Tennessee Disability and Life Insurance Blog
It seems like a matter of common sense: Plan administrators should evaluate the physical and cognitive demands of a claimant’s occupation when reviewing a claim for disability benefits. Too often, however, our clients show us denial letters from plan administrators that fail to discuss the unique aspects of their jobs and whether our clients can still perform them.
A recent case decided by the United States Court of Appeals for the Sixth Circuit (“Sixth Circuit”) sharply criticized that practice, while offering favorable guidance to disability claimants and attorneys alike.
In Card v. Principal Life Ins. Co. (October 2019), the plaintiff (“Plaintiff”) was a nurse at a long-term care and skilled rehabilitation center when she was diagnosed with chronic lymphocytic leukemia in February 2013. She continued to work until December 2013 when she had to end her employment due to feelings of fatigue and weakness. Later that month, Plaintiff filed a claim for short-term, long-term and total disability benefits with Principal Life Insurance Company (“Principal Life”), the plan administrator.
Principal Life denied Plaintiff’s disability claims. After the Plaintiff filed a lawsuit challenging the denial of disability benefits in federal district court, the court sided with Principal Life finding “substantial evidence in the record” supporting the denial. The Sixth Circuit disagreed and overturned Principal Life’s denial of disability benefits.
As a part of its analysis in the Card case, the Sixth Circuit observed that Principal Life did not follow the “plain language” of its own plan’s terms. Under the plan, Principal Life had to consider whether each claimant could perform the specific duties of his or her job or occupation before making a decision regarding short-term and long-term disability benefits.
In Card, Plaintiff’s nursing job was not a sedentary position. Rather, her job required her to stand, walk, push/pull, lift and bend frequently. On occasion, Plaintiff also had to exert 50 to 100 pounds of force. Plaintiff’s job also entailed “frequent” exposure to infections and exposure to infectious waste, diseases and blood-borne pathogens. To put it simply, this was not an ordinary desk job.
In criticizing the denial of long-term and short-term disability benefits, the Sixth Circuit observed that there was no indication that Principal Life considered Plaintiff’s physically demanding job duties or her ability to perform them. To the contrary, Principal Life relied on a file review that determined that Plaintiff could perform sedentary work. The Sixth Circuit observed that Principal Life’s analysis, in and of itself, was incomplete. Instead, Principal Life should have evaluated whether Plaintiff could perform the job she actually had.
In explaining its ruling, the Sixth Circuit was particularly critical of how Principal Life evaluated Plaintiff’s claim. It noted: “We are troubled by the fact that there is so little evidence of a process anywhere in the record—either by Principal Life or by the physicians it hired to review plaintiff’s file—that relates plaintiff’s condition to her expected job duties.” To put it another way, Principal Life evaluated Plaintiff’s medical condition in a vacuum without assessing how her individual health issues affected her ability to perform her job. For example, even though Plaintiff’s condition decreased her resistance to infection, Principal Life failed to consider whether she could continue at a job that regularly exposed her to infections, infectious wastes and diseases.
The Sixth Circuit’s decision in Card is especially notable because courts are reluctant to overturn denial of disability benefits in ERISA cases. Under ERISA, courts review a plan administrators’ denials of disability claims under the “arbitrary and capricious standard.” Under that standard, a court will uphold a denial of disability benefits if the denial is the result of a “deliberate principled reasoning process” and if the denial is supported by “substantial evidence.” The arbitrary and capricious standard is a favorable one for plan administrators because courts will uphold a denial of disability benefits if the decision was the product of at least some deliberation and evidence, even if the claimant’s evidence is more persuasive.
Nevertheless, the Sixth Circuit found in Card that Principal Life’s denial of disability benefits was not the result of a “deliberate principled reasoning process.” In denying Plaintiff’s disability claim, Principal Life failed to examine, at any point, the specific demands of Plaintiff’s occupation. As a result, the Sixth Circuit held that Principal Life’s disability determination was arbitrary and capricious and reversed the denial of disability benefits.
It is important to note that the reasoning in Card only applies when the definition of long-term or total disability depends on the claimant’s ability to perform his or her current or prior job, in what is called the “Own Occupation” phase of disability. Most disability plans require that within 24 months of qualifying for benefits under the “Own Occupation” phase, claimants then show that they cannot perform any job for which they are qualified, in what is called the “Any Occupation” phase of disability. If you are applying for disability benefits under the “Any Occupation” phase of disability, the Plan administrator can justify a denial of benefits simply by finding one job that you could reasonably perform, provided that job is somewhat comparable in pay to your prior or current one.
Disability cases are both complex and highly individualized. If you have been wrongly denied disability benefits, consult with a law firm that regularly handles administrative appeals and disability lawsuits.