Tennessee Disability and Life Insurance Blog
In an ERISA disability case, a federal district court reviews a decision to deny benefits under “an arbitrary and capricious” standard. Under this standard, a court will not overturn a denial of long-term disability benefits if a plan administrator can offer a “reasoned explanation” for its decision. Simply put, even if a denial of disability benefits is clearly wrong, a court will not overturn it if the plan administrator can provide some factual basis, however thin, for its decision.
Still, courts in the Sixth Circuit have said, repeatedly, that the arbitrary and capricious standard is “not a rubber stamp.” So what exactly constitutes an arbitrary and capricious decision? Unfortunately, there is no clear rule. However, the Sixth Circuit does have a substantial body of case law explaining reasons why a denial of disability benefits will not be upheld. Below are several important ERISA cases that can help Plaintiff’s lawyers attack a denial of long-term disability benefits:
In Calvert, the Sixth Circuit said that, while there is nothing inherently objectionable about a plan administrator using a file review of a claimant’s medical evidence, a plan administrator’s decision to conduct a file review, instead of a physical examination, is a “factor to consider in [the court’s] overall assessment of whether [plan administrator] acted in an arbitrary and capricious fashion.” According to the Calvert court, the lack of a physical examination “may raise questions about the thoroughness and accuracy of the benefits determination.”
In Shaw, the Sixth Circuit found a denial of disability benefits to be arbitrary and capricious because the plan administrator “ignored favorable evidence [from the claimant’s] treating physicians.” The Shaw court also criticized the plan administrator for making factually incorrect assertions including stating that the plaintiff failed to submit specific measurements of the range of motion in his neck, when he did.
Finally, like the Calvert court, the Shaw court found fault with the plan administrator’s file review of medical evidence. In particular, the court criticized the plan administrator for failing to conduct an in-person examination of the plaintiff, while still “second-guessing” his treating physicians and making “credibility determinations” regarding his subjective reports of pain.
- DeGennaro v. Liberty Life Assur. Co. of Bos., 561 F. Supp. 2d 811, 818 (W.D. Mich. 2008)
Here, the district court found a denial of disability benefits to be arbitrary and capricious, in part, because the plan administrator “siloed” each of the plaintiff’s medical conditions rather than determining whether the “totality” of her conditions resulted in a covered disability. Citing Calvert, the DeGennaro court observed that an in-person examination, in place of a file review, would have given the plan administrator “a more complete picture” of the plaintiff’s health. The court noted that, while the plaintiff’s individual conditions, in and of themselves, may not preclude the plaintiff from working, her disability was the cumulative effect of all of her conditions, including degenerative joint disease in both her knees, obstructive sleep apnea, and the side effects from her medications.
Although not a disability case, Butler examined a denial of medical benefits under an ERISA plan and provided helpful examples of what the Sixth Circuit considers an arbitrary and capricious decision, including (1) ignoring “key pieces of evidence;” (2) failing to explain the plan administrator’s disagreement “with the opinions of [the claimant’s] treating physicians,” and (3) “making factual incorrect assertions.”
Leonor is not an ERISA case, but it’s still helpful for plaintiffs who are claiming total disability, even if though they can still perform some parts of their pre-disability occupation. In Leonor, the plaintiff was a dentist who, due to an injury, could no longer perform clinical dental services but who could still manage his other business ventures. He claimed total disability. His disability policy defined disability as being “unable to perform the important duties of Your Occupation.”
The Sixth Circuit found that the above policy language was ambiguous and can be reasonably understood to cover disabilities in which the plaintiff cannot perform most, though not all, of the important duties of his or her pre-disability occupation. The Court stated that, in the context of disability insurance, reading “unable to perform the important duties of Your Occupation” to mean that the plaintiff cannot perform any aspect of their job doesn’t serve the interests of the parties. Rather, a person is unemployable as long as he or she “cannot perform a substantial proportion of that profession’s important duties.”
In Haynor, the defendant argued that the plaintiff did not exhaust his administrative remedies under his employee benefit plan governed by ERISA. The court rejected the defendant’s argument noting that the plaintiff had appealed his denial of benefits multiple times. In explaining its decision, the Haynor court cited 29 C.F.R. §§ 2560.503–1(c)(2)–(d), which deems a claims procedure of any plan is unreasonable if the claimant has to file “more than two appeals of an adverse benefit determination.”
In Watson, the district court criticized the plan administrator’s conclusory denial letter, specifically noting that it did not provide any explanation as to why the conclusions of the plaintiff’s physician were rejected. The court stated: “This is a textbook indicator that Western & Southern [Defendant] acted arbitrarily and capriciously.”
Hopefully, these case summaries will be helpful to claimants with disabilities policies and to their lawyers.