and focused and makes his clients’ legal needs his highest priority. Bill vigorously represents their interests—delivering high quality work—and is well-respected by judges and adversaries. He is particularly adept at counseling clients through difficult litigation issues and achieving a successful resolution of the dispute at hand. He appreciates getting to know his clients, often extending invitations to seminars as well as keeping them posted on ERISA and insurance developments, and offering training and advice. He is committed to his community, diversity, and volunteering. When he’s not working, you can find him riding a bike to tutor at Sheridan Elementary School, meeting with Page Education Scholars, or working with Boy Scouts on the path to becoming Eagle Scouts. Bill enjoys spending time with his family and cross-country skiing.
