Gavel, scales of justice and law books

The U.S. Court of Appeals for the 10th Circuit on Tuesday decided that a Colorado woman’s life insurance company did not deny her benefits unreasonably, but that she could sue for breach of contract because she appeared to meet the company’s guidelines for disability.

Brenda Sandoval developed neck and arm pain in 2014, and a doctor performed surgery on her spine. Within weeks she returned to work, but the pain resurfaced in 2015 and necessitated a second surgery. As a result of her pain, Sandoval could not return to work as a training supervisor for Douglas County for over a year.

Sandoval had three life insurance policies from Unum Life Insurance Company of America, a Tennessee-based company. If a policyholder had a disability that prevented them from performing their job and they were under the care of a physician, they would receive a monthly benefit. In February 2016, Unum approved Sandoval’s claim after gathering evidence about her condition. 

However, in March and April, Unum decided that the conditions on Sandoval’s allowable activities were too restrictive given her condition, and that she could return to her duties. The company asked two doctors to review her file, and both agreed with the conclusion. In May, Unum ended her disability benefits, and Sandoval sued for unreasonable conduct and breach of contract.

A district court found that Sandoval had not proven that Unum acted unreasonably in evaluating her claim. “The Court is troubled, however, that Unum appeared to rely only on its own employees in evaluating and denying” the claim, cautioned Judge William J. Martinez. “The factual record submitted also causes additional concern, particularly that Unum's vocational expert altered her analysis of the physical requirements of Sandoval's job mere moments after the initial meeting in which Unum decided that Sandoval could return to work at least part time.”

Writing for the three-judge circuit panel, Judge Robert E. Bacharach affirmed the district court's finding of reasonableness. Sandoval, he said, needed to show that Unum both acted unreasonably and “knew or recklessly disregarded the unreasonableness of its conduct.” Sandoval pointed to the Unum doctors’ judgment on her condition without evaluating her and the lack of deference to her own physician’s opinion as unreasonable.

“Unum’s disagreement with Ms. Sandoval’s surgeon does not suggest that the investigation was unreasonable,” Bacharach concluded, mentioning that the company tried repeatedly to contact her doctor.

However, the court sided with Sandoval on her breach of contract claim, finding that a jury could reasonably conclude that she met Unum’s own definition of disabled because she was under the care of a doctor and met the threshold for loss of income.

The case is Brenda Sandoval v. Unum Life Insurance Company of America.

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