Sixth Circuit ERISA Decisions from August

The Sixth Circuit issued three interesting ERISA decisions last month. In the first case, the Court affirmed dismissal of the LTD claim as untimely where the plan provided a limitations period of three years from when the initial proof of claim was required and the plaintiff filed suit within 8 months after the conclusion of her internal appeal following a contractual change in the eligibility standard.  In the second decision, the Court affirmed denial of LTD benefits on the basis of physical disability, but reversed on the mental disability LTD claim.  In the third case, the decision of the claims administrator (aka insurance company) on medical coverage was repeatedly reversed in three court appeals for refusing to consider and/or explain why it was not accepting the medical recommendations of the treating physicians for inpatient alcohol rehabilitation after several failed attempts at outpatient rehabilitation as provided in the insurance company’s internal guidelines. Ultimately, the court decided that the decision was arbitrary and capricious and ruled in favor of the claimant.

In Russell v. Catholic Partners Employee LTD Plan, No. 13-4804 (6^th Cir. 8-14-14), the nurse claimant submitted a claim for LTD benefits based on a knee and mental impairment which prevented her on May 12, 2007 from continuing the RN job she had held for 30 years.   Her LTD benefits were granted on November 15, 2007 since she was unable to continue her regular occupation.  However, she was also informed at that time that the standard of eligibility changed after two years and she would then be required to show that she was unable to work in any gainful occupation in order to continue receiving LTD benefits.   After the two years passed, her claim for LTD was denied since the insurance carrier determined that she could perform work as a case manager or triage nurse despite her physical and mental impairments.  The claimant appealed internally and the final denial was issued on July 20, 2010.  When the claimant initiated a federal court lawsuit on March 20, 2011, the carrier moved to dismiss on the grounds that the statute of limitations had run. 

The LTD Plan required written proof of a claim to be submitted within 90 days of the 180-day elimination period.   It also provided that a federal lawsuit could be initiated 60 days after proof of the claim had been submitted and within 3 years after the proof of claim was required.   The Court determined that the proof of claim was required to be submitted by February 8, 2008 and, therefore, the limitations period expired on February 8, 2011 – fifty days before the claimant initiated the lawsuit.   The Court rejected the claimant’s argument that the limitations period was re-set by the application of a different eligibility standard on November 12, 2009. “The Supreme Court recently held “a participant and a plan may agree by contract to a particular limitations period, even one that starts to run before the cause of action accrues, as long as the period is reasonable.”  In this case, the claimant had six months after the final denial of her LTD claim on July 20, 2010 to file suit before the three-year limitations period expired. “The plan’s use of the “any gainful occupation” standard did not reset the contractual limitations period.”  The Court also refused to re-set the limitations period each time the carrier requested new evidence supporting proof of continuing disability. 

In Hayden v. Martin Marietta Materials Inc. Flexible Benefits Program, No. 13-6319 (6^th Cir. 8-18-14), the claimant left work in January 2010 because of a variety of physical ailments and mental impairments (depression and anxiety).  She sought and was awarded SSI benefits.   However, she was denied LTD by her employer’s claims administrator on the grounds that her physical ailments were objectively insufficient to render her unable to work in her profession (as an office manager) and her mental impairments were not sufficiently severe to prevent her from working.  The Court agreed that the claimant failed to show that she was physically unable to work during the entire 180-day elimination period. For instance, her physician’s notes did not mention her arthritic hands until eleven months after she stopped working and similarly did not discover other conditions until after the elimination period. Her “minor” heart condition from 2008 similarly did not prevent her from working.   Therefore, the plan’s decision to deny benefits on this basis was not arbitrary or capricious.

The Court reversed the claims administrator, however, on the mental disability claim because the reviewer imposed a higher standard than the criteria outlined in the plan documents.  The reviewer denied benefits on the grounds that the claimant could perform some work, instead of evaluating whether she was mentally capable of continuing to perform her own profession.  Indeed, the reviewer’s decision “suggests that Hayden would have had to be suffering from “severe psychiatric symptoms, suicidal ideation, homicidal ideation, hallucinations” to be considered disabled.” This decision would effectively preclude any claimant from showing that depression or anxiety as a “disability— [and] is inconsistent with the terms of the Plan, which focus on whether a claimant can perform the material and substantial duties of her own occupation.”  The reviewer also denied benefits in part because he was influenced by the fact that the claimant’s employer was going through bankruptcy.  The treating physicians and psychiatrist had explained that her anxiety was related to her own health problems and those of her husband.  

It is true, as a general matter, that when a plan administrator relies on the opinion of one doctor over that of another, “the plan administrator’s decision cannot be said to have been arbitrary and capricious because it would be possible to offer a reasoned explanation, based upon the evidence, for the plan administrator’s decision.”  . . . . But ERISA does not grant to a plan administrator carte blanche to adopt the opinions of its reviewing physicians. When a reviewing physician’s report is “inadequate,” a plan administrator cannot be said to engage in a deliberate, principled reasoning process when it adopts the position of that report.  . . .  In particular, where a reviewing physician’s opinion applies standards that conflict with the terms of the plan, that opinion is not evidence supporting a conclusion that the claimant is not disabled within the meaning of the plan.

Instead of remanding the case for another review, the Court awarded benefits to the Claimant based on her mental disability in light of the uncontroverted evidence.

In Butler v. United Healthcare of Tennessee, Inc,  No. 14-6446 (6^th Cir. 8-22-14), the claimant was a long-time alcoholic, who attempted a variety of outpatient treatment programs before finally admitting herself into an inpatient facility in 2005.  Her husband’s insurance company denied coverage, although she seemed to meet the insurance carrier’s internal criteria (as they belatedly discovered only after initiating the litigation), of having a “[h]istory of continued and severe substance abuse despite appropriate motivation and recent treatment in an intensive outpatient or partial hospitalization program.”  Her husband paid for her inpatient treatment and pursued two internal appeals of the denial of coverage.   The external reviewer hired for the third internal appeal was given an incorrect standard by the insurance company and failed to explain why he disagreed with the recommendations of the claimant’s two treating physicians or mention the claimant’s history of failed outpatient rehabilitation.   After litigation commenced in 2008, the carrier realized it had given the wrong standard to the external reviewer and attempted to correct that mistake, but the reviewer affirmed his prior decision and still failed to explain why he disagreed with the recommendations of the claimant’s two treating physicians or mention the claimant’s history of failed outpatient rehabilitation.   

The Court agreed that the insurance carrier had not completed a complete or fair review of the case and remanded it for the carrier to explain why it disagreed with the recommendations of the claimant’s two treating physicians and why the claimant’s history of failed outpatient rehabilitation was irrelevant.  Instead, the carrier obtained another letter from the same external physician claiming that he believed he had previously reviewed the letters from the treating physicians and, in any event, after reviewing the file again he still believed coverage should be denied, but still did not explain why he disagreed with the treating physicians.  The Court remanded the case again for the insurance carrier to retain a different external reviewer, explain why it disagreed with the treating physicians and permit the submission of new medical information.  The claimant submitted new medical information that specifically addressed the carrier’s internal criteria for inpatient treatment (which was not disclosed until after litigation commenced).  While the carrier retained a new external reviewer, it suggested that the reviewer should not give much weight to the new medical information.  The reviewer, in turn, made the same mistakes as the first reviewer:  He denied coverage without explaining why he disagreed with the treating physicians or why the claimant’s unsuccessful outpatient treatment did not qualify under the carrier’s own criteria.  Accordingly, the Court granted judgment for the claimant and the Sixth Circuit affirmed.  

United’s refusal to give Janie’s benefits claim a fair review not once, not twice, but three times—in spite of clear instructions from the district court—casts a pall over United’s handling of the claim from the start. Through it all, through three chances to get it right (indeed through three chances just to engage in a nonarbitrary decision-making process), United failed the Butlers in multiple ways. United never explained its disagreement with the opinions of Janie’s treating physicians, which all contained detailed accounts of her prior attempts to get sober using increasingly intensive outpatient programs and which unequivocally deemed residential treatment necessary.  . . .United ignored key pieces of evidence and the key guideline applicable to Janie’s claim, making factually incorrect assertions (e.g., Janie had no history of trying unsuccessfully to treat her addiction with outpatient treatment),  . . ., or remaining silent about the matter,  . . . or (worst of all) mentioning the prior failures but nonetheless concluding without explanation that she did not meet the guideline requirements,  . . .. And United stacked the deck against the claim, instructing reviewers to “disregard” the evidence that John submitted in favor of the “contemporaneous physician-authored documents” that it had entered in the record.

                . . .

United adds that the decision to deny benefits cannot be arbitrary and capricious because five reviewing physicians agreed with it. That reviewing physicians paid by or contracted with the insurer agree with its decision, though, does not prove that the insurer reached a reasoned decision supported by substantial evidence. The physicians’ opinions carry weight only to the extent they provide a fair opinion applying the standard for granting benefits to the facts of the case. Elliott, 473 F.3d at 619. The reviewing physicians did not do that. They misstated or omitted the key fact of Janie’s prior failed outpatient treatment and ignored United’s guideline that allowed residential rehabilitation where outpatient treatment had not worked in the past. This argument, too, proves too much. If a decision to deny benefits could never be arbitrary and capricious when backed by the insurer’s reviewing physicians, court review would be for naught. The insurer would invariably prevail so long as the insurer had physicians on its staff willing to confirm its coverage rulings. That also does not make sense.

The District Court had also penalized the carrier for failing to earlier provide a copy of its internal criteria.  However, the statute only imposes liability on the Plan Administrator (the employer), not the claims administrator (i.e., the insurance company).

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Reverses Denial of LTD Based on File Reviews That Questioned Claimant’s Credibility and Mental Health

Last week, the Sixth Circuit reversed the denial of the first year of LTD benefits to a Central Ohio employee when the denial was based entirely on reviews of the medical file which questioned the lack of an objective cause for the claimant’s back pain and the subjective evaluation of his mental impairments.  Javery v. Lucent Technologies Inc. Long Term Disability Plan for Management or LBA Employees, No. 12-3834 (6^th Cir. 2-3-14).  The LTD Plan utilized two standards for benefits depending on whether the claim encompassed the first year (a lesser standard) or thereafter.  The employee’s LTD application, which was filed in November 2005, involved a long and tortuous history through the internal review process and two appeals to federal court.  One of his attorneys neglected to include the claim in his 2007 bankruptcy petition, but the federal courts declined to apply the judicial estoppel doctrine to bar his ERISA appeal.  The LTD Plan Administrator relied on file reviews by a staff nurse, staff physician and independent physicians to deny the employee’s application under the lesser first-year standard.  Ultimately, the Sixth Circuit concluded that the rationale for Plan’s decision lacked sufficient weight to counter the overwhelming medical evidence provided by the employee showing that he was unable to work due to a combination of his mental and physical impairments. File reviews are rarely appropriate or sufficient when the Plan is evaluating mental health or questions the claimant’s credibility.

According to the Court’s opinion, the plaintiff began working for the employer in 1998 as a software engineer and his job required him to sit for 8-10 hours/day and about 70 hours/week. By 2005, his physician advised him to stop working because of significant back pain for which he was taking medication.  He received STD and then applied for LTD under his employer’s plan, which provided that for the first year he would be considered to be disabled if was unable (for other than an injury covered by workers compensation) to engage “in his  . . .  occupation or employment at the Company, for which the eligible employee is qualified, based on training, education or experience.” (emphasis added).  After his initial claim was denied, he submitted medical documentation concerning his degenerative diseased discs and how the medication disoriented him and impaired his cognitive abilities.  While his physician believed returning to work would be in his best interests, he could not sit for prolonged periods.   An IME revealed no neurological basis for the pain, but suspected psychogenic factors.  

The Plan Administrator’s nurse manager reviewed the file and denied the appeal because that the plaintiff should be able to perform a sedentary occupation. The Plan Administrator explained that his claim was denied because his back pain did not make him unable “to work throughout your entire Benefit Waiting Period.”   At this point, the plaintiff retained an attorney and appealed again.  Additional medical evidence was submitted, as well as an explanation that the employer refused to provide certain accommodations (such as reduced working hours, etc.).  A physician employed by the Plan Administrator reviewed the file and saw no clinical basis to support his claimed back pain.  The Plan Administrator again denied the appeal and noted, among other things, that no mental status tests had been administered to document a cognitive impairment.  Again, the plaintiff appealed and submitted detailed psychological records.  After his final appeal was denied in January 2007, the plaintiff filed for bankruptcy 10 months later and in January 2009 sought review under ERISA of his LTD application in federal court.

 

The district court reviewed the plaintiff’s file de novo and in March 2011 remanded it back to the Plan Administrator for reconsideration of his mental impairment.  The plaintiff again submitted additional medical records concerning his sleep apnea and hospitalizations for mental illness, MRIs, CT scans, and a determination by the Social Security Administration that he was totally disabled from working at any job.  The Plan Administrator hired an independent neurologist and psychiatrist to review his files, but, although it had the right, did not request a medical evaluation.  Again, the Plan Administrator denied the plaintiff’s claim, and he re-activated the federal action for another appeal under ERISA.  This time, the court granted summary judgment to the Plan Administrator and the plaintiff appealed.

 

On appeal, the Plan argued that the plaintiff should be precluded from pursuing the appeal because his bankruptcy petition did not list the claim on his schedule of assets. The plaintiff showed that the mistake had been inadvertent because he had communicated the claim to his bankruptcy attorney.  The trial court refused to apply the judicial estoppel doctrine, which precludes a party from taking contradictory positions in different litigation.  Although the Sixth Circuit noted there was some authority that judicial estoppels should be reviewed on an abuse of discretion basis, it applied a de novo review. “We have made clear that “judicial estoppel does not apply where the prior inconsistent position occurred because of ‘mistake or inadvertence.’”  Moreover, in this case, the plaintiff lacked a motive to conceal the LTD claim from creditors: “[U]nder Ohio laws, proceeds from a disability insurance policy are completely exempt from a debtor’s estate (i.e., set aside for the benefit of the debtor) to the extent that they are necessary for the support of the debtor and his family.” 

The trial and appellate courts applied a de novo standard of review of the plaintiff’s LTD claim in this case because, as the Plan’s attorneys conceded at oral argument, the Administrator’s decision was not entitled to deference.  The Court concluded that the plaintiff had proved that he was unable to work as a software engineer for the first year of his LTD application based on a review of his job and the medical evidence.

 

Both parties agree that Plaintiff’s job as a software engineer was technically and intellectually demanding and required sitting for prolonged periods of time.

 . . . The medical evidence in the administrative record indicates that a combination of extreme pain, and mental illness, and the effects of pain medication made it exceedingly difficult for Plaintiff to concentrate, handle stress, stay awake during the day, remember things, relate to co-workers, make decisions, or sit for any extended period of time.

Three treating physicians concluded he was unable to work. In addition,  

[o]f the two psychiatrists who evaluated Plaintiff in 2006, one determined that he was seriously mentally ill and incapable of working, and the other found substantial impairment in Plaintiff’s ability to sustain the stress and pressure of day-to-day work. Their diagnoses were confirmed shortly thereafter by Dr. Borders, a psychiatrist at Shepherd Hill behavioral health facility, when Plaintiff was hospitalized for twelve days for mental illness in an acute in-patient unit in September 2006.

The Court found that the opinions of the Plan’s medical experts were insufficient to counter the plaintiff’s medical file.  While none of them found an objective basis for the plaintiff’s back pain, one of them suspected a mental cause.  Another physician complained about the lack of objective evidence and then overlooked such evidence in the file.  For example, he complained about the lack of psychological tests and then overlooked such a test that had diagnosed severe depression.  He also noted that non-mental health providers had not provided information about his mental health when, in fact, they had.  Finally, he had ignored the requirements of the plaintiff’s software engineer position.

First, file reviews are questionable as a basis for identifying whether an individual is disabled by mental illness. See Smith v. Bayer Corp. Long Term Disability Plan, 275 F. App’x 495, 505–09 (6th Cir. 2008) (noting that “[c]ourts discount the opinions of psychiatrists who have never seen the patient for obvious reasons”).  Second, reliance on a file review is inappropriate where a claims administrator disputes the credibility of a claimant’s complaints.

 . . . .

Plaintiff submitted medical evidence from numerous doctors and therapists who directly treated or examined him and concluded that he was unable to work due to a combination of his physical and mental conditions. He visited over a dozen medical experts. Those doctors who knew him best concluded, unequivocally, that he was unable to work at the relevant time.  Defendant offers little to contradict this evidence. Accordingly, Plaintiff is entitled to disability benefits for the relevant period.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: Ability to Perform Some Part-time Work Means Plaintiff Not Totally Disabled from Performing Any Work or Qualified for LTD Benefits

On Friday, the Sixth Circuit Court of Appeals affirmed summary judgment for a long-term disability benefits plan on the basis that it was not arbitrary or capricious for the plan to deny LTD benefits to a participant because she was capable of performing some part-time work.  McClain v. Eaton Corporation Disability Plan, No. 13-5395 (6^th Cir. 1-24-14).  Like many LTD plans, the defendant’s plan only provided LTD benefits (of 70% wage replacement) to participants who were sufficiently disabled so as to be “totally and continuously unable to engage in any occupation or perform any work for compensation or profit.”  The plaintiff’s “treating physician opined she could work part-time, and a market study identified various part-time positions in the area for which she was qualified.”  Therefore, the defendant plan concluded that because the plaintiff was able to perform some work, she was not totally disabled from performing any work as required by the terms of the benefit plan.

According to the Court’s opinion, the plaintiff injured her back at work and received short-term disability benefits under the plan, which only

defined disability as being “totally and continuously unable to perform the essential duties of your regular position with the Company, or the duties of any suitable alternative position with the Company.” After 24 months, however, the Plan switched from an “own occupation” standard to an “any occupation” standard, providing Second Tier coverage if “you are totally and continuously unable to engage in any occupation or perform any work for compensation or profit for which you are, or may become, reasonably well fit by reason of education, training or experience--at Eaton or elsewhere.”

After the short-term disability benefits expired, the plan sought updated medical information.  The plaintiff’s new treating physician “submitted medical information to the Claims Administrator, indicating that Plaintiff could work part time at a sedentary position with frequent rest, but that she had no ability to work full time.”  Importantly, he “limited Plaintiff to a part-time schedule, with certain restrictions.”  The Claims Administrator performed a survey of the local job market and identified “four positions locally, paying between $7.25 and $10.00 per hour, that both allowed for part-time work and met Plaintiff’s physical restrictions.”  Therefore, the plaintiff was notified that she did not qualify for LTD benefits because she was not “totally disabled” as required by the plan. 

 The plaintiff pursued an administrative appeal. A non-reviewing physician reviewed the plaintiff’s file and spoke with her treating physician.  He reiterated that plaintiff could perform sedentary work with restrictions, but did not note any restriction to part-time work.  Her treating physician indicated that she was very upset with him because of his restrictions and her loss of LTD benefits.  On her second appeal, the plaintiff submitted records from her initial surgeon, who also indicated that she could return to work in some capacity. 

The Plan Administrator arranged for a neurological surgeon and an orthopedic surgeon from an independent medical review organization to review Plaintiff’s claim file. Both doctors found that Plaintiff was not disabled under the terms of the Plan. The neurological surgeon submitted a report stating that Plaintiff was capable of returning to work with various restrictions, and that Plaintiff was capable of working in a sedentary position.

The orthopedic surgeon was even more optimistic: “The claimant should actually be able to return to work full duty without limitations at this point, as the multiple examinations performed and the imaging studies do not support further limitations or restrictions as noted.” Again, the Plan Administrator denied the plaintiff’s appeal and she sought further review in federal court.

 The Sixth Circuit noted that it must uphold the Plan Administrator’s decision: “A decision reviewed according to the arbitrary and capricious standard must be upheld if it results from a deliberate principled reasoning process’ and is supported by ‘substantial evidence.’”  

Under an arbitrary and capricious standard, honoring the extreme deference due the administrator, we are not convinced it was irrational to have concluded that an ability to work part time does not meet the definition of totally disabled to engage in any occupation or perform any work for compensation. It is reasonable to conclude that an ability to do some work means one is not unable to do “any work.”

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Reverses Employee’s Summary Judgment and Remands LTD Determination to Insurance Company Where Insurer Failed to Address Significant Issues Raised by Treating Physicians

On Tuesday, the Sixth Circuit Court of Appeals reversed a summary judgment granted to an employee-plaintiff on his ERISA claim that his LTD benefits were unlawfully terminated.  Fura v. Federal Express Corp Long Term Disability Plan, No. 12-2062 (6^th Cir. 8-6-13).  The Court refused to find that the employee was entitled to benefits as a matter of law because certain aspects of the reports of the treating physicians were conclusory (instead of descriptive) and the insurer could only be reversed if it had been arbitrary or capricious.  However, the Court also refused to deter to the insurer’s flawed explanation for its decision.  The Court questioned the thoroughness of the decision to terminate benefits and found “some serious flaws” in the insurer’s analysis and failures by the two reviewing physicians to address significant material evidence provided by the treating physicians.  Accordingly, it determined that the insurer failed to give a reasoned explanation for its decision, which justified remand.

Under the arbitrary and capricious standard, we uphold the administrator’s decision “if it is the result of a deliberate, principled reasoning process and if it is supported by substantial evidence.”  . .   Several lodestars guide our decision: “the quality and quantity of the medical evidence”; the existence of any conflicts of interest; whether the administrator considered any disability finding by the Social Security Administration; and whether the administrator contracted with physicians to conduct a file review as opposed to a physical examination of the claimant.

Under the employer’s LTD plan, an employee could not receive benefits after two years unless he or she was “totally disabled, which means that the employee is completely unable to work at least 25 hours per week because of a “medically-determinable physical or functional impairment[.]”   

In February 2008, the Social Security Administration determined that [the plaintiff] was disabled and awarded him benefits retroactive to his second back surgery [in January 2007]. [He] underwent a third spinal surgery in February 2009, but his back problems continued. Thus, near the two-year deadline of August 2009, [the insurer] asked Fura to prove that he was totally disabled. Under the terms of the plan, a covered employee can prove that he is totally disabled only through “significant objective findings” from medical examinations, test results, and “anatomical, physiological or psychological abnormalities which can be observed apart from the individual’s symptoms.” [He] then submitted records from his treating physicians. These records described [his] back problems, as well as a number of other ailments.

The insurer engaged a neurologist and a physician to review the plaintiff’s medical records.  They both found that the plaintiff was capable of working at least 25 hours/week in a sedentary job.

The Court was unimpressed with their analysis and found their conclusions to “suffer from some serious flaws.”  First, it was unclear why they concluded that his “pain would permit him to work 25 hours per week” because they never examined him, had no first-hand knowledge and were contradicted by observations of the plaintiff’s treating physicians.  They also failed to explain why the discounted the opinions of the treating physicians on the issue of the plaintiff’s pain.  “Of course, we do not defer to the opinions of treating physicians.  . . . But ‘a plan may not reject summarily the opinions of a treating physician, [and] must instead give reasons for adopting an alternative opinion.’”

More critically, the Aetna physicians failed to address significant material evidence. First, no reviewing physician addressed Dr. Ganley’s notes that Fura is losing sensation in his arms. FedEx now claims that this condition is not serious, but no medical professional submitted that opinion to Aetna. Second, no Aetna physician addressed the evidence that Fura’s range of motion is restricted. Even if Fura can get around with a walker, overwhelming medical evidence indicates that he can do so only with difficulty. Drs. Ganley and Easton both recorded numbness in Fura’s legs and difficulties with balance and stability. Each doctor also recorded restrictions on Fura’s ability to sit, stand, and drive—all elements of a sedentary workday. The omissions do not stop there. No reviewing physician discussed the progressive nature of Fura’s ailments, his impaired bowel and bladder function, or the impact of his lymphedema on his ability to do sedentary work.  And Aetna’s decision to rely on file reviews makes these omissions all the more troubling because a “plan’s decision to conduct a file-only review . . . [may] raise questions about the thoroughness and accuracy of the benefits determination.” Elliott v. Metro. Life Ins. Co., 473 F.3d 613, 621 (6th Cir. 2006) (quotation marks omitted). 

Neither Aetna nor the reviewing physicians were required to discuss every piece of evidence in the record. But Aetna’s decision to terminate Fura’s benefits “must be consistent with the quantity and quality of the medical evidence that is available on the record.” Moon v. Unum Provident Corp., 405 F.3d 373, 381–82 (6th Cir. 2005) (internal quotation marks omitted). Here, Aetna relied on file reviews that failed to confront significant evidence of total disability. In light of this evidence, Aetna did not give a reasoned explanation for its decision.

The Court decided to remand the case to the insurer instead of affirming the plaintiff’s judgment because the evidence was insufficient to grant the plaintiff judgment as a matter of law, but the insurer’s decision was insufficiently reasoned to warrant deferral. “When an employee-benefit plan grants the plan administrator discretion to determine a claimant’s eligibility for benefits, we can reverse that decision only if it is arbitrary or capricious.” 

Remand to the plan administrator is appropriate “where the problem is with the integrity of the plan’s decision-making process, rather than that a claimant was denied benefits to which he was clearly entitled.” Elliott, 473 F.3d at 622 (brackets and quotation marks omitted). Here, Aetna relied on reviewing physicians’ opinions that did not address significant evidence of total disability. Without an explanation for this evidence, we cannot find Aetna’s decision to be reasoned. But neither can we say, on this record, that Fura is totally disabled as a matter of law. Certain aspects of his treating physicians’ reports, for example, appear conclusory. Remand, rather than outright affirmance, is thus the appropriate outcome. 

On remand, Fura will also be free to supplement the record with the Social Security Administration’s decision granting him benefits as well as the record in that case. Without the decision and record, Aetna had no way of evaluating the reasons for the SSA’s award. Once the decision is part of the record Aetna can evaluate its reasoning to determine whether the award is persuasive evidence of total disability. Fura may also wish to ask his physicians to explain more fully the medical evidence supporting their conclusions.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Affirms Summary Judgment Against LTD Applicant Who Was Receiving SSDI

This morning, the Sixth Circuit Court of Appeals affirmed summary judgment in favor of an insurance company which denied long-term disability benefits to an employee who claimed that she could not work (and was successful in obtaining SSDI benefits), but whose medical providers had periodically released her to return to work.  Frazier v. LINA, No. 12-6216 (6^th Cir. 8-5-13).  The Court found that the employer’s LTD insurance policy at issue named the insurance company as a fiduciary and could be considered as the plan document, not merely an asset of the plan.  The Court also found that the plan vested discretionary authority in the insurance company when it required employees to submit “satisfactory proof” of their disability to the insurer.  “This Court has found ‘satisfactory proof,’ and similar phrases, sufficiently clear to grant discretion to administrators and fiduciaries.  . . Although the Policy could have more clearly expressed this grant of discretion, the ‘mere fact that language could have been clearer does not necessarily mean that it is not clear enough.’”  The decision was clearly rational to deny benefits (meaning it must be affirmed) because, among other things, the employee’s own doctors had released her to return to work without restrictions at various points.  Finally, the Court found the insurance company had the discretion to assist the employee with her SSDI application and was not mandated by the policy to assist her.

 NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Affirms Dismissal of FMLA and ERISA Claims

Today, the Sixth Circuit released two opinions affirming the summary judgment dismissal of two lawsuits.  One involved FMLA and disability discrimination claims and the other involved denial of STD/LTD benefits under ERISA.  In the FMLA case, the plaintiff employee failed to show that his termination was related to his use of FMLA  leave or violated Ohio law.   Blosser v. AK Steel Corp., No. 12-4015 (6^th Cir. 4-2-13).  In the ERISA case, the plaintiff employee claimed to be too stressed out to work, but refused to consult with a psychiatrist and had only the vague support of her primary care practitioner to support her claims.  Therefore, the Court found it was not arbitrary or capricious for the insurance carrier to deny her claims under ERISA.   Hogan v. Life Ins. Co. of N. Am., No. 12-5902 (6^th Cir. 4-2-13).

In Blosser, the plaintiff employee was hired in 2007 as an at-will engineer and received negative performance feedback:

[The manager] informed [plaintiff] that his performance was not meeting expectations and told him that he would need to improve. On one occasion, [the manager] indicated that the cost and time associated with one of [plaintiff’s] projects was “getting out of hand” and that [his] projects were not progressing as expected. Nevertheless, [plaintiff] continued having problems and failing to meet the expectations of [the manager] and other supervisors at AK Steel.

In September 2008, the plaintiff took FMLA leave to remove a brain tumor and was released to return to work without any medical restrictions in November 2008.   He returned to work on December 1 without any medical restrictions and admitted that he was not suffering from any disability. His work performance did not improve after his medical leave.  While he accomplished assigned tasks, his manager felt that he did not show enough initiative or independent judgment.

[The manager] rated [plaintiff] as “below satisfactory” in seven of ten performance sections, including “job knowledge, planning, control, management of resources, decision-making, communications (oral and written), and current performance.” [The manager] explained his ratings by writing, “Al is slow to assume the responsibilities of the Infrastructure work for Middletown Works. . . . [He is] not aggressive enough. . . . The quantity and difficulty of the projects that Al has been assigned is lower due to the length of time he has taken to work on them. . . . [He] has not achieved the desired improvement in response time.” When [the manager] and [plaintiff] met to discuss the evaluation, [he] blamed any substandard performance on his recent medical problems.

In the meantime, the recession adversely affected the company’s business and layoffs were made based on seniority, job performance and uniqueness of skills.  Because the plaintiff had low seniority, a non-unique job and documented poor performance, he was selected for layoff.  Before he had been notified of the layoff, the plaintiff emailed the HR department – in an attempt to avoid being laid off – that his medical condition had not been properly considered in his prior performance evaluation.  He filed suit following his layoff.

The Court found that the plaintiff could not show that he was laid off because of his FMLA leave merely because the layoff occurred six weeks following his return to work.    First, the Court focused not on the date of his return to work, but on the date several months earlier when he requested FMLA leave in September.  The passage of four months between his FMLA request and his layoff was found insufficient to support, by itself, the implication of retaliation.  “[A] plaintiff must couple temporal proximity with other evidence to show causation.”  In this case, the “other evidence” submitted by the plaintiff was insufficient.  The offer by his supervisor to help him move was irrelevant.   A comment that his work performance had not improved or changed since his medical leave was also irrelevant.  Comments by the company CEO in general against a state law form of FMLA leave was also insufficient to show retaliation.  In addition, the plaintiff could not show pretext in that there had been dissatisfaction with his job performance before he requested medical leave and those comments were consistent with his subsequent performance evaluation following his medical leave.   He also could not dispute the company’s economic need for layoffs during the recession.  Finally, he could not show his layoff was retaliation for emailing HR because the decision had already been made before his email was sent.

The Court also rejected his disability discrimination claim under Ohio law on the grounds that he could not show that he was disabled when he returned from a brief medical leave with no medical restrictions.  The Court found that his surgery and the potential of a need for future medical treatments did not render him disabled as having a record of a disability.   Instead, his brain tumor – while serious – was of temporary duration and was resolved without any further medical restrictions.  Therefore, the Court rejected any argument that it constituted a record of a substantial impairment. 

The Court found that the plaintiff had failed to produce any evidence that he had been regarded as disabled and could not show that his layoff was pretext for discrimination.

In the Hogan case, the plaintiff visited her primary care physician in September 2008 complaining of anxiety, difficulties concentrating, panic attacks, disliking her job and back pain.  He diagnosed her with depression, prescribed medication and she stopped working two days later on the grounds of depression, anxiety and panic attacks.   She visited her physician a week later complaining of anxiety and work-related stress and he agreed that she required a medical leave to adjust to her new medications.  A month later, she explained to her physician that she was still too stressed to return to work and he referred her to a psychiatrist.   She visited her EAP, which noted no restrictions on her work or daily activities, but referred her to another psychiatrist in order to rule out Alzheimers or dementia.  There was no evidence that she had ever consulted with any psychiatrist.

The plaintiff’s claims for STD and LTD were denied because she failed to provide satisfactory proof of disability.  While her primary physician noted that "significant stressors at work exacerbate [her] condition . . . but did  not connect any specific work activity to her condition, nor did he provide any evidence of objective testing or fruther evaluation.  And while he noted restrictions on her work activities, he did not initially place any restrictions on any other activities of  [her] daily life."  In rejecting her claim, the defendant company explained the:

 

lack of clinical evidence of functional deficiencies and added “we cannot conclude from the records we received a physical or mental inability to function at work other than your current dislike for your position.

 . . . .

Disability is determined by medically supported functional limitations and restrictions which preclude ability in performing your occupation. We do not dispute you may have been somewhat limited or restricted due to your diagnosis, however an explanation of your functionality and how your functional capacity prevented you from performing the requirements of a Leave Processor was not clinically supported as we were not provided with physical exam findings, physical limitations, and severity of symptoms.

The Court affirmed the denial of the claim:

In evaluating Hogan’s claim, LINA received only three brief visit notes from Hogan’s treating physician—an internist lacking any sort of mental-health specialization. These notes indicated that the idea to take time off from work originated with Hogan and was not a restriction imposed by her physician (although Dr. Schurfranz agreed with her decision to stop working until her medications better controlled her self-reported symptoms). The record lacked any sort of clinical verification, and despite requests and opportunities to do so, Hogan failed to provide the type of information about her specific limitations that could be used by LINA to determine that she met the plan’s definition of disability.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Reverses Termination of LTD Benefits as Arbitrary and Capricious and Retroactively Awards Benefits

Last week, the Sixth Circuit surprisingly reversed as arbitrary and capricious under ERISA the decision of an insurance company to terminate LTD benefits it had previously awarded to the plaintiff.  Neaton v. Hartford Life and Accident Ins. Co., No. 11-6-61 (6^th Cir. 3-21-12).  In that case, the plaintiff suffered from a rare genetic condition that made him particularly susceptible to skin cancer, requiring him to submit with increasing frequency to increasingly invasive surgeries to remove and repair carcinomas before they spread to other organs.  His medical condition was only expected to worsen as he aged and was exposed to sunlight and fluorescent lighting and his recovery time kept him off work fairly regularly. Prior to applying for long-term disability, the plaintiff held a well-compensated position as a debt collector.  After much consideration, the defendant granted his application, but then determined approximately six months later that the plaintiff was well enough to perform his – or a substantially similar job – from home.  The Court found this decision to be arbitrary and capricious for a number  of reasons, including the lack of improvement in the plaintiff’s underlying medical condition, the defendant’s failure to seek or consider the treating physician’s opinion on the plaintiff’s ability to recover more quickly from his surgeries if he was working from home, the defendant’s failure to consider all types of the plaintiff’s recent surgeries in underestimating his anticipated absenteeism, and the defendant’s unsupported conclusion that the plaintiff’s employer would accommodate the anticipated number of medical absences plaintiff was expected to incur in the future.  Although the trial court had granted the insurance company judgment on the pleadings, the Sixth Circuit reversed and retroactively reinstated the LTD benefits.

The Court found that the plan administrator was vested with discretionary authority to administer the plan because employees were required to submit satisfactory proof of disability in order to receive benefits.  There was also a question about a potential conflict of interest when the same entity both administers the benefit plan and pays the claim.

The plaintiff argued that it is always suspicious when a claimant is later found to no longer be disabled without any change or improvement in his underlying medical condition.   In this case, “based on a review of [the plaintiff’s] file, a [defendant] employee concluded that he was no longer eligible for disability benefits because he was able to perform his former job, a sedentary, indoor occupation.”  When his benefits were terminated the next day, the plaintiff protested on the grounds that his conditioned had only worsened since his application and he would appeal.  The defendant hired two other physicians to review his claim.

 As an initial matter, the defendant’s consulting physicians greatly minimized the amount of recovery time the plaintiff would require from his surgeries and assumed that his recovery time would be shortened if he were permitted to work from home.  His treating physician was never consulted about whether there would be a reduction in his recovery time if he worked from home and the plaintiff insisted the recovery time was significant.  It was an error to give preference to non-treating physicians on the issue of recovery time – particularly without consulting the treating physician at all – “because a patient’s recovery time following surgery is variable and depends in part on the extent of a patient’s pain. Accordingly, the length of the patient’s recovery is in large part a credibility determination.” 

While it is not per se improper to rely on the opinion of a non-examining medical consultant, whether a doctor has physically examined the claimant is a factor that may be considered in determining whether a plan administrator acted arbitrarily in giving greater weight to the opinion of its consulting physician. Kalish, 419 F.3d at 508. The plan administrator’s failure to require a physical examination “may, in some cases, raise questions about the thoroughness and accuracy of the benefits determination.” Calvert v. Firstar Fin. Inc., 409 F.3d 286, 295 (6th Cir. 2005). Indeed, the lack of a physical examination may be particularly inadequate where, as here, the file reviewer makes critical credibility determinations.

This Circuit has repeatedly criticized the rejection of the opinion of a treating physician that is consistent with the medical record, in favor of non-examining file reviewers.

While it is not an abuse of discretion to give more weight to a consulting physician opinion than that of a treating physician, in this case, the defendant’s physicians failed to consult the treating physician about this issue at all.

Although the district court did not wholly disregard the opinion of [the plaintiff’s] treating physician, a court should not uphold a termination when there is an absence of reasoning in the record to support it. McDonald, 347 F.3d at 172. The number of days [the plaintiff] required to recover from a[n invasive] Moh’s procedure if working from home is in large part a credibility determination. See Calvert, 409 F.3d at 297. [Defendant’s] exclusive reliance on the opinion of a physician who never physically examined [the plaintiff], or even spoke to him about his recovery process, calls into question the quantity and quality of the medical evidence and opinion.

Secondly, the Court also found that the defendant’s expert underestimated the plaintiff’s absenteeism by not including his absences for the less-invasive carcinoma removal procedures and considering the period of time before his medical condition worsened following the application for LTD benefits.

The vocational expert’s opinion here, based upon calculating the average frequency of [the plaintiff’s] surgeries over a timeline beginning prior to the time he claimed to be disabled, results in an artificially low assumption as to the frequency of his surgeries and work absences, and does not constitute substantial evidence to support [Defendant’s] denial of benefits. Moreover, regardless of which time period the Court considers, any one of the periods shows a number of absences greater than what government statistics suggest could be accommodated.

Finally, the defendant’s vocational expert also concluded – without citation to any authority whatsoever – that the plaintiff’s anticipated level of absenteeism – which the Court already found was artificially low – could be accommodated by “the common practice of employers.”  “Conclusory medical and vocational opinions that fail to provide evidence or reasoning to support the conclusions are insufficient to support a denial of benefits.”  There was no evidence in the file that the plaintiff’s employer would accommodate the anticipated level of absenteeism, or that it would he qualify for paid sick leave for all of the anticipated days.  The Court then referred to evidence that he was anticipated to miss more than 20 days (and perhaps almost 30) per year, but that government studies showed that few employers paid more than 10 days per year in sick pay.  (There was no discussion about accrued paid leave benefits, presumably because they had long since been exhausted).

Finding the termination of LTD benefits to be arbitrary and capricious under the circumstances, the Court determined that the proper remedy was to reinstate the plaintiff’s LTD benefits retroactively to the date of their termination instead of remanding the matter for reconsideration by the plan administrator.   While the plan administrator may conduct another review and ultimately decide to properly terminate benefits, it cannot benefit from its prior arbitrary and capricious decision. “A retroactive award of long-term disability benefits wrongfully withheld and reinstatement of Neaton’s long-term disability payments is the appropriate remedy in this case.”

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: Denial of LTD Benefits, Attorneys Fees and Remand

This morning, the Sixth Circuit Court of Appeals affirmed a trial court decision that the denial of LTD and 401(k) benefits were arbitrary and capricious and that the plaintiff was entitled to attorney fees as a prevailing party under ERISA. However, the remedy for the denial of benefits was not the award of benefits, but rather, remand to the plan administrator to re-evaluate its prior invalid decision. Burge v. Republic Engineered Products, Inc., No. 10-3124 (6th Cir. 8/3/11). The plaintiff injured her wrist in a fall, subsequently became depressed and left work in mid-January 2006. A variety of physicians and psychiatrists issued conflicting decisions about the existence, extent, and scope of her medical and emotional condition. There was some evidence of malingering and exaggeration of symptoms. The employer terminated receipt of LTD on the grounds that there was no evidence of “total disability.” Her position was then eliminated in August 2006. Problem was, the employer’s LTD plan did not require evidence of total disability and there was no discussion in the decision about the plaintiff’s ability to perform any work. Accordingly, the trial court concluded on appeal that even though the plan vested discretion in the plan administrator, the decision had been arbitrary and capricious for relying on requirements that were not contained in the LTD plan, by not following a methodical appeal process, by reverting between the LTD and STD plans, by refusing to consider all evidence of her wrist condition and by considering only her medical status without also considering her ability to perform any gainful employment. The court also awarded attorney fees to the plaintiff as a prevailing party. On appeal, the Sixth Circuit affirmed the trial court on the merits and award of attorney fees, but found that the proper remedy for the benefit claims was to remand to the employer to make a proper decision.

“Generally, when a plan administrator chooses to rely upon the medical opinion of one doctor over that of another in determining whether a claimant is entitled to ERISA benefits, the plan administrator’s decision cannot be said to have been arbitrary and capricious because it would be possible to offer a reasoned explanation, based upon the evidence, for the plan administrator’s decision.” The employer was not required to consider evidence of vocational experts and the plaintiff’s receipt of SSA benefits was only one factor to be considered.

Nonetheless, the employer made an arbitrary decision when it failed to follow a methodical appeal process:

Specifically, Republic (1) failed to follow a stated, methodical appeal process and inconsistently applied and reverted between the STD and LTD Plans; (2) applied a standard of “total disability” that did not appear in the Plan; and (3) failed to consider evidence of Burge’s actual wrist condition. . . . [The employer] never “reasoned from [the plaintiff’s] condition to her ability to perform her occupation. There is no statement or discussion of [plaintiff’s] occupational duties or her ability, or inability, to perform them.”

In Elliot, we held that “medical data, without reasoning, cannot produce a logical judgment about a claimant’s work ability.” Id. at 618. There, as here, we noted that the plan administrator’s two denial letters contained “mere recitation[s] of medical terminology employed by various physicians in their diagnoses of [the claimant’s] condition, without any reasoning as to why those diagnoses would permit her to function in the workplace. A court’s decision that merely said ‘affirmed’ or reversed’ could not be considered ‘reasoned.’ Similarly, [the plan administrator] cannot be said to have given a reasoned denial of the [claimant’s] claim . . . .” Id. at 619. Even assuming that the appropriate definition of disability is that used in the STD Plan, which requires the claimant to be unable to engage in her regular occupation, rather than the LTD Plan, which is broader, none of [the employer's] benefits denial letters analyzed whether [the employee] would be able to perform her regular occupation in light of the restrictions imposed on her by the physicians who examined or treated her and in view of her complaints that [the employer] did not accommodate these restrictions.

A trial court is empowered to either award benefits or to remand to the plan administrator to make a proper determination following a flawed decisionmaking process. In light of the question in this case about the plaintiff’s malingering and exaggeration of symptoms, the Sixth Circuit found remand to be a more appropriate remedy than simply awarding the plaintiff LTD benefits.

Even though the plaintiff ultimately may not be entitled to LTD benefits, she would still be entitled to attorney fees as a prevailing party under ERISA. The trial court was not arbitrary in awarding her fees after ruling on the merits of her claim in that the employer’s underlying decision was flawed.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Supreme Court: Even Partially Prevailing Parties Can Win Attorneys Fees in ERISA Litigation

On Monday, an almost unanimous United States Supreme Court held that certain parties can be awarded attorney fees from the opposing party even if they are not "prevailing parties" in the litigation. Hardt v. Reliance Standard Life Ins. Co., No. No.09-448 (5/14/10). In that case, the plaintiff sued the defendant insurance company when it denied her LTD benefits for carpal tunnel syndrome. The trial court found that she had presented compelling evidence that she was totally disabled and that the defendant had acted on incomplete medical evidence. Instead of granting her summary judgment, however, the trial court remanded the case to the insurance company to reconsider its prior decision within 30 days. Not surprisingly under the circumstances, the defendant reversed its decision and awarded the plaintiff benefits. The trial court then awarded her attorney fees under ERISA §1131(g)(1). The Fourth Circuit Court of Appeals reversed on the grounds that the plaintiff had never obtained an enforceable court judgment and, thus, was not a "prevailing party." With Justice Thomas writing the majority opinion, the Supreme Court reversed on the grounds that the specific statutory provision permits the trial court discretion to award attorney fees to either party, not merely prevailing parties. Justice Stevens concurred separately.

The insurance company initial denied the LTD claim based on its evaluation of the results of her functional capacity evaluation (showing she was capable of some sedentary work). After she appealed, it reversed itself and found she was totally disabled from her current occupation (clerical) and could have benefits for 24 months. In the meantime, the plaintiff was diagnosed with "small-fiber neuropathy, a condition that increased her pain and decreased her physical capabilities over the ensuing months." She applied for and received social security benefits on the grounds that she was completely disabled from working. The insurance company notified her that her LTD benefits were about to run out and demanded repayment for about $14K because of her receipt of SSA benefits. She appealed and provided updated medical information. The insurance company again asked for a capacity evaluation, but did not ask the evaluator to consider her neuropathy problems. The evaluators requested two evaluations and complained that the plaintiff was refusing to try out of fear of pain. The defendant then hired a physician and vocational counselor to resolve her appeal, but the physician concluded that she might improve after reviewing only some of her medical records and the counselor opined that there were 8 jobs she was capable of performing based on her 2003 medical condition (before the neuropathy was diagnosed). Thus, the insurance company terminated her benefits in 2006.

After exhausting her administrative remedies, the plaintiff filed suit in federal court. The court denied cross-motions for summary judgment. However, the court found compelling evidence that the plaintiff was completely disabled and the defendant had failed to properly review her medical records. Thus, it remanded the case for 30 days to the insurance company to reconsider its prior decision. After the insurance company reversed itself again, the plaintiff requested to be awarded attorney fees.

ERISA's section 1132(g)(1) provides: "In any action under this subchapter (other than an action described in paragraph (2)[i.e, recovering delinquent contributions on behalf of a multi-employer plan]) by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." Based on the plain text of the statute, the Supreme Court found that it was erroneous to limit the recovery fees to a prevailing party and, instead, held that it is within the trial court's discretion to award fees "as long as the fee claimant has achieved 'some degree of success on the merits.'" Unlike §1132(g)(2) which limits fees to a party who obtains a judgment for the plan, there is no mention of "prevailing party" in that section of the statute.

To guide courts faced with this decision in the future, the court then analyzed when it would be appropriate to award attorney fees under §1132(g)(1). The basic principle of the "American Rule" is that each party pays their own attorney unless provided otherwise by statute or contract. Statutory standards vary widely from prevailing party, to substantially successful litigant, to when appropriate to the court's discretion. The Court found the most analogous situation to involve a similar statute under the Clean Air Act which permits an award of fees "when appropriate." Even in that situation, the Court found that Congress did not intend to completely abandon the American Rule and would still require some success by the party to obtain its aims in the litigation before it would be awarded fees. Thus, fees are available to partially prevailing parties who achieved some success.

A claimant does not satisfy that requirement by achieving "trivial success on the merits" or a "purely procedural victor[y]," but does satisfy it if the court can fairly call the outcome of the litigation some success on the merits without conducting a "lengthy inquir[y] into the question whether a particular party's success was 'substantial' or occurred on a 'central issue.'"

In this case, the plaintiff convinced the court that the defendant insurance company had failed to comply with ERISA in reviewing her request for benefits. Summary judgment in her favor was only denied in order to give the insurance company another chance to evaluate her application – something it had already done several times before she initiate the litigation. Only because of the trial court's instruction did the insurance company reverse itself. Thus, the plaintiff achieved victory even without a court order.

These facts establish that [the plaintiff] has achieved far more than "trivial success on the merits" or a "purely procedural victory." Accordingly, she has achieved "some success on the merits," and the District Court properly exercised its discretion to award [the plaintiff] attorney's fees in this case.

No further remand was deemed necessary.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Supreme Court Upholds Less Deferential Standard of ERISA Review Against TPA Insurance Company.

On June 19, 2008, the Supreme Court affirmed the Sixth Circuit Court of Appeals in Metropolitan Life Ins. Co. v. Glenn, No.. 06-923. In that case, Sears purchased long-term disability insurance from MetLife and appointed MetLife as the Third Party Administrator of the LTD claims of Sears’ employees. Sears’ LTD Plan also gave MetLife discretionary authority to determine employees’ eligibility for benefits. When the plaintiff applied for LTD, MetLife initially granted her application for 24 months of benefits. However, after encouraging her to apply for SSI benefits (which she obtained), it then determined that she was ineligible for extended benefits in that one of the medial reports submitted indicated that she was capable of performing sedentary work.

The Supreme Court had previously noted in Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101, the proper judicial standard of review for ERISA benefit claims under §1132(a)(1)(B). First, courts should be "guided by principles of trust law," analogizing a plan administrator to a trustee and considering a benefit determination a fiduciary act. Next, the principles of trust law require that de novo review be utilized unless the terms of a benefits plan provide otherwise. Finally, if the terms of the benefit plan grant the administrator or fiduciary discretionary to determine the participant’s eligibility for benefits, the court should utilize a deferential standard of review as appropriate. However, if the administrator or fiduciary with such discretion "is operating under a conflict of interest, that conflict must be weighed as a 'facto[r] in determining whether there is an abuse of discretion.’”

In Glenn, the Court determined that this analysis from Firestone applied equally to an insurance company acting as both the insurer and the TPA and not just an employer who acts as both the fiduciary evaluating the claims and the employer which funds the benefits. That "[e]very dollar provided in benefits is a dollar spent by ... the employer; and every dollar saved ... is a dollar in [the employer's] pocket" is equally applicable to this situation. Nonetheless, the Court reiterated that the TPA was still entitled to a deferential standard of review pursuant to the terms of the LTD plan, but that – in light of the conflict of interest inherent in an insurance company deciding for itself whether to award benefits out of its own accounts -- the reviewing court was permitted to consider a number of factors, including ”(1) the conflict of interest; (2) MetLife's failure to reconcile its own conclusion that Glenn could work in other jobs with the Social Security Administration's conclusion that she could not; (3) MetLife's focus upon one treating physician report suggesting that Glenn could work in other jobs at the expense of other, more detailed treating physician reports indicating that she could not; (4) MetLife's failure to provide all of the treating physician reports to its own hired experts; and (5) MetLife's failure to take account of evidence indicating that stress aggravated Glenn's condition.”

Insomniacs can read the full decision at http://www.supremecourtus.gov/opinions/07pdf/06-923.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.