Hugo Diaz, a computer programmer for Bank One, stopped working on January 31, 2002 due to chronic back pain, and underwent a lumbar fusion surgery on February 4, 2002. Mr. Diaz’s job was classified as sedentary and required him to be sitting for 90% of the time. On July 22, 2002, Diaz filed his application for long-term disability and on August 27, 2002 Prudential denied Mr. Diaz’s claim on the basis that his inability to perform his job was not consistent with the medical evidence presented. After filing his initial application and submitting two Appeals of his denial to Prudential, Mr. Diaz received his final denial on April 16, 2003.
Mr. Diaz’s long-term disability policy defined disability during the first 24 months as: “You are disabled when Prudential determines that you are unable to perform the substantial and material duties of your regular occupation due to your sickness or injury; and you have a 20% or more loss in your indexed monthly earnings due to that sickness or injury.
Mr. Diaz filed a lawsuit in the district court on April 22, 2003 and on May 12, 2004 a summary judgment was granted in favor Prudential. The Appellate Court reversed the summary judgment because the district court applied the wrong standard of review. The district court reviewed the case again and granted another summary judgment in favor of Prudential. Finally on August 23, 2007, the Appellate court once again reversed the entry of Summary Judgment for Prudential and ruled that a summary judgment in favor of Prudential can not stand. In reversing Prudential’s summary judgment for the second time, the Appellate Court stated, “The district court failed to consider the difference between a person’s being able to engage in sporadic activities and her being able to work eight hours a day five consecutive days of the week. In doing so, it ignored the dispute of material fact about Mr. Diaz’s capacity to do the latter.” The court also noted that the district court failed to consider the opinions of Mr. Diaz’s personal physician, neurologist, and pain management specialist.
Practice note: This case is very interesting because the Appellate court acknowleged that district court judges can be confused about the manner in which they are suppose to review an insurance companies denial of long-term disability benefits. The court stated, “Some of the confusion in this area may be attributable to the common phrase “de novo review” used in connection with ERISA cases.
In fact, in these cases the district courts are not reviewing anything; they are making an independent decision about the employee’s entitlement to benefits. In the administrative arena, the court normally will be required to defer to the agency’s findings of fact; when de novo consideration is appropriate in an ERISA case, in contrast, the court can and must come to an independent decision on both the legal and factual issues that form the basis of the claim. What happened before the Plan administrator or ERISA fiduciary is irrelevant.”