Aetna’s Rationale for Denial
In Patterson v. Aetna Life Insurance Company, C.A. No. 17-3566 (3rd Cir. 2019) through his employer, First Consulting Group, Inc. (“FCG”), is a pharmaceutical consulting firm, Patterson became covered by a long-term disability policy underwritten by Aetna. Patterson’s occupation with FCG was characterized as “Director, Business Services” or “System Development Technical Director.”
In January 2007 Patterson underwent a lumbar spine reconstruction surgery performed by a board certified in orthopedic and spinal surgery. After the surgery, Patterson was unable to work and began a program of physical therapy and pain medication. In accordance with the terms of the Policy, Aetna approved Patterson for LTD benefits, beginning February 2007 with a maximum benefit period to August 2037 if his medical condition remained unchanged. In 2014, Aetna terminated those benefits because it concluded that Patterson was “no longer disabled.” Patterson’s long-term disability policy defined “disability” as follows:
You will be deemed to be disabled on any day if:
- you are not able to perform the material duties of your own occupation solely because of: disease or injury; and
- your work earnings are 80% or less of your adjusted predisability earnings.
“Own occupation” is not defined in the policy. Aetna found that Patterson was not disabled because he could fulfill the material duties of his “own occupation” as performed “in the national economy.” Aetna further determined that Patterson’s “own occupation” “in the national economy” was “sedentary” and – although Patterson had limitations and could not do a job in a “heavier category” – he could perform “sedentary” work. Aetna’s decision was not based on whether Patterson could do his actual “job as performed for his specific Employer,” which Aetna considered to be more demanding than his “occupation as it exists in the national economy.” More specifically, Aetna found that Patterson’s occupation as it exists in the national economy was lighter than his actual job because his actual job required travel.
The District Court Decision
After Aetna denied Patterson’s internal appeal, he brought an ERISA claim. On cross motions for summary judgment, the District Court determined that Aetna’s “national economy” interpretation of “own occupation” was contrary to the plain language of Patterson’s policy in light of the 3rd Circuit’s prior decision in Lasser v. Reliance Standard Life Insurance Co., 344 F.3d 381 (3d Cir. 2003), and that own occupation must involve consideration of Patterson’s actual duties as performed before the onset of disability.
The District Court then found that travel and standing to give presentations were material duties of Patterson’s own occupation. The District Court concluded that Aetna’s decision to terminate benefits was arbitrary and capricious because Aetna did not consider whether Patterson could perform his actual job duties and, even if it had done so, Patterson could not perform those duties. Aetna timely appealed the District Court’s decision.
The 3rd Circuit Decision And Ruling
Aetna argued on appeal that it was allowed to construe the term “own occupation” in Patterson’s long-term disability policy to mean Patterson’s occupation as performed in the national economy. Aetna further argued that, under its “national economy” interpretation, substantial evidence supported the decision to terminate Patterson’s benefits. The 3rd Circuit disagreed.
The 3rd Circuit agreed that Aetna had discretionary authority to interpret Patterson’s policy, but precedent – particularly Lasser – established that “own occupation” is unambiguous and that Aetna’s “national economy” interpretation of the term was unreasonable. In Lasser, the 3rd Circuit interpreted a long-term disability policy that considered a person to be “disabled … if as a result of injury, illness or disease he is capable only ‘of performing the material duties of his/her regular occupation on a part-time basis or some of the material duties on a full-time basis.’”
There, the Court held that the term “regular occupation” is unambiguous and refers to “the usual work that the insured is actually performing immediately before the onset of disability,” at least where no other definition appears in a policy or has been otherwise anticipated by the parties. Consequently, the court rejected Reliance Standard’s interpretation of “regular occupation” as referring to a job “in the general economy.”
Despite this clear precedent, Aetna argued that Lasser is not controlling because the policy in Lasser used the term “regular occupation” whereas the policy here used the term “own occupation.” But the Court noted that it has equated “own occupation” in prior rulings with Lasser’s definition of “regular occupation.” Significantly, the Court also noted that other courts have recognized that the distinction between “own occupation” and “regular occupation” is one without a legal difference.
Further, the Court noted, even if a difference between “own occupation” and “regular occupation” could be teased out, the words “own occupation” would seem even more directly to capture the idea of one’s actual job duties than the words “regular occupation.” In short, the Court concluded that is no reason to treat “own occupation” and “regular occupation” as being meaningfully differently.
In fact, the Court noted that Aetna itself seemed to subscribe to that view. Citing a prior Aetna lawsuit in Connecticut – Peck v. Aetna Life Insurance Co., 495 F. Supp. 2d 271 (D. Conn. 2007) – the Court pointed out that Aetna successfully argued that the terms “own occupation” and “regular occupation” are interchangeable. And, importantly, that case was litigated while Aetna was paying benefits to Patterson under his policy. The Court found that given Aetna’s vigorous arguments in Peck that “own occupation” and “regular occupation” have the same meaning its assertions to the contrary in Patterson were, to say the least, quite troubling.
The Court found it further concerning that Aetna inexplicably attempted to distinguish Peck by claiming that technically the decision of a District Court in Connecticut is not determinative and carries little precedential weight in District Court in New Jersey without acknowledging that its own argument was the basis for that holding.
The 3rd Circuit held that because it concluded that “own occupation” and “regular occupation” – in the absence of a clear definition in the Policy – should be construed in the same manner and, therefore, its prior decision in Lasser controlled its interpretation of “own occupation” in Patterson. And the unambiguous plain meaning of that term is “the usual work that the insured is actually performing immediately before the onset of disability.” As such, Aetna’s “national economy” interpretation was deemed impermissible because it conflicted with the plain meaning of “own occupation” and was neither established by Patterson’s policy nor contemplated by the parties.
This case was not handled by our office, but it may provide claimants guidance in their pursuit of compensation of disability insurance benefits. Please feel free to contact our office and to speak with one of our disability attorneys for a review of your disability insurance policy and to discuss how we may be able to assist you in securing benefits.