Disability Benefits from Employer

Employees often purchase disability insurance plans through their employers.  These plans are governed by ERISA.  Receiving benefits for disability under a long-term disability plan can be difficult when you are suffering with a mental-health issue like severe depression or bi-polar disorder.  The Eighth Circuit recently came down with a decision which shows that you likely will not be entitled to benefits under long-term disability policies which only provide benefits if you are totally disabled if you can do any job.

In Siegel v. Connecticut General Life Ins., et al, the employee suffered from severe depression.  The Eight Circuit held that the plan administrator did not abuse its discretion in terminating plaintiff's benefits as there was substantial evidence to support the determination that he was able to work and was not totally disabled.

The long term disability plan provided that if the employee's disability was due to mental illness, he

would stop receiving benefits after the first two years unless he was "totally disabled."  The term "totally disabled" was defined as being unable to perform the essential duties of any occupation for which the employee was or could reasonably become qualified.

The plan administrator initially approved Siegel's long-term disability claim in October 1995. In November 1997 it reapproved his claim for continued benefits, concluding that he was incapable of employment in "any

occupation." Connecticut General requested and received periodic updates from Siegel's doctors regarding his condition.

Siegel sent a letter to the plan administrator asking whether he could obtain part time employment without losing his disability benefits. The plan administrator informed Siegel of the relevant provisions of

the plan which allowed totally disabled beneficiaries to pursue "rehabilitative work" for a limited time.  However, the plan administrator then opened an investigation into Siegel's continued eligibility and requested

that he complete a questionnaire about his daily activities. Siegel reported that he used a computer daily, watched television for five to six hours, did laundry, attended religious services, volunteered two days a week for one hour, and could drive a "couple hundred miles with breaks." Siegel explained that he was unable to return to work due to a "lack of concentration and inability to plan and follow through."

 Siegel's psychiatrist, indicated that he suffered from "[p]ersistent and unremitting depressed mood and pessimistic outlook," "poor ability to focus," "poor ability to maintain pace," and "poor ability to

apply self-discipline." Dr. Beeghly reported that Siegel's memory, thought process, and judgment were normal. Dr. Beeghly expressed frustration that Siegel had not been seeing a therapist as he had

recommended. 

The plan administrator informed Siegel that his benefits would be terminated, explaining that it had concluded he was no longer incapable of employment.  Siegel responded with additional documentation. A form filled out by his primary care physician indicated that Siegel was disabled, but it did not give any further information as to his medical history, diagnosis, or treatment.  A report by a neuropsychologist who had examined Siegel concluded that he likely had "relatively severe, presumably treatment-resistant depression" but that there was "no evidence for neuropsychologically based intellectual or memory impairment."

Two experts concluded that he retained several functional capabilities. These included "ability to focus and concentrate," "higher level executive functioning,"2 and social skills. A vocational rehabilitation specialist identified three entry level occupations in which Siegel could work: repair order clerk, production clerk, and mail sorter. 

Siegel filed an ERISA action in the district court seeking review of the plan administator's decision. See 29 U.S.C. § 1132(a)(1)(B). The parties then agreed to have a court trial limited to the administrative record. The district court granted LINA's motion for judgment, concluding that the plan administator had not abused its discretion because it had conducted a full and fair review and there was substantial evidence to support its decision. 

The Eight Circuit held that the district court properly did not apply de novo review.  The abuse of discretion standard was proper. 

The Eight Circuit determined that it woudl affirm the plan administrator's decision if it was reasonable and supported by substantial evidence. Clapp, 262 F.3d at 828. Substantial evidence is "more than a scintilla, but less than a preponderance." Id. (quoting Sahulka v. Lucent Techs, Inc., 206 F.3d 763, 767–68 (8th Cir. 2000)).  Because the plan administrator  is both insurer and decision maker, "we take that conflict [of interest] into account and give it some weight in the abuse-of-discretion calculation." Carrow v. Standard Ins. Co., 664 F.3d 1254, 1258–59 (8th Cir. 2012).

The Eighth Circuit agreed with the district court that the plan administator did not abuse its discretion in

terminating Siegel's benefits. To be "totally disabled" under the plan's definition, Siegel must have been unable to perform the essential duties of "any occupation for which [he is] or may reasonably become qualified." There was substantial evidence from which LINA could reasonably conclude that Siegel was able to work. Siegel expressed an interest in part time work and had asked LINA how much he could work and earn without losing his disability benefits. Although Siegel's treating physicians indicated that he suffered from depression and lack of motivation, they did not identify any specific impairments or deficiencies. Only Dr. Beeghly was willing to certify that Siegel was disabled, and even he expressed some doubt on the subject.

The experts retained by LINA all agreed that while Siegel exhibited symptoms of severe depression, he was not totally incapable of employment. We conclude that on this record, it was not an abuse of discretion to terminate Siegel's benefits.

If you are having problems receiving benefits under your employer's long-term disability plan, you may want to speak to an attorney.  If you need help with long-term disability or other employment related questions, contact Angela Madathil, and Madathil Law Office, LLC, for a free consultation.  Contact us at angela@madathil-law.com or by telephone at 402.577.0686.  For more information look at our website www.madathil-law.com.

If you live in Omaha, Lincoln, Lancaster County, Douglas County, Otoe, or Cass Counties and you need an employment lawyer, consider contacting Angela Y. Madathil and the Madathil Law Firm.   The firm serves clients in all of these areas.

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