United States: Select Circuit Court Decisions

Third Circuit

Miller v. American Airlines, Inc., No. 10-1784, 2011 U.S. App. LEXIS 1462 (3rd Cir. Jan. 25, 2011).

The plaintiff, an airline pilot, suffered a psychotic episode while on duty and was later admitted to a hospital for treatment. As a result, the plaintiff's FAA medical certification, required for all commercial pilots, was revoked. Based on the diagnosis of a brief reactive psychosis and information supporting disability from his own occupation, the plan approved payment of LTD benefits. Four years later, because medical records indicated that the plaintiff was asymptomatic, although his diagnoses remained the same, the plan terminated the plaintiff's LTD benefits.

The Court found the plan's determination arbitrary and capricious because the records that prompted the termination of benefits did not differ in any material aspect from the records the plaintiff submitted before termination. Further, the court found that the plan erred by basing its decision in part on the plaintiff's failure to obtain his FAA medical certification when the plan's terms did not require the plaintiff to do so.

Fourth Circuit

Duperry v. Life Ins. Co. of North Am., No. 10-1089, 2011 U.S. App. LEXIS 1399 (4th Cir. Jan. 24, 2011).

Long term disability benefits were denied here because the plaintiff, who had been diagnosed with rheumatoid arthritis, osteoarthritis, and fibromyalgia, provided only subjective evidence of her purportedly disabling pain and fatigue. The court, applying the abuse of discretion standard, reversed the plan's decision and followed the lower court's reasoning that a plan administrator cannot "simply dismiss such subjective complaints of pain out of hand, especially where there is objective medical proof of a disease that could cause such pain."

Further, the defendant argued that an award of benefits should be limited to the "own occupation" period because it had not yet considered the plaintiff's claim under the "any occupation" standard. The court disagreed, finding that the evidence in the administrative record established that the plaintiff's inability to work was not connected to any particular duty of her occupation. Thus, the court affirmed an award of benefits up to the date of the lower court's decision instead of remanding to the defendant.

Sixth Circuit

Soloman v. Medical Mutual of Ohio, No. 09-4152, 2011 U.S. App. LEXIS 213 (6th Cir. Jan. 4, 2011).

The plaintiff sought treatment for her cocaine addiction and utilized a website (not maintained by the defendant) to attempt to locate an in-network treatment provider. However, the outdated website's information was inaccurate and the plaintiff sought treatment at a provider that had been removed from the network. Despite subsequently being warned that her treatment was not covered, the plaintiff spent nearly two months at the out-of-network facility. The defendant determined that certain services were not medically necessary, that she did not obtain pre-approval for the services that were medically necessary, and that her treatment was considered "residential" but not in-patient, and thus not covered beyond the first two days of her stay.

The plaintiff argued for application of de novo judicial review because an independent reviewing physician made the final decision regarding her claim. The court disagreed and held that the independent reviewing physician merely made "medical necessity" finding which was not a decision regarding coverage. Therefore, the defendant was entitled to the discretionary review. The court upheld the defendant's determination as a rational interpretation of the plan.

Union Security Ins. Co. v. Blakeley, No. 09-4368, 2011 U.S. App. LEXIS 2911, (6th Cir. Feb. 15, 2011).

This case presented the not uncommon scenario of a dispute over life insurance proceeds between the children of the deceased and the deceased's purported fiancée where no beneficiary had been designated. In that situation, the policy provided that proceeds would be paid first to a surviving spouse, and if none, to a domestic partner, and thereafter to the deceased's children. In this case, the deceased's fiancée claimed entitlement to the proceeds as a "domestic partner," arguing that state law should be applied to establish her status as such. The Sixth Circuit found that although "domestic partner" was not expressly defined in the policy's general definition sections, the plan listed criteria for determining whether a domestic partner was an insurable life under the plan. As a result, the Court held that beneficiary status must be determined by application of the plan documents rather than by state law and remanded for consideration of whether the fiancée satisfied the plan criteria to be considered a domestic partner.

Seventh Circuit

Comrie v. IPSCO, Inc., No. 10-2393, 2011 U.S. App. LEXIS 3417 (7th Cir. Feb. 18, 2011).

Under the top-hat plan at issue here, if any high level executive was involuntarily terminated within two years of a change in control, they would be eligible for benefits that were calculated based on "compensation" which expressly excluded bonuses.

Here, the issue was whether stock-linked income was properly considered as a bonus or as compensation for the purpose of determining the amount of benefits owed. The court first determined that even though the plan administrators were not fiduciaries, the arbitrary and capricious standard still applied to the plan's decision because the plan expressly conferred discretion on the administrative committee. The court upheld the administrative committee's decision that, because the amount of stock-linked income plaintiff received was discretionary, it should not be considered as compensation.

Eighth Circuit

Wrenn v. Principal Life Ins. Co., No. 09-3658, 2011 U.S. App. LEXIS 3962 (8th Cir. Mar. 2, 2011)

A fifteen-year-old was admitted into the hospital for forty days for treatment related to severe malnutrition as a result of anorexia nervosa. Although the plaintiff argued that the focus of the hospitalization was the child's calorie intake and limitations on her physical activity in order to increase her body weight, the plan denied coverage beyond the policy's ten day for mental health inpatient services.

Applying the abuse of discretion standard, the court noted that for the plan to reasonably deny the plaintiff's hospital charges, "substantial evidence had to support its determination that the primary focus of her hospitalization was mental health treatment, i.e., treatment designed to alter her behavior." Overturning the defendant's decision, the court held that there was "insufficient evidence to support the determination that [the child's] mental health was the primary focus of the hospitalization."

Ninth Circuit

Salomaa v. Honda Long Term Disability Plan, 2011 U.S. App. LEXIS 4386 (9th Cir. March 7, 2011).

In this LTD claim based on chronic fatigue syndrome ("CFS"), the defendant denied the plaintiff's claim based on a "lack of objective physical findings." The plaintiff disputed that CFS could be objectively verified and provided a neuropsychologist's report which stated that there was no evidence of malingering, and that his IQ test supported the diagnosis of CFS. Applying the arbitrary and capricious standard of review, the court found that the defendant was unreasonable to demand objective tests for a condition that is not objectively verifiable. Further, the majority focused on the fact that each of the plaintiff's examining or treating providers concluded that he was disabled, a position that was soundly criticized by the dissent. Because the defendant also changed its reasons for denying benefits and failed to engage the plaintiff in a meaningful dialog as to the type of evidence that might better support his claim, the court held that the defendant abused its discretion.

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