In a case not handled by Attorneys Dell & Schaefer Chartered, a former employee of the Eaton Corporation was dealt what is most likely a final blow in her quest to obtain continued Long Term Disability (LTD) Benefits. Although this case was not handled by our firm and although the case has a somewhat unique definition of disability, we look to it as guidance for our clients and for others who are currently on claim or who have been denied LTD benefits.
The Story of the Eaton Corporation Employee’s Claim
The Eaton Corporation Employee obtained long-term disability insurance through the Eaton Corporation Disability Plan which was designed to pay her 70% of her monthly base pay should she ever be unable to work due to a disability. In January 2008, the employee left work due to a back injury. She was provided disability benefits for the first 24 months of benefits as the policy defined “disability” for that time period as being “totally and continuously unable to perform the essential duties of your regular position with the Company…”
Unfortunately for this employee, and unfortunately for most covered under Group Disability Insurance Policies provided by their Employers, the definition of disability (what it means to be disabled under the policy) changes after 24 months of benefits. After the first 24 months of benefits it became harder for the employee to qualify for LTD benefits as she then had to prove that she was “totally and continuously unable to engage in any occupation or perform any work for compensation or profit for which you are, or may become, reasonably well fit by reason of education, training or experience…”
Around the time of this change in definition of disability, most insurance companies begin reviewing the claims to see if the claimants will continue to qualify to receive benefits in light of the more difficult to reach new definition of disability. The Eaton Corporation Disability Plan was no exception and when the change in definition of disability was occurring, they began to order new medical records to assess whether the employee should still be on claim.
Additional medical records where received from the employee’s treating physicians. Unfortunately for the employee, one of her treating doctors noted that she could work on a part-time schedule. Additionally, the Eaton Corporation also had a Transferable Skills Assessment completed and determined that there were occupations she could perform even with her restrictions and limitations. Eaton used this information to deny the employee’s claim.
The Employee filed an administrative appeal challenging Eaton’s decision. However, a file review was conducted by an “independent” orthopedic surgeon that found she could perform a sedentary occupation. Eaton again denied the employee’s claim.
A final administrative appeal was again filed. With its last review, the Eaton Corporation had two independent physicians (an orthopedic surgeon and a neurological surgeon) review her claim and both doctors found that she was not disabled under the terms of the plan. This lead the Plan Administrator, who also reviewed the claim, to again deny the employee’s claim. With no further administrative appeals available, a lawsuit was filed.
The Lawsuit and the Appeals Court Decision
After the District Court ruled in favor of the Eaton Corporation Disability Plan’s decision to deny her continued LTD benefits, the case was appealed to the United States Court of Appeals for the Sixth Circuit.
The Appeals Court noted that since the Policy in question gave the claim administrator discretionary authority to determine eligibility for benefits and to construe the terms of the plan, then the Courts were limited to review the denial of benefits only to determine if Eaton’s decision was “arbitrary and capricious.”
The “arbitrary and capricious” standard is often used in ERISA disability claims as many of the insurance policies contain these “discretionary” clauses that give the claim administrator the authority to determine eligibility for benefits and to construe the terms of the plan. This is unfortunate for most disability insurance lawsuits as this standard makes it more difficult for the employees to win their lawsuits. This is because this standard is the least demanding form of judicial review. This means that the courts must give great deference to the claim administrator’s decision and only overturn it if the result is unreasonable. Thus a decision to deny will be upheld if it results from a deliberate principle reasoning process. If there is a reasonable explanation based on the evidence, the claim administrator’s decision must be upheld by the courts.
In this particular instance, the Court found that the records of the employee’s own treating physicians coupled with the reviews of the independent doctors provided ample support for Eaton Corporation’s reasoned explanation deny her claim. Additionally, the Court noted that it was “not convinced it was irrational to have concluded that an ability to work part time does not meet the definition of totally disabled to engage in any occupation or perform any work for compensation.” The Court continued that “(i)t is reasonable to conclude that an ability to do some work means one is not unable to do “any work.”
Although the language in this policy will be different from languages in other policies, we can learn from this case that a doctor’s note that says you are able to work par-time may be detrimental to your claim if you are in the “any occupation” phase.
If you have been denied or are in fear of getting denied by Prudential, Unum, Cigna or any other disability insurance company, please do not delay and please contact Attorneys Dell & Schaefer for a free consultation and review of your claim.