The Tenth Circuit Court of Appeals, in McMillan v. AT&T Umbrella Benefit Plan No. 1, has affirmed a district court’s decision to reverse a plan administrator’s denial of short-term disability benefits on the basis that that it acted arbitrarily and capriciously in denying an employee’s claim.
The employee applied for short-term disability benefits after having worked as an IT consultant for the employer for six years. The employee had coronary artery disease, type-two diabetes, hypertension and sleep apnea, and a cardiologist determined that he had small vessel coronary disease that could not be corrected by medical intervention.
As a result of these conditions, the employee experienced shortness of breath even when walking on flat ground along with daytime somnolence. Moreover, a neuropsychological exam performed as part of Social Security proceedings had confirmed that the conditions had given the employee memory problems that would cause him significant difficulty in concentrating through a normal work day.
The employer’s disability plan required the employee to provide a medical, psychiatric or psychological opinion, based on a test performed according to generally accepted principles of the health care profession, to support the disability claim. The plan did not require the employee to provide objective evidence to substantiate the disability.
The employee provided the plan with a report prepared by his primary doctor that provided medical records that confirmed the existence of his conditions. In turn, the plan administrator consulted with a doctor of its own selection who concluded that the employee’s medical records did not support a finding that he was unable to perform the duties of his pre-disability occupation. Accordingly, the plan administrator denied the employee’s claim.
The employee responded by filing an administrative appeal which reasserted that he was unable to perform the essential functions of his job and that the plan administrator had neglected to obtain a formal job description of his pre-disability occupation from his employer before denying his claim. In response, the plan administrator contacted the employee’s former supervisor to obtain a complete job description. The supervisor explained that while there were no physical requirements, “it is a cognitive position that requires memory and thought.” The plan administrator next referred the employee’s appeal to four physician specialists of its own choosing, all of whom issued reports that indicated he was not disabled. However, none of these reports provided a specific discussion of the employee’s job duties and its cognitive requirements.
In response, the employee sued the plan administrator in federal district court, claiming that its decision to deny his claim for disability benefits violated ERISA.
The district court found that the plan’s denial was arbitrary and capricious and awarded the employee disability benefits. In reaching this determination, the court noted that the plan administrator had failed to adequately consider the employee’s ability to perform all of his essential job functions before denying his claim. The court also found that the employee’s actual employment duties were inconsistent with the plan administrator’s determination that he had a sedentary job. The employer subsequently appealed the decision to the Tenth Circuit.
The Tenth Circuit found that the record did not contain substantial evidence that the employee could perform either the physical or cognitive duties of his job. Consequently, the court concluded that the plan’s determination that the employee could perform the cognitive requirements of his job was arbitrary and capricious because it was not based on sufficient evidence for a reasonable person to accept the denial of benefits. As a result, the Tenth Circuit affirmed the district court’s decision to award the employee disability benefits.