Decision Faults Insurer for Failing to Consider Evidence Not in the Record

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Jan 282014
 

As most ERISA claimants know (or will shortly into their lawsuit find out), a District Court’s review of an adverse benefit determination is normally limited to the materials in the administrative record, that is, the materials that were presented to and/or considered by the insurance company while the claim was still under consideration. Indeed, that facet of ERISA litigation is the main reason why ERISA appeals need to be handled with extreme care, for an appeal often serves as a claimant’s final opportunity to present evidence helpful to the cause.

There is precedent for a District Court to consider evidence that is dehors (or outside) the administrative record where “good cause” to do so is shown, but a recent decision from the Eleventh Circuit takes it a step further. In the case, the disability insurer, Life Insurance Company of North America (“LINA”), had required Diane Melech (the claimant) to pursue a Social Security Disability Income (“SSDI”) claim — a practice universally pursued by disability insurers, because when a claimant succeeds with an SSDI claim, the insurer gets to offset the amount received. But before the SSDI claim was decided, LINA denied Ms. Melech’s disability claim, and while she was in the process of appealing LINA’s denial, the Social Security Administration (“SSA”) had her submit to two (2) medical examinations (which, in turn, generated two (2) reports). Although Ms. Melech’s SSDI claim was thereafter approved, and LINA was apprised of that fact, the reports were never presented to LINA, and LINA never sought to obtain them. Instead, LINA denied Ms. Melech’s appeals, after which she brought suit.

The District Court found in LINA’s favor, deciding that the decision to deny benefits was correct based on the record before it — a record that did not include the reports generated by the two (2) SSA physicians. The Eleventh Circuit, by 2-1 vote, viewed the matter differently, holding that once LINA took the self-serving step of requiring Ms. Melech to pursue an SSDI claim, it became obligated to consider the evidence presented to the SSA in conjunction therewith (regardless of whether or not that evidence had found its way into the administrative record). In other words, having sent Ms. Melech to the SSA in pursuit of SSDI benefits, LINA had an affirmative obligation to seek out and obtain the evidence presented to the SSA.

Melech v. Life Ins. Co. of N. Am., 739 F.3d 663 (11th Cir. 2014)

Ability to Perform Part-Time Sedentary Work Deemed Fatal to Disability Claim

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Jan 272014
 

Karen McClain’s pain management physician certified her as capable of performing only part-time sedentary work. Nevertheless, in reliance upon that opinion, her long-term disability claim was terminated. During the course of a pair of unsuccessful administrative appeals, physicians retained by the claim administrator concluded that full-time work was possible, and those conclusions played a prominent role in the Sixth Circuit Court of Appeals’ decision affirming a District Court’s determination to uphold the benefit termination.

In dicta, however, the Sixth Circuit indicated that even if the conclusions reached by those other physicians were not entertained (that is to say, even if the opinion of Ms. McClain’s pain management physician were the sole consideration), the same result would obtain because a claimant who is capable of engaging in part-time work is ipso facto unable to demonstrate that he or she is incapable of performing “any work for compensation or profit.” In other words, the ability to work part-time is, in the Sixth Circuit’s view, incompatible with the notion of disability, at least insofar was that term was defined in Ms. McClain’s plan.

The Sixth Circuit’s position marks a dangerous (and, in our view, erroneous) incursion on the rights of disability claimants, and we will monitor the issue for further developments.

McClain v. Eaton Corp. Disability Plan, 740 F.3d 1059 (6th Cir. 2014)