Conflict of Interest Can Arise When Insurers has Duty to Determine Whether Claimant Qualified for Benefits and The Responsibility to Pay Benefits

As part of Kantor & Kantor’s”Throwback Thursday”, we take a look at Mondolo v. Unum Life Ins. Co. of Amer., CV-11-07435 CAS (MRWx) (C.D. Cal. 2013).

Kantor & Kantor LLP achieved a victory on behalf of client Tanya Mondolo, who sued Unum Life Insurance Co. in U.S. District Court for the Central District of California for wrongfully denying her disability insurance benefits. The court ruled that Unum, a Fortune 500 company and the largest group and individual disability carrier in the United States, abused its discretion in terminating Mondolo’s disability benefits. The court ordered Unum to reinstate benefits, with interest, and that Kantor & Kantor could make a motion for attorneys’ fees and costs.

Mondolo suffered from fibromyalgia and avascular necrosis, often called bone death. Her physicians believed the bone death was a late developing side effect from the chemotherapy regimen used years ago to treat her leukemia. She had difficulty walking, suffered from uncontrolled pain, and was too weak to tolerate prolonged sitting or typing.
“Like so many group disability insurers, Unum labored under a structural conflict of interest because Unum has both the duty to determine whether claimants qualified for benefits and the responsibility for paying those benefits,” said Kantor & Kantor partner Alan E. Kassan, who assisted associate Brent Dorian Brehm on the case. “Unum’s bias led the court to review Unum’s decision regarding Mondolo’s benefits with enhanced skepticism and the denial could not withstand scrutiny.”

In reaching its decision, the court noted Unum’s history of biased claims administration and case specific facts that the Kantor lawyers argued aggravated Unum’s conflict of interest. The court found the following:
• Unum failed to properly investigate Mondolo’s claim, neglecting to determine how much sitting she could tolerate without significant pain.
• Unum did not investigate whether the alternative jobs it claimed Mondolo could perform were appropriate for her limited ability.
• Unum and its reviewing physicians failed to consider psychological evidence, even though the policy expressly stated that such evidence must be considered.

In addition, attorneys Kassan and Brehm argued that Unum’s conclusions were unreasonable. For example, Unum insisted Mondolo could sit between one-third and two-thirds of a work day. The Kantor attorneys proved even if Unum’s supposition was accurate, Mondolo was still not able to meet the requirements of, or perform the sedentary work Unum argued she was capable of.

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