The Ninth Circuit Court of Appeals, in Alves v. Hewlett-Packard Comprehensive Benefits Plan, has found that a welfare benefit plan’s claims administrator did not abuse its discretion in denying a participant’s claim for long-term disability (“LTD”) benefits because the participant did not meet the plan’s definition of “Totally Disabled.”
Law. ERISA-governed disability benefit claims are subject to DOL regulations requiring a “full and fair investigation” of claims. Specifically, the regulation requires claims administrators to apply plan provisions correctly and to thoroughly investigate claims. A claims administrator’s failure to follow the regulations’ requirements can be the determining factor if a benefit claim denial results in litigation.
Background. The plaintiff filed a claim for LTD benefits under his employer’s welfare benefit plan. The plan’s claims administrator concluded that the plaintiff’s condition did not render him disabled, for plan purposes, because he could continue to perform his “largely sedentary” job duties. As a result, the claims administrator denied the plaintiff’s LTD benefit claim.
District Court. The plaintiff proceeded to challenge the claims administrator’s decision to deny his LTD benefit claim by filing a lawsuit in federal district court. After a trial, the federal district court concluded that the claims administrator did not abuse its discretion in denying the plaintiff’s LTD benefit claim. In response, the plaintiff appealed the district court’s determination to the Ninth Circuit Court of Appeals.
Ninth Circuit. After reviewing the matter, the Ninth Circuit agreed with the district court and concluded that the claims administrator did not abuse its discretion in denying the plaintiff’s LTD benefit claim based on the administrator’s conclusion that the plaintiff was not “Totally Disabled” as defined by the plan.
The Ninth Circuit explained that the claims administrator reasonably construed the plan’s language and provided a detailed explanation of its decision to the plaintiff. The court observed that the claims administrator reached this determination because the plaintiff’s medical records did not show that he was “Totally Disabled” and “unable to perform the material and essential duties of his Own Occupation” or “unable to perform any occupation for which he is or may become qualified.” The court further found that the claims administrator’s decision was supported by substantial evidence, including several “persuasive medical opinions” which all concluded the plaintiff was not disabled in a manner that would prevent him from performing his sedentary occupation or other sedentary work.
The Ninth Circuit also concluded that the claims administrator did not abuse its discretion by failing to consider the determination made by the Social Security Administration (“SSA”) that the plaintiff was disabled. The court found that the claims administrator reasonably explained that the plan applied a different definition of disability from that used by the SSA. Specifically, the court noted that SSA was directed by its Medical-Vocational Guidelines to find the plaintiff disabled, regardless of whether he had the residual capacity to perform the “full range of sedentary work.” The court explained that the claims administrator was not required to compare the medical evidence that it relied on against the evidence relied on by SSA because the administrator evaluated SSA’s conclusion and gave a reasonable explanation for why it was not adopted.
The Ninth Circuit ultimately affirmed the district court’s decision, finding that the claims administrator’s review was thorough, had evaluated the plaintiff’s medical records from a cumulative, “whole body” perspective, and reasonably concluded that the plaintiff was not disabled for plan purposes.