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Disability Determinations: The ERISA Test September 29 , 2006 Excerpted from Mississippi Employment Law Letter, written by attorneys at the law firm Watkins Ludlam Winter & Stennis, P.A. For employers with short- or long-term disability plans, the questions that seem to recur are what the standard is and who the decisionmaker is on whether benefits are payable. The Fifth U.S. Circuit Court of Appeals recently reminded us what both answers are. What's wrong? Linda Chandler was employed as an account executive by Time Warner, Inc., in its Dallas facility. Time Warner maintained a disability plan with the Hartford Insurance Company that provided benefits to employees who are totally disabled. The plan defined a totally disabled employee as one who's prevented by bodily injury, sickness, or mental illness from performing the essential duties of her occupation. Chandler had been to see Dr. Alex De Jesus, who stated she had undifferentiated connective tissue disease, a chronic inflammatory autoimmune disorder. De Jesus, however, left blank the space under the heading of physical findings although he described her as unable to engage in stressful situations or personal relationships. After receiving Chandler's claim, Hartford requested her test results from De Jesus, but he failed to provide them. The insurer denied her claim, and Chandler was informed she could appeal under the appeal process within the employer's disability plan. After reviewing the detailed job description of an account executive, Hartford's associate medical director, George Casda, and an expert, Harvey Schwartz, a rheumatologist, both concluded that Chandler was able to function in the normal sedentary activity of an account executive so long as she didn't work overtime. Ultimately, she filed suit in the federal trial court in Dallas, which upheld Hartford's denial of benefits. She appealed. What's the standard? A denial of benefits that's challenged under the Employee Retirement Income Security Act (ERISA) is reviewed under what's known as an "abuse of discretion" standard if the benefit plan gives the employer or its insurer the discretionary authority to determine eligibility for benefits and construe the terms of the plan. In this case, the employer possessed the final authority to determine eligibility for coverage, and its administrator, Hartford, could clearly assist in that function. Under the abuse-of-discretion standard, courts review whether the administrator acted arbitrarily or capriciously. A decision is considered arbitrary or capricious if it's made without a rational connection between the known facts and the decision or between the found facts and the evidence. Clearly, that wasn't the case here. Hartford's denial of Chandler's claim was based on the conclusions of its own medical doctor and the analysis of an independent physician. Chandler argued that special weight should be placed on De Jesus' conclusions. The court pointed out that nothing in ERISA suggests that plan administrators must accord special deference to the opinions of treating physicians. Neither ERISA itself nor the courts impose a burden of explanation when a plan administrator credits reliable evidence that conflicts with a treating physician's evaluation. Thus, because Hartford's determination had a rational connection between the medical evidence and the job duties, the appeals court upheld the dismissal of Chandler's case. Chandler v. Hartford Life Insurance, et al., United States Court of Appeals, Fifth Circuit, No. 05-50688. What does your plan say? Most disability plans have language similar to the one in this case. They usually require that an employee be unable to perform the functions of the job to which she's assigned although some require that an employee not be able to perform any job at the employer for which she might qualify. Either way, when a claim is made, either you or the administrator of your plan (such as an insurance company) will want to have the job descriptions and physical functions description ready, carefully review all medical evidence, and, if necessary, consult independent physicians and other experts. Once all that has been done, you can make informed decisions that will help you through the plan's internal appeals process or possible litigation. Copyright 2006 M. Lee Smith Publishers LLC. This article is an excerpt from MISSISSIPPI EMPLOYMENT LAW LETTER. MISSISSIPPI EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual problems but rather to provide information about current developments in Mississippi employment law. Questions about individual problems should be addressed to the employment law attorney of your choice. Note: The Mississippi Bar requires the following statement: Listing of the previously mentioned areas of practice does not indicate any certificate of expertise therein.
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