Azur: "It was a scam, I'm tellin' ya. . . Don't you understand what a scam is?"
Watters: "I'm trying to figure it out."
(Exchange between witness Raymond S. "Muzzy" Azar and attorney, Russell F. Watters in the 1990 civil trial relating
to suspected arson at the Gateway Hotel back in my old home town of St. Louis, Mo.)
In the field of ERISA, things are generally not what they seem and words lose meaning. Two examples are the "Independent Medical Examination" (IME) and the "Transferable Skills Analysis" (TSA). In reality, IME's are almost never "independent", and TSA's seldom provide any kind of reliable "analysis". These are fictions, but they're important fictions insurance companies are allowed to rely upon. These two contrivances are combined so as to deny Long Term Disability (LTD) claims. If a lawsuit is filed, a court's review is generally limited to the "administrative record". Insurance companies use IMEs and TSAs to slant the evidence in that record in their favor. This usually happens without the claimant even knowing about it, until it’s too late to actually do anything about it.
Very often LTD plans contain a two-tiered definition of "disability". For example, during the first 24 months a claimant may be considered disabled if he is unable to perform the duties of his "own occupation" ("Own Occ."). After 24 months the definition may change so that a claimant will be considered disabled only if he is unable to perform the duties of "any occupation". ("Any Occ."). That is a much narrower, restricted definition, by which the insured is not considered "disabled", unless he is incapable of performing the material and substantial duties of any occupation for which he is qualified by reason of education, training or experience.
Under the terms of most LTD plans, if the claimant remains "disabled" (e.g. under the "Any Occ." definition), LTD benefits will be paid to age 65. That's the promise anyway. It's one that sounds good when the insurance company is selling the policy and collecting the premium dollars. But it's a promise no insurance company is going to keep in the absence of a potential court judgment. More often than not, LTD benefits are terminated as soon as the claimant falls under the second-tier "Any Occ." definition. Very few claimants make the cut and those who do may still have their benefits abruptly cut off at some point in the future, often without warning.
"Any Occ." Disability a Little Background
To the uninitiated, the term "Any Occ." can be misleading. The first thing you must understand is that "any occupation" doesn't really mean any occupation. If it did, then as long as a disabled nuclear physicist could sell pencils on the street, he would not be entitled to LTD benefits. Long before ERISA was ever enacted, it was well settled as a matter of California state common law that "Any Occ." clauses in LTD plans are not to be interpreted literally. See, e.g. Erreca v. Western States Life Ins Co. (1942) 19 Cal.2d 388, 396 121 P.2d 689. Such clauses were to be given a "common-sense" interpretation. A total state of helplessness is not required in order for a claimant to meet the definition. Instead, a claimant is considered "totally disabled" if he cannot "perform the substantial and material acts necessary to the prosecution of a business or occupation in the usual or customary way". Id.
Federal courts, in the post-ERISA era have likewise rejected excessively stringent interpretations of "disability" definitions in ERISA plans and private insurance policies. As one court put it: "Common knowledge of the occupations in the lives of men and women teach us that there is scarcely any kind of disability that prevents them from following some vocation or other, except in cases of complete mental incapacity." Helms v. Monsanto 728 F.2d 1416, 1421 (11th Cir., 1984). The Helms court discarded a literal reading of an "Any Occ." definition of "disability" because it would, in the court’s view, render the plan totally meaningless if benefits could only be paid if the claimant had no conscious life. Instead, federal courts have held that LTD plans must consider all of the relevant circumstances, including the claimant's age, educational background, training, and availability of suitable employment in the claimant's geographical area. See, e.g. Torix v. Ball Corp., 862 F.2d 1428 (10th Cir., 1988). (See article: Just How Disabled is Disabled When it Comes to Any Occupation Disability).
As you can imagine, this presents a problem for insurance companies, who seek to cut off LTD benefits as soon as the claimant falls under the "Any Occ." definition. Usually, LTD claimants are older workers, who have only done one job for maybe 15 or 20 years. These individuals may have no "education, training or experience" beyond their own job. In such cases the distinction between "Any Occ." and "Own Occ." disability gets rather blurred. For example, what if the claimant has worked as a mechanic for 20 years, but develops post-traumatic arthritis, as the result of an auto accident and he can no longer grip or hold his tools. Everyone agrees he can’t work as a mechanic, but he has no other specifically identifiable job skills. He has no "education, training or experience" to do any job other than as a mechanic. So how can the insurance company deny his LTD claim, even under the "Any Occ." definition?
By shifting the focus away from actual job skills to what are called "transferable skills", that's how. Even though our mechanic may have no specifically identifiable job skills, he will certainly have general skills that could transfer to some other occupation. For example, his unique knowledge of "nuts and bolts" might permit him to work as a quality control inspector at a "nut and bolt" factory. There are no doubt numerous hypothetical jobs that we could dream up that our mechanic friend would be capable of doing. All an insurance company needs to do is to find a few and document it for the "administrative record", and that's where the TSA report comes in.
The Independent Medical Examination (IME)
Before an insurance company concocts the TSA report, it will first seek to define a claimant’s medical "restrictions and limitations". This is frequently done by obtaining an "Independent Medical Examination" (IME) report from a physician. (Although in recent years, insurers have more often opted for cheaper "peer review" reports by paper-reviewing doctors, who never even see the claimant).
Again, "Independent" doesn’t really mean "Independent". The IME doctor is paid directly or indirectly by the insurance company and he has a financial interest in saying what the insurance company wants to hear. And what it wants to hear is that the claimant has some ability to sit, stand, walk, lift, bend, etc.. Once it’s established, by "independent" medical evidence that the claimant is capable of some physical activity, (and thus has some "functional capacity" to work) then the insurance company will present this medical evidence to its in-house vocational consultant who will prepare a TSA report consistent with the IME findings.
The Transferable Skills Analysis (TSA) report
Just like the IME, the suggestion is that the TSA involves some kind of vocational assessment by an independent expert to ascertain if the claimant has any marketable job skills. In reality, however, nothing could be further from the truth. The TSA will be done by an employee of the insurance company. The reason is obvious. From an evidentiary standpoint the TSA report will be the single most critical document in the administrative record, because it will be the only evidence in existence, linking the medically documented work restrictions and limitations stated in the IME report, to identifiable jobs, the duties of which will be said to be consistent with those restrictions and limitations. The TSA report will also seek to confirm the existence of actual jobs, in the “general economy” that are compatible with the claimant's education, training, and experience.
Because the TSA report is so critical to the insurance company's efforts to "paper the record", there is no way any insurance company is going to entrust it to an outside, truly independent expert. It wants complete control over what that report says and what better control is there than to have it done by someone, who draws a paycheck from the insurance company. It also wants the ability to bury the report, if by some chance the "consultant" displays an unanticipated streak of honesty or naiveté. The TSA report will identify several jobs for which it will be said that the claimant has "transferable skills" to perform. Once the report makes its way to the claims adjuster's desk, the adjuster will issue a denial of the "Any Occ." LTD claim, based upon the IME and TSA reports
Attacking the TSA
There are many ways for a knowledgeable, experienced ERISA lawyer to attack TSA reports. In many cases, they’re sloppily prepared. Frequently they simply list several sedentary-type jobs. But often, nothing in the TSA report matches the listed jobs with the listed restrictions and limitations. There may be no "analysis", linking any of the jobs identified with the claimant's specific job skills. There may be nothing establishing that any one of the identified jobs involve employment in the same industry as the claimant's work history; or nothing establishing that the claimant is qualified (by virtue of education, training or experience) to actually do any one of the jobs identified; or nothing, disclosing the alleged degree of transferability of the claimant's job skills to the jobs identified (e.g. low, fair, excellent); or nothing, revealing the amount of additional training, if any, that would be required for the claimant to assume the duties of any of the jobs identified. Finally, there may be nothing in the TSA report showing that the actual physical demands of the jobs identified are indeed within the scope of the claimant’s physical restrictions and limitations; or that the claimant is physically capable of doing any of the jobs identified.
Simply put, "Transferable Skills Analysis" reports prepared by insurance company vocational "consultants" usually contain no "analysis" at all. They frequently rely upon vocational software programs and are often nothing more than hearsay recitations of computer-generated reports. One such software program is the "OASYS" program, which supposedly identifies jobs from the Dictionary of Occupational Titles (DOT) that are said to be consistent with a claimant's vocational preparation and general educational development. (It should be noted that according to Gale Gibson, a developer of the OASYS program, any use of the program, which ignores the "Caveats" published in conjunction with the licensing of the OASYS software, is a MISUSE ). Obviously, the computer-generated results from such programs can only be as good as the raw data inputted into the computer; however, I can assure you that neither the actual computer-generated results nor the raw data that was inputted will ever see the light of day outside the insurance company offices. The only thing that will ultimately be disclosed to the claimant is the TSA report itself, not the vitally important source data that that was relied upon to prepare it.
In the final analysis, the TSA report will likely contain nothing except "bare conclusions" concerning the transferability of the claimant's job skills, and his supposed employability. For that reason alone, it can often be argued that the TSA report does not constitute "substantial evidence" upon which to deny a claim. Furthermore, if nothing in the TSA report establishes that any prospective employers in the identified job categories would be willing to hire a person with the claimant's disability, then it can further be argued that the TSA report is evidence of nothing. (This would seem especially true if the claimant's disability is progressive and degenerative).
Another common inadequacy of TSA reports is that they frequently identify jobs that are not consistent with the claimant's "station in life". For example, our mechanic friend may have been earning $40,000 a year on his old job, but the jobs identified in the TSA report may only pay $25,000 to $35,000 a year. The reason for this common mistake is that the vocational consultant may use the monthly LTD benefit payment as a benchmark, instead of using the claimant's pre-disability income. (LTD benefits are usually in the range of 60% to 80% of the claimant's pre-disability income). That is not the proper measurement. For one thing, quite often, the LTD benefit is non-taxable, whereas the stated income for the jobs listed in the TSA report would be taxable.
Finally, in this writer's opinion, the whole concept of "transferable" skills is a bit esoteric anyway and anything that claims an ability to identify such skills should be treated with a degree of skepticism. TSA reports are often nothing more than hearsay recitations of undisclosed, in-house, computer-generated reports that rely upon unknown software programs and suspect raw data to spit out job descriptions from the DOT, with no analysis at all as to whether the claimant could physically do the jobs identified, let alone whether the jobs are consistent with his education, training or experience. In order for there to be at least the pretense of objectivity, any such reports should be independently prepared and all of the data relied upon by the alleged vocational expert should be disclosed.
THE "IME-TSA SWINDLE"
How Insurance Companies Combine Biased Medical Exams
with Bogus Self-generated Vocational Reports to Deny
Legitimate Disability Claims
By: Michael A. McKuin
Revised: January 2016
ERISA Disability Lawyer