Courts Clarify the Mental Disorder Limitation in Long Term Disability Policies

We have been following the Courts’ treatment of mental or nervous disorders limitations in group long term disability policies. (See blog, Disability Caused by Physical Impairment, July 2015) Recently, the 6th Circuit Court of Appeals joined other courts holding that a claimant is disabled by physical conditions alone, then the mere presence of a psychiatric component does not justify application of a mental health limitation to a claim. In Okuno v. Reliance Std. Life Ins.Co., 2016 U.S. App. LEXIS 16423 (6th Cir. Sept. 7, 2016), Reliance applied the one year limit on benefits because there was the presence of a psychiatric component to her claim regardless of the physical component to her disability. The court rejected Reliance’s rationale that as so long as there is a comorbid psychiatric condition the limitation applies.

Every federal circuit court to consider the meaning of the phrase “caused or contributed to by” has read it to exclude coverage only when the claimant’s physical disability was insufficient alone to render him totally disabled. See George v. Reliance Standard Life Ins. Co, 776 F.3d 349 (5th Cir. 2015). The insurer bears the burden to show that the exclusion applies to the case. “The effect of an applicant’s physical ailments must be considered separately to satisfy the requirement that the review be reasoned and deliberate.” See Okuno . In order to overcome the insurers’ application of this mental health limitation to continued benefits, the claimant must claim total disability as the result of a purely physical condition.

What if a physical condition is covered, but the symptoms include depression, which is a mental illness? Courts caution that policy terms and precise medical facts of the claim must be examined. See, for example, Leight v. Union Sec. Ins. Co. 2016 U.S. Dist. LEXIS 68412 (D.Or. May 24, 2016). Leight’s Aspergers’ Disorder is expressly exempt from the definition of “mental illness” in the policy but Union Security attempted to apply the mental illness limitation, since the disorder produces disabling symptoms of anxiety and depression. The court determined that the mental illness limitation did not apply since Aspergers was a ‘covered condition.”

In conclusion, the mental illness limitation have been applied to long term disability claims which arise from a confirmed physical disorder, such as multiple sclerosis, parkinson’s disease and cancer. Anyone suffering from these illnesses and taking stock of their lives and the financial stresses that come with disability are prone to become anxious and depressed. It is wrong for an insurance company to take advantage of the disabled’s psychological struggles to limit coverage, but claimants must be aware of these hidden traps for the unwary.

Contact us at Bonny G. Rafel, LLC, because we handle involve claimants with disabling conditions of both the body and mind.