Tennessee Disability and Life Insurance Blog
In an ERISA disability case in which a plaintiff is challenging a plan administrator’s denial of long-term disability benefits, a court can do one of three things: (1) It can uphold the plan administrator’s decision; (2) it can reverse the decision and award the plaintiff disability benefits; or, (3) it can order the plan administrator to re-evaluate the plaintiff’s disability claim.
The third option is called a remand. Usually, in a remand, the court will order the plan administrator to follow specific instructions in re-evaluating the disability claim. The court’s instructions could require the plan administrator to evaluate medical evidence it previously ignored. A remand could also require a plan administrator to take a closer look at the physical and cognitive demands of the plaintiff’s occupation.
Although a remand may seem like an unsatisfactory conclusion to a lawsuit, it can prompt the plan administrator to make a reasonable settlement offer to the plaintiff, since the court has already determined that the plan administrator’s review of the disability claim was flawed. It is likely that the plan administrator will be influenced by the fact that, if it denies the claim again, it may be before the same court that previously found fault with its decision-making process.
An award of disability benefits is obviously preferable to a remand. Once a court decides to overturn a plan administrator’s denial of long-term disability benefits, how does it determine whether to order a remand or make an award of benefits? If the court is able to determine from the administrative record whether the plaintiff is clearly disabled under the terms of the Policy, it will award the benefits that the plan administrator should have awarded. If the court finds that the review of the disability claim was flawed but cannot determine from the record whether the claimant is disabled, it will have to remand the matter.
In Elliott v. Metro. Life Ins. Co., (6th Cir. 2006), the Sixth Circuit wrestled with whether to order a remand or to award benefits. In that case, the plaintiff suffered from chronic pain stemming from a serious car accident she was involved in years earlier. MetLife denied her claim for long-term disability benefits and, after the plaintiff brought suit, the trial court upheld the denial of benefits. The plaintiff then appealed to the Sixth Circuit.
In its opinion, the Sixth Circuit reversed MetLife’s decision, noting that MetLife failed to refute, or even attempt to refute, a letter from the plaintiff’s physician discussing her chronic pain and weakness and how her condition limited her work ability. The Sixth Circuit also observed that MetLife failed to analyze how the plaintiff’s medical condition related to the demands of her job. Finally, the Sixth Circuit noted that MetLife relied on a physician consultant that it utilized regularly in litigation and whose findings had been questioned in three separate federal decisions.
Due to MetLife’s flawed and incomplete review of the plaintiff’s disability claim, the Sixth Circuit determined that MetLife’s denial was arbitrary and capricious—the standard for overturning the decision of a plan administrator in an ERISA case. However, the court did not order an award of disability benefits. Rather, it ordered a remand and required MetLife to conduct a “full and fair review” of the plaintiff’s disability claim.
Considering that the Elliott court found severe problems with MetLife’s initial review, why did it not simply award the plaintiff disability benefits? Citing precedent from the First Circuit, the court explained that a remand is the proper remedy when the issue is with the plan administrator’s “decision-making process.” The court explained that a remand is not proper when the plaintiff is “clearly entitled” to disability benefits.
In the Elliott case, the court noted that the evidence was inconclusive as to whether the plaintiff was disabled under MetLife’s plan. For example, although the plaintiff’s physician observed that the plaintiff’s medical condition limited her ability to work, he did not specify the extent of those limitations. Nor did the record establish how plaintiff’s limitations affected her ability to do her job.
On the surface, it may seem like the Elliott decision runs contrary to the arbitrary and capricious standard that gives deference to the plan administrator’s decision. If the Elliott plaintiff could not prove to the court that she was disabled under the terms of the policy, why did the court over-turn Met Life’s denial of her claim for long-term disability benefits? The answer is that the arbitrary and capricious standard focuses as much on the process as on the decision itself. As the Elliott court noted, the plan administrator must offer a “reasoned explanation, based on the evidence” for its denial of benefits in order to satisfy the arbitrary and capricious standard. Under that analytical framework, a plaintiff could fail to submit enough evidence to show that he or she is disabled under the policy, while still winning a remand because the plan administrator’s review of the claim was flawed.
In Bustetter v. Standard Ins. Co. (E.D. Ky. May 6, 2020), the district court provided a helpful analysis as to when an award or re-instatement of benefits is appropriate. It observed that an award of benefits is likely in cases where the plan administrator engaged in a “selective review” of the evidence, or where there was clear evidence of disability or a lack of contrary evidence.
Other circumstances in which a court will likely order an award of disability benefits, instead of a remand, are where the plan administrator’s decision turned on an incorrect interpretation of the material terms of the disability policy or where the plan administrator’s incorrectly analyzed the demands of the plaintiff’s occupation.
Based on an informal review of Sixth Circuit cases, courts appear more likely to order a remand than an outright award of disability benefits. To give themselves a chance of an outright award of disability benefits in litigation, it is important for disability lawyers to focus as much, if not more, on the evidence supporting their disability claim, as they do on the plan administrator’s faulty decision-making process.
Disability cases are rarely straightforward. If your insurer or plan administrator denied your disability claim, contact an experienced disability lawyer to fight for what you are owed.