Circuit Courts Chime in on Eligibility for Long-Term Disability Benefits

Federal circuit courts of appeal chimed in on participants’ eligibility for long-term disability (LTD) benefits in two recent decisions. Both decisions affirmed administrators’ denial of benefits and addressed the impact of information provided (or not provided) by plan participants during administrative appeals.

Eleventh Circuit – Failure to Submit Additional Mental Health Evidence on Appeal

The Eleventh Circuit affirmed the district court’s grant of summary judgment for an insurer-claims administrator, finding that the administrator’s termination of the participant’s disability benefits based on her bipolar disorder was not unreasonable or wrong.

The plaintiff was a commercial litigator with a history of bipolar disorder. In 2019, she experienced a mental health crisis and received psychiatric treatment.

Based on her psychiatrist’s notes reporting that she exhibited “impaired judgment” and “poor decision-making,” the administrator approved the plaintiff’s claim for LTD benefits based on her mental disorder in 2019. In 2020, the plaintiff participated in additional mental health treatment, including a partial hospitalization program, after which her therapist documented intact functioning and normal cognition.

When reviewing the plaintiff’s disability claim in 2021, the administrator attempted to contact her therapist. After several unsuccessful attempts, the administrator terminated the plaintiff’s benefits based on her therapist’s post-discharge notes.

The plaintiff requested an administrative appeal of the administrator’s decision. In response, the administrator hired a psychiatrist to conduct an independent review, who concluded that the plaintiff was not disabled after her release from the hospitalization program. The administrator invited the plaintiff to submit additional clinical evidence to support her claim of continued disability; however, she declined to do so. The administrator subsequently denied the plaintiff’s administrative appeal.

The plaintiff filed suit in the Southern District of Florida, and the district court upheld the administrator’s decision.

The Eleventh Circuit affirmed. The court agreed that the administrator’s decision to terminate the plaintiff’s benefits was not de novo wrong. The only evidence the plaintiff submitted to the administrator in support of her continued disability claim was the therapist’s notes, which did not indicate that she remained unable to work. The plaintiff bore the burden of demonstrating continued disability, and the court found it notable that she declined to submit further evidence when invited to do so. The court also concluded that the administrator did not improperly rely on the opinion of the independent medical reviewer, even though the reviewer had not examined the participant.

Seventh Circuit – Inconsistent Appeal Information Treated as New Claim

The Seventh Circuit affirmed summary judgment for an administrator who denied a professional musician’s claim for LTD benefits under an ERISA plan.

The plaintiff was a world-class musician who served as the principal flutist for the Indianapolis Symphony Orchestra. In mid-March 2020, the symphony placed its musicians, including the plaintiff, on furlough due to the COVID-19 pandemic. In December 2020, while still furloughed, she developed multiple symptoms, including vertigo, fatigue, and brain fog. Although some symptoms subsided, her dizziness worsened, and she developed tinnitus.

The symphony rehired the plaintiff in September 2021. She soon found that performing exacerbated her dizziness and that her tinnitus impaired her ability to hear other musicians. The symphony placed her on sick leave, and she applied for LTD benefits under the symphony’s group policy. In her application for benefits, the plaintiff reported March 13, 2020, as the last day she had worked before her disability and December 11, 2020, as the first date she could not work on a fulltime basis.

The administrator denied the plaintiff’s claim. Under the policy, only “active, full-time employees” were eligible for LTD benefits. The administrator advised that, according to her application, the plaintiff’s disability commenced in December 2020, while she was furloughed and was not an eligible active, full-time employee.

The plaintiff appealed the decision, providing additional materials showing she had been rehired on September 1, 2021, and requesting coverage for an inability to work beginning on that date. Her appeal failed, and she filed suit. The Southern District of Indiana granted summary judgment to the administrator.

The Seventh Circuit affirmed, concluding that the plaintiff was not eligible for coverage based on the information in her initial application because she was not employed by the symphony when she became disabled.

In addition, the court concluded that the plaintiff’s amended benefits request on appeal constituted a new claim for benefits, requiring a separate application for a different loss. Even though ERISA requires administrators to consider all information related to a claim, the amendment conflicted with the facts asserted in the initial application. The court noted that no claims-processing system can work if an applicant could submit contradictory facts on appeal. The court could not consider whether the plaintiff was entitled to coverage on her new claim because she had failed to exhaust her administrative remedies, and therefore her suit was premature.