ERISA Claims

Fort Worth insurance attorneys handling ERISA claims need to read this case from the US 5th Circuit Court of Appeals. It is styled, Killen v. Reliance Standard Life Insurance Company.
Killen worked for Covenant from 2002 until March 2009, when she claimed that neck, shoulder and upper back pain made it too difficult for her to continue. Reliance Standard administered Covenant’s long-term disability plan which is governed by ERISA.
Killen collected benefits from June 2009 to June 2011. During this time, Killen separately qualified for Social Security disability benefits. To continue receiving benefits under the Plan after two years, a claimant must be “totally disabled” such that she is incapable of performing the material duties of any occupation for which she is qualified by way of education, training, or experience. Under the contract, an insured is totally disabled if “due to an Injury or Sickness he or she is capable of only performing the material duties on a part-time basis or part of the material duties on a Full-time basis.”
At the outset, Killen’s primary care physician Dr. Crow treated her. Dr. Crow treated Killen on over twenty separate occasions over the next four years and addressed a variety of maladies she experienced beginning in late 2008. In August 2010, Killen seriously injured her right shoulder by exacerbating an apparently pre-existing tear in the rotator cuff. Dr. Crow found in September 2010 that Killen “had severe pain in the shoulder since that time,” and that she was experiencing “shooting pain towards her neck.” Shortly thereafter, Dr. Crow referred her to Dr. Crawford, an orthopedic surgeon who determined in October 2010 that Killen had a “high-grade full-thickness rotator cuff tear” in her right shoulder. The tear was further corroborated by a radiologist’s report. In a follow-up appointment in January 2011, however, Dr. Crawford found that Killen’s “function is good, even though she has some discomfort.” In May 2011, Reliance Standard’s internal vocational staff–evaluating the reports outlined above after Killen requested continued benefits– performed a residual employability analysis and listed five sedentary occupations appropriate for Killen. Consequently, Reliance Standard determined that, while Killen could no longer work as an ultrasound technician, she “appeared capable of sedentary work activity.” Reliance Standard thereafter decided to discontinue Killen’s benefits. This first denial apparently crossed in the mail with additional documents Killen sent to Reliance Standard, among them a treatment report from Dr. Crow and a letter from Dr. Crawford. Dr. Crow’s letter noted Killen’s “severe anxiety.” Dr. Crawford’s June 2011 letter, however, is the subject of dispute by the parties and is ambiguous about Killen’s condition. He wrote that Killen was “reasonably functional despite the findings on MRI,” but elaborated that “when I say functional, I mean that she still can get by with activities of daily living and can get her hand to her mouth and fix the back of her hair to some extent.” Reliance Standard evaluated these additional documents apparently as a courtesy; it would otherwise have had to open up a more probing internal appeal. The company again denied continued coverage. Subsequently, through her attorney, Killen filed an internal appeal with Reliance Standard, relying on an August 2011 letter from Dr. Crow that repeatedly emphasized how she was “incapable of holding down a job” due to her medical issues. At Reliance Standard’s urging, she submitted to an in- person evaluation and independent review conducted in February 2012 by Dr. Burgesser, a physical medicine and rehabilitation specialist. Dr. Burgesser, while crediting Killen’s chronic, irreparable right shoulder pain and acknowledging Dr. Crawford’s diagnosis, concluded in a detailed report that the injury did not prevent her from performing sedentary work. A subsequent (second) residual employability analysis conducted in March 2012 by Reliance Standard, this time taking into account Dr. Burgesser’s report, came to a similar conclusion as the first: Killen was capable of performing sedentary work in at least three alternative occupations. Relying on these reports, Reliance Standard denied Killen’s appeal in March 2012. In its letter, Reliance Standard noted that Killen had been receiving disability benefits from the Social Security Administration (“SSA”)–benefits which offset Reliance Standard’s own obligations to Killen–but explained that the SSA may have used a different standard in evaluating benefits decisions and also did not have Dr. Burgesser’s report when it awarded Killen benefits. Nearly four months later, Killen sought to supplement the record with a letter from Dr. Crow adhering to the contents of his August 2011 letter: he still believed, he wrote, that Killen was “unable to work due to her medical issues.” Reliance Standard responded, notifying Killen that it had closed her file and would not supplement it with the letter. After Killen exhausted her administrative appeals, she filed suit. The district court granted summary judgment to Reliance Standard.
Killen timely appealed, arguing that Reliance Standard: (1) lacked substantial evidence supporting its denial; (2) failed to give Killen a full and fair review of her claim; (3); issued a decision tainted by a conflict of interest because it both administers and pays benefits; and (4) inappropriately refused to allow Killen to introduce the letter from Dr. Crow after it made a final decision to terminate her benefits.
Review of summary judgment decisions in the ERISA context is de novo, and appeals courts apply the same standard as the district court. Because the Plan gave Reliance Standard discretion to determine benefit eligibility as well as to construe the Plan’s terms, a court reviews Reliance Standard’s denial under the Plan for abuse of discretion. A plan administrator abuses its discretion where the decision is not based on evidence, even if disputable, that clearly supports the basis for its denial. If the plan fiduciary’s decision is supported by substantial evidence and is not arbitrary and capricious, it must prevail.
This appeals court then reviewed the evidence and upheld the district court ruling. It is worth reading to see how this court supported it position in favor of Reliance.