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Court Upholds Principal Life’s Denial of Extended Disability Benefits

Attorney Gregory DellAuthor: Attorney Gregory Dell

In Peterson v. Principal Financial Group, plaintiff injured her back in a car accident and subsequently underwent a spinal fusion. She was awarded 24 months of disability when she was unable to return to her own occupation as a Target employee. After 24 months, the definition of disability changed to requiring her to be disabled from any job “that provides 128% or more of the disability benefit.” Principal refers to these as “extended disability.” After evaluating her medical and other records, Principal denied her application for extended disability.

After exhausting her administrative appeals, Peterson filed this ERISA lawsuit. The court upheld Principal’s denial of extended benefits concluding that, “Principal’s determination that Plaintiff was not entitled to extended disability benefits was based on substantial evidence and is therefore reasonable.” She raised several issues in the lawsuit, all of which the court determined had no merit. Two of them required a deeper analysis.

There Was Substantial Evidence to Show Peterson Could Work at a Sedentary Level

The Colorado federal district court evaluated all the evidence presented to Principal which resulted in its denial including:

  • One of Peterson’s treating physicians, Dr. Lair, reported she would be able to return to work with vocational training in another field.
  • Peterson had a B.A. in psychology and was able to attend post-graduate classes and work as an intern, amounting to 50 hours of activity a week, in an effort to meet her goal as a school counselor.
  • A functional capacity evaluation (FCE) showed she was able to perform “light or sedentary work full-time.”
  • Her surgeon, Dr. Weider, reported her symptoms and diagnosis “to be of relative low-severity,” and her cervical range of motion was normal.
  • Her pain was controlled with Percocet.
  • A surveillance video showed she was capable of “more activity than she had reported.” She was able to carry her child and “turn, squat, and bend while placing him into and removing him from his car seat.”

The court found Principal acted reasonably in denying the application for benefits, noting, “The relevant inquiry is not whether Principal’s conclusion was the best one, but rather whether Principal’s conclusion was a reasonable one—even if on the low end of reasonableness.”

There Was Substantial Evidence That Jobs Were Available That Paid 128% of Peterson’s Disability Benefit.

Following Principal’s determination that Peterson qualified for sedentary work, the burden shifted to her to prove no such work existed for which she was “reasonably fitted by education training or experience” that would pay her $24,222.72 per year. Principal suggest four different jobs available to her that, according to the requirements of the plan, she “could become qualified ‘by education, training, or experience.'”

Since Principal’s determination that she could qualify for these jobs, the court held that she Principal’s determination that she was “not entitled to extended disability benefits was based on substantial evidence and is therefore reasonable.”

This case was not handled by our office, but we think it can be instructive to those struggling to obtain disability benefits when required to prove their inability to work in “any occupation.” For information about disability benefits, call one of our lawyers for a free evaluation.



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