Dr. Zall was a dentist insured by a long-term disability policy through Standard Insurance Company. As we all know, dentists spend a lot of time bent over, using their arms and hands to look into people's mouths and perform various procedures and examinations. They do this all day, every working day. Unfortunately, Dr. Zall developed problems with his neck and arm pain with numbness. He nonetheless pressed on, thinking that perhaps his problems would subside. However, they only got worse.

At first, the pain was not so bad that it distracted him, but it was a nagging pain. Taking breaks every now and then was enough. But as the years passed, it developed into chronic pain where he had to take medication to try to numb the pain enough just to keep working. He had put too many years into his practice and education and was in a position to do as well as he ever could in dentistry. It was the prime time of his life. He could not give up!

However, the pain became too much, and it began to mentally distract him. Dentists take an oath not to engage in treating a patient when they have a disease or condition that could harm the patient. Dr. Zall was at that point. He recognized that the pain was distracting him from making good decisions despite his many years of education, training, and experience. He had an obligation to cease dentistry and avoid harming a patient. In 2013 he filed his claim for long-term disability insurance.

Standard, the long-term disability insurer, denied his claim initially. Dr. Zall appealed the denial with a wealth of supporting evidence from treating physicians. Standard reversed its position and paid the claim. Standard also indicated then that his claim might be limited to 24 months. The reason for this assertion is that Standard thought that his condition was caused by carpal tunnel syndrome or repetitive motion syndrome, as well as diseases of the cervical, thoracic, and lumbar sacral areas of the back and surrounding soft tissue. This particular policy had a limitation of 24 months as to paying for disability relating to those conditions.

However, Standard continued paying the claim past 2015 and, in fact, did not review the claim in detail until about 2018, five years after the start of the claim. In 2019 Standard denied the claim, contending that it should have only paid for 24 months. The claim should have ended in 2015. So it made four years of mistaken claim payments? Really? Sounds suspicious.

Dr. Zall obtained further information from his doctors, who indicated that his condition was an exception to this limitation because it related to herniated discs with abnormalities documented by electromyograms, computer tomography, or magnetic resonance imaging.

Radiculopathies were documented in this case by objective testing. Dr. Zall then appealed and presented this evidence to Standard.

Standard was not content, however, to accept Dr. Zall's evidence, so it had its own doctor Dr. Michelle Alpert review the medical file. She disagreed with all of Dr. Zall's physicians and never examined Dr. Zall. She never saw or spoke to him. She just looked at the records. Again suspicious. A few days after getting Dr. Alpert's report, Standard denied the appeal. The unfairness was compounded, however, as this report from Dr. Alpert was new evidence, and Dr. Zall never had the opportunity to examine that report or have his physicians rebut or comment on the report.

I have long contended that sandbagging like this is unfair and violates the full and fair review requirements underscored by the claim procedure regulation. It enshrined the claimant's right to review and comment on the evidence. This is critical to a fair process. Otherwise, insurance companies would do well to simply deny claims with no evidence at all and then, when there is an appeal, generate their own evidence and uphold the denial. That creates a perfect way to enhance company profits. It certainly would reduce/eliminate litigation, but then why have insurance at all?

Some courts do not understand this unfairness and permit this sandbagging. They disregard fairness principles in the regulation and believe that the insurer should get the last say in presenting evidence, even if it means the claimant never saw that evidence. Thousands of people have had their disability claims unfairly denied, in my opinion.

The Department of Labor agreed that this was an unfair practice, and so it clarified its regulation with a 2018 amendment. It specifically noted that the claimant had to be given new evidence or new rationales for denying the claim. In fact, that evidence or any new rationales had to be given in advance of the deadline for the claim decision, with enough time for the claimant to respond with evidence.

In this case, Dr. Zall's claim was not terminated until 2019. When Dr. Zall filed suit, he argued that the regulation should apply here and that the withholding of Dr. Alpert's report before a final decision was unfair. Standard argued that since the claim originated back in 2013, the 2018 amendment did not apply. The District Court had no problem with the unfairness concerns of Dr. Zall and ruled in Standard's favor.

Now Dr. Zall had to appeal that decision in Zall v. Standard Ins. Co., No. 22-1096, _F.4th_, 2023 WL 312368 (7th Cir. Jan. 19, 2023). At this point, Dr. Zall is now going on four years without his disability benefit. Fortunately, the Seventh Circuit concluded that the plain language of the regulation did require the application of the 2018 fairness amendments. “Once the procedures became operative, they applied to all active claims, as long as they were first filed after January 1, 2002.” The court also concluded that Dr. Zall was prejudiced by Standard's refusal or failure to provide, in advance of its decision, a copy of Dr. Alpert's report. The summary judgment in favor of Standard was reversed, and the case was remanded to the District Court with instructions to send it back to Standard for a full and fair review.

Despite the win for Dr. Zall, I do not like one part of this decision. The case was sent back ultimately to Standard to again decide the claim. Dr. Zall was now forced to go through the appeal process again. Standard gets another bite at the apple! It will likely be after the four-year mark, at best, before Dr. Zall finally receives disability benefits, if at all. He could have to file suit all over again. In my opinion, when an insurer acts unfairly like this, the insurer should be required to pay the claim, and then it can reevaluate the claim on its own nickel. Nonetheless, glad to see a court recognize that fair is fair, and the regulation says what it says. But more is needed than that for the “just, speedy, and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1.