In Hunt v. MetLife, a New York state court upheld a claim that MetLife engaged in consumer fraud. Plaintiff alleged that MetLife (i) systematically misapplied the terms of its long term disability policies and (ii) conducted a sham evaluation of Plaintiff’s claim that was not intended to get to truth of whether Plaintiff was actually disabled.
The court also allowed a claim for attorneys’ fees related to the consumer fraud claim to move forward.
The decision (which can be read here) sets an important precedent in New York for long term disability insurers. Engaging in bait-and-switch, concealing, and obstructive tactics will subject insurers to additional damages, including attorneys’ fees.
Consumer Fraud Under New York State Law
New York’s General Business Law (“GBL”) § 349(h), New York’s deceptive trade practices act, permits consumers to file lawsuits to recover damages caused by deceptive trade practices. The statute also provides that consumers can recover attorneys’ fees for bringing these lawsuits.
To establish a consumer fraud claim under GBL § 349(h), a plaintiff must show a deceptive act that:
- is consumer-oriented;
- defendants engaged in to mislead a reasonable consumer; and
- caused the plaintiff’s injury.
Plaintiffs must plead an actual injury to themselves from deceptive or misleading practices that also impact consumers at large.
The statute does not cover purely private contract disputes, and GBL § 349 claims must not be duplicative of a contract claim. Thus, a GBL § 349 loss must be distinct from the loss caused by a breach of contract. A purely monetary loss is a sufficient injury to satisfy the requirement under § 349, as long as that loss is independent of the loss caused by an alleged breach of contract.
Consumer Fraud Allegations in Hunt v. MetLife
Riemer Hess’s client, the Plaintiff, is a physician who practiced in an emergency room for more than 16 years. Plaintiff became disabled from his regular occupation as an emergency room doctor due to Post-Traumatic Stress Disorder (“PTSD”). After becoming disabled from working in an emergency room, he began a much less stressful and demanding occupation – urgent care physician.
Plaintiff’s allegations were as follows:
In the action, Plaintiff alleged that MetLife marketed an individual disability income policy to Plaintiff and other doctors that would provide future income protection and peace of mind in the event of disability from Plaintiff’s medical specialty of emergency medicine. The policy specifically stated that disability benefits would be owed if a claimant was prevented from performing the material and substantial duties of their regular occupation due to impairment caused by injury or sickness.
Plaintiff became disabled from his occupation as an emergency room doctor, but wanted to continue to work. Because of his persistence, he was able to find work in the much less demanding occupation as a doctor at an urgent care facility. Under the policy, a claimant can collect total disability benefits if he is unable to do his own occupation, even if he can and does work in a different occupation. The action arose because MetLife did not provide these promised income protection benefits. Instead, MetLife conducted a sham evaluation of Plaintiff’s claim. MetLife also refused access to the reports of its doctors, which deprived Plaintiff of the opportunity to respond to those reports. MetLife justified its concealment as a standard practice that it applies to all similar claimants.
Despite voluminous medical evidence of disability, and despite another disability insurer approving his claim for benefits, MetLife eventually officially denied Plaintiff’s claim.
The court held that Plaintiff’s allegations regarding MetLife’s actions were consumer fraud under New York’s GBL § 349 in three different ways.
First, if, as alleged, MetLife misapplied its policy terms to avoid paying Plaintiff total disability benefits, that was consumer fraud. These would be consumer-oriented actions because the policy and riders were standard forms issued to similarly situated consumers. The court further held that such a misapplication would mislead a reasonable consumer, and that Plaintiff could be injured by the practice.
Second, if, as alleged, MetLife made a practice of delaying and denying covered claims under the policy, that was consumer fraud. The practice could have impacted consumers broadly, as well as Plaintiff directly, and could have been deceptive to a reasonable consumer.
Third, if, as alleged, MetLife concealed its reviewing doctors’ reports, that was also consumer fraud. Plaintiff alleged that during the claims process, MetLife continued to request additional information, while refusing to divulge what it needed from Plaintiff to support total disability. The court held that the practice could be “misleading and deceptive.” The practice could have damaged Plaintiff, and MetLife stated that the practice was its standard procedure.
The court held that Plaintiff’s claim for attorneys’ fees arising from MetLife’s consumer fraud violation of GBL § 349 could go forward. The court held that GBL § 349(h) provides an independent statutory authorization for attorneys’ fees if Plaintiff could establish MetLife’s liability under that statute.
The court’s decision to hold New York disability insurers accountable for their claims practices is a major win for disability insurance claimants.
If you need help holding a disability insurer accountable for their claims practices, call us today at (212) 297-0700. We are here to help.