Metlife Wrongfully Denies Disability Benefits to Walgreens Manager with Knee Injury

MetLife claims that this disability claimant became disabled the date after her employment ended and therefore she is not entitled to any disability benefits. This unreasonable argument by Metlife has unfortunately delayed payments to Ms. Jones for more than 4 years and it remains undetermined if she will ever be awarded long term disability benefits. The worst part about this case is that ERISA laws prevent the court from sanctioning Metlife for their outrageous claim denial. The background of this case is complex as it involved many other non-disability issues.

Case Background

Pamela Jones became a Walgreen store manager in 1986 after the pharmacy in Enfield, Connecticut which she worked at was purchased by Walgreens. One of the benefits offered by Walgreen was an disability benefit plan, which promised to pay disability benefits to Walgreen’s store managers should they become disabled from illness, injury or pregnancy.

Jones had the opportunity to take advantage of this disability plan after she slipped on ice while she helped unloading a truck. As a result of the accident, she injured her right knee. She was instructed by her Walgreen’s district manager on June 3, 2004 to take disability leave. She received disability benefits while she was on leave.

During the time that she was on leave, Jones reached the conclusion that Walgreens discriminated against female employees. She returned to work in May 2005 as a training manager. Two months later she filed a gender discrimination suit against Walgreen.

Jones was offered a position in October 2005 as a store manager in Springfield, Massachusetts. She took the position, then notified Walgreen that she did have certain medical restrictions, including the inability to climb ladders or lift parcels that exceeded 20 pounds in weight. She also informed them that she had to keep bending and squatting to a minimum, and limit her workday to eight hours.

Employee Files Class Action Complaint.

Meanwhile , Jones requested and received release of jurisdiction and right to sue letters in mid-2006 from Connecticut’s Commission on Human Rights and Opportunities and the federal Equal Opportunity Employment Commission. She filed a class action complaint on July 9, 2006 in the District of Connecticut.

When Walgreen’s district manager received notice of the class-action lawsuit, he asked Jones to supply updated medical information. She did so on September 11, 2006. Her orthopedic surgeon reported that she had “symptomatic ongoing patellofemoral osteoarthritis that would eventually require total knee arthroplasty.”

Walgreen Manager Terminated Because of Disability.

On October 13, 2006, Jones was given notice that she was being terminated immediately. The letter she received stated that the reason she was being terminated was connected with the findings of her physician that she was suffering from permanent work related restrictions which made it impossible for her to function in her position as a store manager.

The letter informed her that she might possibly be eligible for benefits under the “Income Protection Plan.” She immediately applied for short-term disability benefits, and MetLife, the administrator of Walgreen’s plan approved her application for benefits in a letter dated December 15, 2006.

Former Walgreen Manager Informed She Doesn’t Qualify for Disability Benefits after All.

Yet over six months later, on June 20, 2007, Jones had still not received any payments, so she sent a letter to MetLife inquiring into the status of her claim. She also sent a letter the same day to Walgreen’s Director of Risk Management Benefits Accounting. In this letter she asked to have a copy of all the plan documents.

A month later, on July 20, 2007, MetLife informed her that she had been denied benefits because she had become disabled after she stopped working for Walgreens. It appears that Walgreen’s agent had reported to MetLife that Jones had become disabled on October 14, 2006, one day after she had been terminated. MetLife took the position that because Jones had not been an active employee. When she became disabled, she was not entitled to benefits.

Jones filed an appeal on September 7, 2007. In her appeal, she noted that it was absurd that Walgreens could terminate her for being disabled, and that MetLife should then turn around and refuse to pay her benefits because her disability supposedly started after she was terminated.

MetLife continued to hold that her disability had arisen after her termination, and on October 9, MetLife informed her that it was affirming its initial determination that she did not qualify for long-term disability benefits and that she had no further appeals available to her.

Former Walgreens Manager Takes Company and the MetLife to Court over Denial of Disability Benefits.

Jones filed suit on January 15, 2009. In the lawsuit her long-term disability attorney alleged among other things that Walgreens had improperly denied her claim for long-term disability and short-term disability benefits. Among the accounts included in the complaint were the following:

• Walgreens had violated its duties as a plan fiduciary under ERISA when it wrongfully denied Jone’s claim for short-term disability and long-term disability benefits.
• Walgreens had failed to establish and maintain reasonable claims procedures.
• MetLife had violated its duties as a plan fiduciary under ERISA by wrongfully denying Jones’ claim for short-term disability and long-term disability benefits.
• Walgreen’s agent who had reported to MetLife that her disability did not begin until after she left Walgreen’s employ had wrongfully denied her claim for short-term disability and long-term disability benefits.
• MetLife had failed to deny her claim in a timely manner and/or to administer the appeals process properly as required under ERISA.
• Walgreens had unlawfully terminated her in retaliation for filing a class-action suit.

The disability lawyer was seeking payment of the short-term disability and long-term disability benefits that Jones was entitled to. And the attorney was also seeking damages for the emotional distress caused by the wrongful denial of her claim.

Walgreens Tenders Check Claiming it Covers Denied Short-term Disability Benefits.

Walgreen’s attorney, on August 31, 2009, tendered a check to Jones’s disability attorney for the amount of $30,840, less withholding. The attorney claimed that this was a payment “being made in connection with the decision to reconsider the initial determination that Ms. Jones was not eligible for short-term disability benefits because she was not an active employee at the time of her claim.”

MetLife and Walgreen Moves for Court Dismissal of Disability Lawsuit.

In November, MetLife, Walgreen and Walgreen’s agent moved for the court to dismiss the counts against them. MetLife requested that the court remand Jones’ long-term disability claim back to the disability insurance company for further review. Walgreens and Walgreen’s agent asked the court to dismiss the counts against it, and seconded MetLife’s request for remand. What would the court do?

Applying the principle established in Pasdon v. City of Peabody, the Court would have to accept all of MetLife’s and Walgreen’s “well-pleaded factual averments as true, and draw all reasonable inferences” in MetLife’s and Walgreen’s favor. Applying the principle established in Rivera-Gomez v. De Castro, the Court could only grant MetLife’s and Walgreen’s Rule 12(c) motion as long as it appeared beyond doubt that Jones would not be able to prove a set of facts that supported her claim and which would entitle her to relief.

MetLife and Walgreens, along with its agent, moved for dismissal using for arguments.

1. Jones’ short-term disability benefits were already paid.
2. Long-term disability benefits should be remanded to MetLife for redetermination of eligibility.
3. Jones’ claims for damages in excess of the benefits provided for under the plan are not available under ERISA.
4. ERISA does not allow Jones to recover monetary damages for breach of fiduciary obligations.

Court Considers Short-Term Disability Benefits.

According to Jones’ disability attorney, the payment received from Walgreen for short-term disability benefits was not for the full amount that his client should have received. Walgreen’s claimed otherwise. Walgreens paid $30,840. Jones claimed that the full amount should have been $38,550.20. For this reason the court could not dismiss the claim for short-term disability benefits as requested by Walgreens and MetLife.

Court Considers Long-Term Disability Benefits.

MetLife and Walgreens argued that Jones’ claim for long-term disability benefits should be dismissed and remanded to MetLife for reconsideration. The court chose not to dismiss the long-term disability benefit claim. Rather the court chose to place a hold on Jones’ claim and remand her claim to MetLife for an eligibility determination so that a sufficient administrative record could be prepared upon which the Court could make a decision at a later time, if Jones had to return to court in order to seek her rightful benefits under ERISA.

The court found that MetLife’s original decision was based on faulty information, thus MetLife had never truly reviewed her claim. The court would not sit in the position of determining the validity of whether Jones had a claim or not. That was MetLife’s job. Once MetLife had laid out its position and provided a substantive reason for denying her claim, then the court could review the administrative record.

MetLife indicated that it would be able to review Jones’ disability claim within 60 days. The court determined therefore to stay Jones’ claim for 60 days, after which time Jones could have her disability attorney resume proceedings if MetLife’s decision was unsatisfactory.

Court Considers Emotional Distress Damages.

MetLife and Walgreens were both correct when they stated that Jones was not entitled to emotional distress damages under ERISA. While it is true that ERISA required MetLife to process Jones’ claim in a timely manner, within 45 days, failure to do so does not trigger a monetary sanction. ERISA merely recognizes that a claim may be treated as having been denied after the time limitation his past. For this reason the Court had to dismiss the motion for monetary damages.

The only exception that could have existed for this situation would have been the provision in the plan itself for the recovery of damages. Because the plan that Jones participated in did not provide for monetary damages if the plan administrator failed to process a claim in a timely manner, Jones’ only available relief was the collection of the benefits that she had been wrongfully denied.

Court Considers Fiduciary Violations.

Under ERISA § 404, Jones had the right to sue all three defendants. Yet at the same time, ERISA § 404 did not authorize monetary relief above and beyond the losses in benefits which have been denied to her. The only additional monetary relief that she could see was for fees and interest related to the denial of her disability benefits.

As a result of this finding, the Court agreed with MetLife and Walgreens that the portions of Jones’ disability attorney’s motions relating to compensation for emotional distress damages and fiduciary violations should be dismissed. Yet, the court did uphold Jones’ right to review of her claim for short-term disability benefits, and the potential future review of MetLife’s decision regarding her qualifications for long-term disability benefits after giving MetLife 60 days in which to process her claim.

If Metlife denies benefits after reviewing the claim, this case will continue in court and the claimant will have to continue to wait even longer before she may be entitled to benefits.