Every month, the International Foundation releases the Legal and Legislative Reporter, a compilation of new employee benefits–related case summaries. Below is a summary we thought you’d be interested in. Content provided by Morgan, Lewis & Bockius LLP.
The U.S. District Court for the Eastern District of California approves the plaintiff’s claims for long-term disability (LTD) benefits based on defendant’s improper denial.
The plaintiff is a participant in her employer’s LTD plan. The defendant is the insurance company administering the LTD benefits under the plan. The plan is governed by the Employee Retirement Income Security Act of 1974 (ERISA).
In 2018, the plaintiff suffered an ankle injury requiring surgery. Following the surgery, the plaintiff’s doctor instructed her to not work while recovering, specifically advising against spending time sitting, standing, using a keyboard, or rotating and flexing her wrists. The plaintiff’s job required her to sit at the computer for eight to ten hours a day. Despite initial signs of improvement, the plaintiff’s recovery stalled due to an anterior cruciate ligament injury. The doctor imposed similar restrictions on sitting and standing, as well as on working, driving, walking and climbing. These restrictions did not include the previous limitation on wrist movement. At this time, the plaintiff informed her employer of her condition, and the employer submitted a claim for LTD benefits on her behalf. As a result of the injury, the plaintiff underwent surgery, and her subsequent restrictions were the same as prior to the surgery, without the limitation on keyboard use.
Despite undergoing surgery, the plaintiff’s condition did not improve, and in her claim for LTD benefits, the plaintiff stated that she could not sit or stand for long periods of time, suffered chronic pain, could not walk without assistance and could not concentrate. Upon receipt of this claim, the defendant requested copies of the plaintiff’s medical records from her doctor and provided the doctor with a questionnaire to describe the plaintiff’s condition and estimated recovery. In this report, the doctor noted the restrictions on the plaintiff’s movements and estimated a three-month recovery before being able to return to work.
In order to be eligible for LTD benefits under the plan, the plan requires a participant to have a disability, which is defined as having three elements: (1) the employee must be unable to complete the material and substantial duties of their regular occupation because of illness or injury, (2) the employee must be under the regular care of a doctor, and (3) the employee must have sustained a 20% or greater loss in monthly earnings because of their injury or illness. Material and substantial duties refers to duties that are normally required for the performance of one’s regular occupation and cannot be reasonably omitted or modified.
The defendant concluded that the plaintiff did not meet the disability definition and denied her claim for LTD benefits. This is because the defendant believed that the plaintiff could perform the material and substantial duties of her regular occupation despite her condition. The plaintiff then saw a different doctor who recommended elective surgery because she was suffering daily pain. Despite this recommendation of additional surgery, the defendant determined that there was a lack of consistent documentation and records showing that the plaintiff had significant limitations and restrictions preventing her from performing her regular occupation. The plaintiff appealed the defendant’s denial of her claim, which was denied on review. After exhausting administrative remedies, the plaintiff filed suit.
ERISA enables participants to make a claim for benefits or enforce their rights under the plan. First, the court notes that the administrative record is limited to the same record before the defendant administrator. Second, the court reviews the defendant’s denial of the plaintiff’s LTD benefits. The court observes that the plaintiff’s job requires her to work long hours while sitting and focusing. The court also notes that the plaintiff received medical care and physical therapy to address her chronic pain. Further, the court observes that the Social Security Administration found the plaintiff’s injury to be severe enough to qualify for disability benefits, which supports the plaintiff’s doctors’ reports of her disabling pain. Therefore, the court finds that the plaintiff’s claim that she is unable to work due to her chronic pain is reliable. The court also finds that the defendant’s denial was not supported by the evidence.
With respect to the claim for LTD benefits, the defendant argued that the plaintiff ceased to be entitled to LTD benefits after she decided not to undergo elective surgery despite her doctor’s recommendation. However, the court rejects this argument because it is on different grounds than that which the defendant relied upon when denying the plaintiff’s claim. If a court upholds a plan administrator’s decision, they must do so on the same basis as the administrator provided in the administrative process. Furthermore, the plaintiff’s decision not to undergo surgery does not render her noncompliant to receive benefits under the plan. Consequently, the court remands the question of eligibility to the defendant because the record does not show whether the plaintiff could perform the duties of any gainful occupation under her current condition.
Lastly, ERISA permits district courts to award reasonable attorney fees and costs as well as prejudgment interest to compensate a claimant for any losses incurred due to the defendant’s prior nonpayment of benefits. Absent special circumstances, a prevailing ERISA employee plaintiff should ordinarily receive attorney fees from the defendant. Here, because there are no special circumstances, the court awards both the attorney fees and costs and the prejudgment interest to the plaintiff.
Accordingly, the court finds the plaintiff to be disabled under the plan and entitled to benefits for the period of June 19, 2019 through July 2, 2021. However, the court remands the issue of whether the plaintiff is entitled to LTD benefits beyond this period.
Logan v. Prudential Insurance of America, et al., No. 2:20-cv-01742-KJM-JDP (E.D. Cal., Nov. 9, 2022).