Blogging Employee Benefits

March 15, 2006

Disability Benefit Denial Reversed

Filed under: Disability, Litigation — Fuguerre @ 6:36 pm

A disability plan’s administrator/insurer failed to comply with ERISA when it terminated an individual’s benefits without reviewing the specific ground for its decision, according to a 5th Circuit ruling reversing the district court’s summary judgment for the administrator. Moreover, although the individual had only appealed the district court decision without moving for summary judgment on his own behalf, the appellate court remanded the case to the district court with specific instruction to enter judgment in favor of the individual. [Robinson v. Aetna, No. 05-50567]

The plaintiff’s job as a sales representative for an alcoholic beverages distributor had necessitated driving 25% of his work time prior to suffering a stroke that permanently impaired peripheral vision in one eye. Initially his employer’s disability plan administrator (who also served as plan insurer) awarded him with disability benefits, given plan terms that characterized total disability as inability to perform the “material duties” of one’s “own occupation.” A year and a half later, confusing information from the individual’s own doctor led the plan administrator to believe that the vision problem had improved; and despite clarification from the personal physician, supporting correspondence from another treating physician, and advice from one of the administrator’s own physicians – all recommending disability with respect to any occupation requiring the operation of a motor vehicle – the administrator terminated the disability benefits. The explanation first given by the administrator in communication stating that the individual had exhausted administrative remedies: the administrator claimed to have conferred with an unidentified vocational consultant, who had advised that driving was not a material duty of a sales representative in the general economy. Attached to the plan administrator’s motion for summary judgment in the district court was an occupation description from the Department of Labor’s Dictionary of Occupation Titles (DOT), which listed 28 activities as more important than driving for a sales representative in the general economy.

Evaluating adherence to ERISA procedures under a substantial compliance standard, the appellate court found that the plan administrator had failed to comply with ERISA’s requirement to provide review of the specific ground for the benefits denial. The plan administrator also failed to comply with ERISA regulations requiring identification of vocational experts used for an adverse benefits decision. The appellate court found these procedural errors to extend beyond mere technical noncompliance or a de minimus violation, stating that the failures denied the claimant meaningful review of the termination of benefits.

Turning to the benefits denial decision itself, the appellate court found that the district court erred in considering the DOT attachment, because that evidence had not been in the administrative record prior to the litigation. Although the plan gave the administrator discretion, the appellate court reviewed the decision under a modified abuse of discretion standard, seeing the plan administrator as having an “inherent conflict of interest” in its dual role as both administrator and insurer. However, even granting the administrator “all but a modicum” of deference, the appellate court found no concrete evidence in the record to support the administrator’s conclusion that driving ought not be considered a material duty of the claimant’s job.

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