The Ninth Circuit Court of Appeals, in Kott v. Agilent Technologies Inc. Disability Plan, has determined that a plan administrator abused its discretion in denying long-term disability (“LTD”) benefits because it: (i) failed to provide the plaintiff with a sufficient explanation for the basis of its denial; (ii) did not properly consider her physical limitations; and (iii) made erroneous factual findings.
Law. In the ERISA context, a plan administrator abuses its discretion if its application of a correct legal standard is: (1) illogical; (2) implausible; or (3) without support in inferences that may be drawn from facts in the record. It is also an abuse of discretion if a plan administrator relies on clearly erroneous findings of fact in making benefit determinations.
Background. The plaintiff was a participant in her employer’s LTD plan. To qualify for benefits under the plan, the plaintiff was required to prove, initially, that she was unable to perform her own occupation and, later, that she was “continuously unable to perform any occupation for which she is or may become qualified” to perform.
Following the onset of back pain and severe plantar fasciitis in her foot, the plaintiff filed a claim for LTD benefits. The plaintiff’s claim was originally approved under the LTD plan’s “own occupation” standard.
After she had received benefits for one year, the plaintiff’s LTD benefits were terminated because it was determined that she was not disabled under the plan’s “any occupation” standard. The plaintiff appealed the decision and provided the plan with supplemental medical information to support her claim. Upon review, the plan upheld its benefit denial decision after it had determined that the record did not demonstrate that the plaintiff was unable to perform the duties of any occupation.
The plaintiff responded by filing a lawsuit in federal district court challenging the plan’s decision to deny her LTD benefit claim. The district court ultimately ruled in favor of the plan, determining that it did not abuse its discretion in denying the plaintiff’s claim. In turn, the plaintiff appealed to the Ninth Circuit.
Ninth Circuit. In reviewing the matter, the Ninth Circuit reversed the lower court’s decision, finding that the plan had abused its discretion in denying the plaintiff’s claim. In particular, the Ninth Circuit found that the plan had failed to provide the plaintiff with a proper explanation of why it had denied her claim because it did not identify any additional material or information that the plaintiff needed to provide to perfect her claim. The Ninth Circuit also observed that the plan had failed to consider the simultaneous restrictions on the plaintiff’s ability to sit and stand, which likely precluded her from performing even part-time work.
Kott v. Agilent Technologies Inc. Disability Plan is available by clicking here.