By Mark D. DeBofsky
Mark D. DeBofsky is a name partner of DeBofsky, Sherman & Casciari, PC. He handles civil and appellate litigation involving employee benefits, disability insurance and other insurance claims and coverage, and Social Security law. He can be reached at firstname.lastname@example.org.
Disability claims involving chronic fatigue syndrome and fibromyalgia are difficult to assess because the symptoms are self-reported and cannot be objectively verified. However, in Schnoor v. Walgreen Income Protection Plan, 2013 U.S.Dist.LEXIS 114435 (W.D.Mich. Aug. 14, 2013), the court had no difficulty seeing through a deficient claim evaluation, despite the broad deference given to the benefit plan administrator.
The plaintiff, Kandise Schnoor, began working as a Walgreens pharmacist in 2001 and became disabled in April 2011 due to chronic fatigue syndrome, fibromyalgia and cognitive deficits. Sedgwick, the plan administrator, approved one week of benefits. However, additional benefits were denied following file reviews performed by two physicians who reported that there were no objective findings supporting Schnoor's claimed disability.
Schnoor appealed the benefit denial, submitting additional proof from a physician and evidence of cognitive impairment demonstrated on neuropsychological testing. Schnoor was also awarded Social Security disability benefits during the claim process. She provided that evidence as well. Once again, Sedgwick had the files reviewed by two doctors who recommended upholding the denial. The appeal was unsuccessful. Schnoor then filed suit.
Schnoor had been treated for several years by a well-known chronic fatigue syndrome/fibromyalgia researcher and clinician, Dr. Charles Lapp, who unequivocally supported her claim, as did two neuropsychologists who had evaluated her and found cognitive impairments.
Schnoor also submitted evidence documenting on-the-job mistakes she had made in the months leading up to her disability, such as filling prescriptions with the incorrect drug, four events involving filling prescriptions for the wrong patient and other errors. Based on its review of the evidence, the court determined that Sedgwick's determination did not result from "a deliberate principled reasoning process," the governing standard in the 6th U.S. Circuit Court of Appeals.
The court found the reports obtained by Sedgwick improperly discredited the clinical findings and were based on rank speculation that the errors at work were "attributable to family and socioeconomic stress, not medical illness." The court observed that the reviewers' conclusions lacked valid evidentiary support and found the evidence established that Schnoor's compromised abilities made her "a danger to others" in her role as a pharmacist. The court thus concluded:
"Where, as here, the plan administrator does not offer a reasoned explanation for giving greater weight to the consulting physician, that the consulting physician does not examine the claimant and rejects as incredible the claimant's self-reported symptoms weighs heavily in favor of a finding that the administrator acted arbitrarily."
The Social Security finding was also critical to the court's determination. The court found the award of benefits and the absence of any rationale as to why the Social Security determination was unwarranted, "weighs in favor of a finding that the benefits determination was arbitrary and capricious."
After finding the benefit denial arbitrary and capricious, the court awarded benefits to the plaintiff. Although courts have created an extra-statutory remedy of remanding cases to the plan administrator after finding a benefit denial to have been arbitrary, the court rejected Sedgwick's request for a remand in this matter, finding the plaintiff was clearly entitled to the benefits.
Sedgwick was also unsuccessful in arguing that the plaintiff could not obtain long-term disability benefits without a remand because it had only evaluated the initial short-term disability benefit claim. However, the court applied the Employee Retirement Income Security Act (ERISA) futility doctrine and found that "where a claimant was effectively precluded by the terms of the long-term disability plan from applying for long-term benefits, a claimant's 'failure' to apply must be excused."
The court further determined that the evidence clearly established the plaintiff's entitlement to ongoing benefits. The court cited Cooper v. Life Ins. Co. of N. Am., 486 F.3d 157, 171 (6th Cir. 2007) for the proposition that "[p]lan administrators should not be given two bites at the proverbial apple where the claimant is clearly entitled to disability benefits. They need to properly and fairly evaluate the claim the first time around; otherwise they take the risk of not getting a second chance, except in cases where the adequacy of claimant's proof is reasonable debatable." Id. at 172.
This opinion exemplifies a careful evaluation of the "quality and quantity of the evidence presented," as ERISA requires. Instead of merely concluding that file reviews by four doctors was adequate justification for the claim denial, the court exposed the poor quality of the reviewing doctors' opinions and contrasted them with the detailed narrative and rationale provided by the treating doctors and the objective neuropsychological test findings supporting the claim, which was further corroborated by contemporaneous work records. The Social Security disability finding was a critical piece as well.
But where this opinion really stands out is in the court's flat-out rejection of Sedgwick's plea for a remand. The court clearly recognized that the remand request had no substantive basis and the court was no doubt suspicious that Sedgwick was merely looking for a new reason to deny the claim again if given a chance. The court properly pointed out that Sedgwick had ample opportunity to properly evaluate the claim and that if it doubted the plaintiff, it could have had her examined rather than rely on frequently retained reviewing doctors whose opinions have been questioned by other courts as well as this one.
Remands in ERISA cases are a curious way to resolve claims since they fail to end the litigation with finality and the majority of the federal courts of appeals deem remand orders in ERISA cases unappealable for that reason. Yet not a single court has explicitly questioned its authority to remand ERISA cases.
Since the ERISA statute deems suits over benefits to be civil actions, the same as any other civil action in the federal judicial system, the absence of statutory authority to remand to a private plan administrator makes such a procedure questionable at best and raises a constitutional question that some future court will no doubt examine.