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 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.