Michael Mitchell, a man disabled from several health problems including chronic fatigue syndrome ("CFS"), hemochromatosis, restless leg syndrome ("RLS"), knee osteoarthritis, sleep apnea, and depression, won his case this month against MetLife for long-term disability benefits pursuant to the Employee Retirement Income Security Act of 1974 (ERISA).
MET denied Mitchell's disability benefits claim because it found that he did not suffer from a disability and that the late filing of the claim prejudiced its evaluation. On appeal, MET additionally found that Mitchell was still working after the date of his claimed disability, rendering him ineligible for LTD benefits.
The Court found that MET applied the wrong definition of disability, failed to credit Mitchell's substantial evidence of serious medical conditions, and failed to adequately investigate the claim or request available evidence when the lack of that evidence in the file was part of the reason for denial. "Where MET has engaged in several practices indicative of a significant conflict of interest, this warrants heightened abuse of discretion review" the Court ruled. In addition, MET offered inconsistent reasons for denial of Mitchell's claim--another factor to be weighed in abuse of discretion analysis.
The Court weighed the fact that MET applied an objective evidence requirement that did not appear in the policy. That constituted a "procedural irregularity". The presence of those factors indicated a significant conflict of interest to the Court.
The terms of the plan should be interpreted "in an ordinary and popular sense as would a [person] of average intelligence and experience." In Mitchell's case, MET's master plan and summary plan description had conflicting definitions of disability. The summary plan description contained a more restrictive definition of disability. In addition to the terms from the master plan, the summary plan description also required that a person be "unable to perform his/her regular job functions due to sickness or as a direct result of injury". The Court found that the master plan definition of disability unambiguously did not contain a regular job functions requirement, whereas the summary plan unambiguously did.
Conflicting definitions of "disability" were construed against MET as the drafter of the language
When a master plan document and summary plan description contain conflicting provisions, courts have held that the provision more favorable to the employee is controlling. The rationale for the this principle is that any burden of uncertainty created by careless or inaccurate drafting of the summary must be placed on those who do the drafting, and who are most able to bear that burden, and not on the individual employee, who is powerless to affect the drafting of the summary or the policy and ill equipped to bear the financial hardship that might result from a misleading or confusing document. Accuracy is not a lot to ask.
The Mitchell Court noted that inconsistency between master plan and summary plan documents is a recurrent problem in ERISA cases. Summary plans, which are supposed to explain employer benefit plans to employees in succinct, clear language, routinely serve to obfuscate the meaning of plan terms by having terms that conflict with the master plan. The resulting confusion constitutes a disservice to the parties involved. Many employers bargain for particular policy provisions in benefit plans that they offer to employees, only to have inconsistencies blur those policy terms, often being interpreted by administrators in an ad hoc manner that restricts entitlement to benefits. When faced with two conflicting documents, employees cannot consult either for guidance, and are similarly subject to the risk that inconsistent terms will be exploited to impose greater restrictions on benefits. Steadfast adherence to a rule that resolves inconsistencies against the drafter encourages the drafting of consistent plan documents that will better serve employers and employees alike, and avoid courts and lawyers having to needlessly determine the effect of conflicts in terms that arise from unnecessary drafting errors.
MET's "objective evidence" requirement was improper when not defined by policy
MET's denial on appeal was based primarily on Dr. Schmidt's report which found no disability based upon a lack of objective evidence. Before even considering the report, the Court found that MET could not deny Mitchell's claim based upon that objective evidence requirement. Nowhere in the plan terms was there an objective evidence requirement, nor did MET explain the basis for this requirement. The Court held that MET could not deny a claim based upon a lack of objective evidence unless that standard was made "clear, plain and conspicuous enough [in the Policy] to negate layman [Mitchell's] objectively reasonable expectations of coverage."
MET's reliance on objective evidence is problematic for medical conditions like Mitchell's that may not be amenable to objective verification. In cases involving chronic fatigue syndrome, the courts have held that subjective evidence is important because "CFS does not have a generally accepted 'dipstick' test."
Additionally, MET applied this objective evidence requirement without informing Mitchell of the kind of evidence that could satisfy it. When Mitchell's appeal was denied, MET did not provide an explanation of objective evidence. The Court found that MET failed to comply with 29 C.F.R. 2560.503(g)(iii) which requires "a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary." The courts have described this regulation as encouraging "meaningful dialogue between ERISA plan administrator and their beneficiaries." Instead, MET opted to find a lack of objective evidence without explanation how Mitchell might meet the requirement. Given the problems with requiring objective evidence in this case, the Court found that Dr. Schmidt's report failed to credit the diagnoses of several treating physicians that Mitchell was restricted in his ability to work due to his conditions.
Where MET had before it substantial, reliable evidence indicating the existence of a disability, it could not rely simply on a lack of evidence to deny Mitchell's claim. This was not a case where an administrator credited other reliable evidence over a claimant's treating physicians. The circumstances suggested that MET, a conflicted administrator, affirmatively sought to avoid obtaining additional evidence that could support a claim, perhaps in the interest of denying the claim for lack of evidence. This was an occasion when an independent medical examination was done in order to determine the credibility of Mitchell's evidence. MET did not exercise this option, choosing instead to assert a lack of evidence without attempting to confirm for itself whether Mitchell suffered from disabling conditions.
Continued employment did not mean that Mitchell could perform regular duties
The Court also noted that MET's denial of benefits, based at least in part on the fact that Mitchell was "still working," was in tension with its argument that Mitchell needed to be unable to perform regular job functions. The fact that a person is "still working" doesnot settle whether that person is able to perform regular job functions. While Mitchell attended work on a full-time basis, substantial evidence indicated that he was unable to perform regular job functions. That MET appeared to have equated being at work with being able to perform regular job functions indicated its flawed approach to evaluating Mitchell's claim. Mitchell's physicians and supervisor attested to the significant work impairment associated with his medical conditions. MET's reliance on Mitchell's continued attendance at work, as well as the noted problems with the objective evidence requirement, did not satisfy the Court that MET properly considered whether Mitchell was able to perform regular job functions. Accordingly, even under the more stringent policy definition of disability, the Court held that MET abused its discretion by denying that Mitchell was disabled. Mitchell's case was remanded to the District Court to calculate Mitchell's benefits. Here's another win for the good guys.
Alan C. Olson practices employment law in New Berlin, Wisconsin. AOlson@Employee-Advocates.com
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