By: Charles Fuller and Denise Martin
Most long term disability insurance policies contain a pre-existing condition limitation clause. Insurers often rely upon these types of clauses to deny a participant’s claim for benefits. This article will discuss various Fourth Circuit cases in which the Court determined the applicability of a policy’s pre-existing condition limitation. As demonstrated below, one repeated theme is that for an injury to be covered under a pre-existing condition limitation, it must be causally related to an earlier injury, not merely related in some other way, such as that it was discovered during treatment of the first condition or involves the same body part as the original condition.
When interpreting long term disability insurance clauses which provide that the injury must have occurred “solely” or “exclusively” from accidental means or so “arises directly and independently of all other causes,” the Fourth Circuit has applied a moderate test. See Adkins v. Reliance Standard Life Ins. Co., 917 F.2d 794, 797 (4th Cir. 1990) (citing Colonial Life & Acc. Ins. Co. v. Weartz, 636 S.W.2d 891, 894 (Ky. Ct. App. 1982), overruled on other grounds by Mifflin v. Mifflin, 170 S.W.3d 387 (Ky. 2005)). The Fourth Circuit rule is as follows:
[A] pre-existing infirmity or disease is not to be considered as a cause unless it substantially contributed to the disability or loss…. [A] “pre-disposition” or “susceptibility” to injury, whether it results from congenital weakness or from previous illness or injury, does not necessarily amount to a substantial contributing cause. A mere “relationship” of undetermined degree is not enough.
Adkins, 917 F.2d at 797 (citing Weartz, 636 S.W.2d at 894). In Adkins, the plaintiff, a coal miner, was denied benefits under a group accident policy on the basis that a back injury he had sustained prior to enrolling in the plan was a pre-existing condition. 917 F.2d at 795. After becoming eligible for benefits, he suffered three additional work-related injuries to his back, and the final accident left him completely disabled. Id. Adkin’s insurer contended that Adkin’s disability was the result of several pre-existing medical conditions and denied him coverage. Id. As the Fourth Circuit test Court of Appeals lays out, a susceptibility to injury resulting from a previous injury “does not necessarily amount to a substantial contributing cause”, and the court remanded the case to the trial court on the basis that the insurer had not proven whether the participant’s pre-existing condition was a substantial cause of his disabling injury. Id. at 797.
In Thompson v. Life Ins. Co. of North Am., the Fourth Circuit considered whether the plan administrator of a long term disability benefits plan abused its discretion in denying a participant’s claim for benefits under a pre-existing condition exclusion. 30 Fed. Appx 160 (2002). The plan’s pre-existing condition limitation provided that the Life Insurance Company of North America (LINA) would not pay benefits for any period of disability that “results, directly or indirectly, from an injury or sickness” for which the employee sought treatment in the three months prior to the effective date of his insurance coverage. Id. at 164. The plaintiff, Mr. Thompson, was diagnosed with chronic obstructive pulmonary disease (COPD), while being treated for a pre-existing cardiac condition. Id. LINA applied the limitation and denied Mr. Thompson’s claim on the basis that the two conditions were “related” because Mr. Thompson was diagnosed with COPD while being treated for his cardiac condition. Id. at 165. The court distinguished the pre-existing condition limitation’s use of “results” from LINA’s use of the word “relates”: “results” requires a causal link, whereas “relates” does not. Id. The Fourth Circuit found that LINA’s interpretation of the pre-existing condition limitation was not objectively reasonable or based on substantial evidence, as all of the physicians in the record asserted that there was no causal relationship between Mr. Thompson’s cardiac condition and the COPD. Id.
Similarly, in Hardester v. Lincoln Nat. Life Ins. Co., the Fourth Circuit applied a dissenting judge’s earlier opinion which asserted that where breast cancer was discovered in the “course of treating an unrelated manifest condition”, the pre-existing condition limitation did not apply. 52 F.3d 70, 71 (4th Cir. 1995) (en banc) (reversing panel decision for reasons expressed in dissenting opinion Hardester v. Lincoln Nat. Life Ins. Co., 33 F.3d 330 (4th Cir. 1994) (Hall, J., dissenting)). Ms. Hardester had been diagnosed with fibrocystic disease more than decade previously. Id. at 337. Fibrocystic disease causes a woman to develop benign cysts and masses in her breasts; it is not cancer and does not develop into cancer. Id. Just before becoming eligible for benefits under a group health insurance plan, Ms. Hardester’s gynecologist discovered small masses in Ms. Hardester’s breasts. Id. On the same day she became insured under the policy, Ms. Hardester saw a surgeon regarding the masses, and a follow-up mammogram showed a malignant carcinoma. Id. Lincoln National Life Insurance Company refused to pay for Ms. Hardester’s chemotherapy on the basis that the cancer was a “pre-existing condition.” Id. Judge Hall’s dissenting opinion, which was later followed by the Fourth Circuit en banc, noted that “according to the undisputed medical record, there was no causal or associative relationship between the fibrocystic tissue and the carcinoma.” Id. at 339. Thus, the breast cancer was found not to be a pre-existing condition under the policy. 52 F.3d at 71.