U.S. Magistrate Judge Morton Denlow, the foremost advocate in the Northern District of Illinois of paper trials in lieu of summary judgment, penned a fascinating ruling in White v. Airline Pilots Association, 2005 U.S. Dist. LEXIS 5980, 364 F.Supp.2d 747 (N.D. Ill., April 8), after following a paper trial procedure.

Plaintiff Kathleen White, who had worked for the Airline Pilots Association (ALPA) for 15 years in the field of communications, stopped working in 2002 due to a blood disease, porphyria, along with other medical complications. She submitted a claim to ALPA's disability insurer, Metropolitan Life Insurance Co., with an attending physician certification reporting that White was incapable of working.

During the course of the claim, White also qualified to receive Social Security disability benefits. MetLife reviewed the evidence submitted, but denied the claim. White immediately appealed and submitted additional documentation from her treating physician, Dr. Adam Milik, who reiterated his support for the claimant's disability and offered a detailed rationale in support of his opinion.

Nonetheless, the denial was upheld, although the court reported that MetLife mischaracterized both the relevant occupation and the disabling condition; and had also instructed its reviewing physician not to call the treating doctor. A second appeal was similarly unavailing, as was a third appeal, and efforts were made to reopen the claim following the Social Security award.

Although the court applied an arbitrary and capricious standard of review, the court was able to conclude that the decision was ''downright unreasonable'' and that MetLife never accorded the plaintiff a full and fair review as required by 29 U.S.C. §1133. First, the court found, the insurer never accurately named or described the claimant's occupation; therefore, it could not have made an accurate determination as to whether the plaintiff was medically unable to perform the duties of her own occupation. The record was filled with misstatements of the claimant's job,and in the communications to its reviewing doctor, MetLife also misstated the occupation. The court cited Quinn v. Blue Cross & Blue Shield Association, 161 F.3d 472 (7th Cir. 1998), and Hillock v. Continental Casualty Co., 2004 U.S. Dist. LEXIS 3907 (N.D. Ill., March 2, 2004), for the proposition that the insurer is obligated to make a reasonable inquiry into the claimant's skills and whether those skills can be used to allow a return to work.

The court also criticized a denial of a full and fair review by pointing out that MetLife restricted its reviewing doctor as to the evidence he could review and that the insurer failed to send him additional evidence that might have assisted in the evaluation. That resulted in the doctor reporting that there was not enough evidence in what he reviewed to support disability, which suggests that if additional records had been reviewed, it could have supported the claim. The court further pointed out that MetLife never forwarded additional records submitted by the claimant to its reviewer and also instructed the reviewer not to speak to the treating doctor.

Under 7th U.S. Circuit Court of Appeals case law, Denlow added, ''a treating physician's information is likely superior to the information of a plan's medical consultant, when the consultant has not examined the claimant but has only spoken to the treating physician on the telephone. Hawkins [v. First Union], 326 F.3d at 917, n. 13. In this case, Dr. [Robert A.] Menotti did not even talk with Dr. Milik on the phone — he was instructed not to do so by MetLife. Compare [Black & Decker v.] Nord, 538 U.S. 822, 827, 155 L.Ed.2d 1034, 123 S.Ct. 1965 (noting that the independent consultant conducted an exam of the claimant); Anderson [v. Operative Plasterers' & Cement Masons' International Association Local No. 12 Pension & Welfare Plans], 991 F.2d at 358 (noting that the independent consultant conducted an examination of the claimant). MetLife's actions in relying so completely on Dr. Menotti's 'independent recommendation' were arbitrary and capricious.''

In a crucial footnote, Denlow also pointed out: ''ERISA does not require plan administrators to accord special deference to the opinions of treating physicians. Nord, 538 U.S. at 824 ('Courts have no warrant to require administrators automatically to accord special weight to the opinions of a claimant's physician; nor may courts impose on administrators a discrete burden of explanation when they credit reliable evidence that conflicts with a treating physician's evaluation.'). However, the 7th Circuit in Hawkins recognized that an examining physician's recommendation should be given more weight than a consultant who did not examine the claimant. Hawkins, 326 F.3d 914, 917. Thus, this court does not rely on the 'treating physician rule,' forbidden in ERISA claims. The court merely notes that Menotti's recommendation was made without examining White and without speaking with her treating physician, and without the complete medical files provided by White.''

The court then awarded benefits to the claimant, holding that remand would be inappropriate. The court found the record ''so clear-cut that it would be unreasonable for MetLife to deny the application for benefits on any ground and because MetLife's conduct was patently unreasonable in failing to provide a full and fair review.''

''In this case,'' the court explained, ''MetLife's decision to deny White [long-term disability] benefits was patently unreasonable because it did not provide a full and fair review; therefore remand is unnecessary. See Quinn, 161 F.3d at 477. MetLife conducted a careless and superficial review of White's claim during which it: (1) did not follow its own procedure; (2) consistently misstated White's job title during three critical points of the review; (3) did not describe the background or qualifications for the internal MetLife reviewers (the 'nurse consultants'); (4) included the wrong applicants information within White's file; and (5) did not attach parts of the record until filing its response brief in this case.

''After a disorganized and imperfect review, MetLife arbitrarily concluded that White was able to perform her 'own occupation' without considering what White's occupation required. See Weaver [v. Phoenix Home Life Mutual Insurance Co., 990 F.2d 154 (4th Cir. 1993)], 990 F.2d at 159 (finding that remand was unnecessary because the insurer abused its discretion).''

The court added a final justification for its refusal to remand: ''Because MetLife acted arbitrarily and capriciously, this court has no confidence that it would give White a full and fair review if the court remanded the case back to MetLife. See Govindarajan [v. FMC Corp., 932 F.2d 634, 637 (7th Cir. 1991)]., 932 F.2d at 637 (finding that selective review of medical evidence and a conclusion based on that selectivity was arbitrary and capricious and did not warrant remand). In addition, a remand would penalize White and benefit MetLife.''

The court pointed out that additional corroboration for its conclusion was found in the Social Security determination.

Noting that while he did not consider the Social Security determination for assessing MetLife's decision, Denlow pointed out that ''Social Security decisions are still relevant and instructive. Tegtmeier v. Midwest Operating Engineers Pension Trust Fund, 390 F.3d 1040, 1046-47 (7th Cir. 2004); Donato v. Metropolitan Life Insurance Co., 19 F.3d 375, 380 (7th Cir. 1994). Thus, although determinations made by the Social Security Administration are not binding in ERISA actions, see Anderson, 991 F.2d at 358-59 (7th Cir. 1993) (holding that Social Security determinations of disability are not dispositive of disability under a pension plan), a determination of disability under the Social Security Act can be considered when applicable. See Ladd, 148 F.3d at 755-56 (considering the grant of Social Security benefits in an ERISA case as it related to defendant insurance company's actions).''

Denlow then added this significant observation about the value of Social Security rulings:

''It is true that the Social Security Administration and MetLife make their determinations based on different standards — the Social Security Administration determines whether a claimant is disabled from any occupation, whereas MetLife determines whether the claimant is disabled from his own occupation. See 20 C.F.R. §416.920.

''However, an inability to perform one's own job is one of the five steps necessary to prove entitlement to Social Security benefits, see id., thus the award of Social Security benefits by an impartial administrative law judge is instructive. Only after the administrative law judge has concluded that the claimant cannot perform her own occupation does he consider whether the claimant can perform any occupation. Id.

''It is likely more difficult for a claimant to prove that she is disabled from any occupation than to prove that she is disabled from her own. Although the Social Security determination of disability is not binding on this court, it corroborates the conclusion that plaintiff was disabled from performing her regular occupation. See La Barge, 2001 U.S. Dist. LEXIS 1033, 2001 WL 109527 at *8 ('The findings of the Social Security Administration is compelling evidence of [the claimant's] disability.').''

Consequently, the court ruled that ''public policy warrants'' the immediate payment of benefits. In addition, the court ruled the plaintiff is entitled to an award of fees since the insurer's decision ''was not substantially justified and was not taken in good faith.''

This ruling offers great insight into how an insurance company should not conduct a claim review. If insurers seek the protection of the arbitrary and capricious standard of review, they should also be held to a fiduciary standard contained in the ERISA statute (29 U.S.C. §1104) requiring that insurers act in the interest of plan participants and their beneficiaries for the purpose of paying benefits. In Ruiz v. Continental Casualty Co., 400 F.3d 986 (7th Cir. 2005), the 7th Circuit ruled that the arbitrary and capricious standard only applies if the plan administrator is a fiduciary; and the court made it clear that insurers adjudicating disability claims are fiduciaries under the ERISA law.

The court also recognized sound reasons to deny the insurer a remand. In addition to the cases cited, the court could also have cited Zervos v. Verizon New York Inc., 277 F.3d 635, 648 (2d Cir. 2002), which held, ''[A] remand of an ERISA action seeking benefits is inappropriate where the difficulty is not that the administrative record was incomplete but that a denial of benefits based on the record was unreasonable.'' In Grosz-Salomon v. Paul Revere Life Insurance Co., 237 F.3d 1154, 1163 (9th Cir. 2001), the court similarly held: (''[A] plan administrator will not get a second bite at the apple when its first decision was simply contrary to the facts.'' Also, in Watson v. UNUMProvident Corp., 2002 WL 246579 (D. Md., Feb. 19, 2002), a case which also involved a claim record containing documents pertaining to someone other than the claimant, the court refused to order a remand following a finding that the insurer had acted arbitrarily and capriciously in order that the insurer face the ''consequences of its unreasonable and unprincipled deliberative process.''

However, there is more to be said on this issue. The whole concept of a remand in ERISA cases is an aberration. In an article entitled, ''The Paradox of the Misuse of Administrative Law in ERISA Benefit Claims,'' 37 John Marshall L.Rev. 727, 748-749 (2004), I wrote the following as part of an essay criticizing the importation of administrative law into ERISA claims in the absence of any statutory authority to do so:

''Nowhere in the ERISA law is there authority for a remand; certainly, in other civil disputes of a comparable nature, no insurer would seriously argue to the court for the right to a remand. Yet the courts continue to make ridiculous distinctions about the resolution of ERISA benefit cases. In Hackett v. Xerox Corporation Long-Term Disability Plan, [315 F.3d 771, 776 (7th Cir. 2003)], the court concluded the decision to remand should be based on whether the claim involves an initial determination or if the matter involves a termination of benefits, such as disability insurance payments, which had been ongoing.''

As the Hackett court explained, in a case where the plan administrator ''did not afford adequate procedures in its initial denial of benefits, the appropriate remedy respecting the status quo and correcting for the defective procedures is to provide the claimant with the procedures that she sought in the first place. Wolfe, 710 F.2d at 394. If the claimant prevails on remand before the plan administrator, then the claimant would be entitled to retroactive benefits from the time at which the initial denial occurred. Id. However the court is not in the place to make the determination of entitlement to benefits. The court must not substitute its own judgment for that of the administrator. Quinn, 161 F.3d at 478; see also Gallo v. Amoco Corp., 102 F.3d 918, 923 (7th Cir. 1996). The fact that the plan administrator failed to provide the adequate procedures does not mean that the claimant is automatically entitled to benefits — such a holding might provide the claimant 'with an economic windfall should she be determined not disabled upon a proper reconsideration.' Quinn, 161 F.3d at 478.

''On the other hand are cases where the plan administrator terminated benefits under defective procedures. In these cases the status quo prior to the defective procedure was the continuation of benefits. Remedying the defective procedures requires a reinstatement of benefits.''

''This ruling,'' I wrote in the John Marshall essay, ''may be appropriate in analyzing Social Security disability benefit disputes, but it has no support in the ERISA statutory language. If a decision regarding benefit eligibility is both defective and wrong, there is no reason why a claimant should be denied benefits. The court in Hackett speaks of a potential 'windfall' to claimants, but there is no unjust enrichment where the evidence before the court justifies the benefit payment. The court further notes, in cases involving ongoing benefit payments, the employee benefit plan remains free to investigate ongoing eligibility to receive benefits.''

''Philosophically, the notion of a remand is antagonistic to our system of civil jurisprudence; moreover, it defeats the congressional purpose of the ERISA statute. A law designed for the protection of plan participants and their beneficiaries fails to meet that goal where plan administrators are given multiple opportunities to shore up a defective record and benefits due are either delayed or denied. After the parties conduct a pre-suit appeal, the matter is ripe for judicial determination; and the courts fail in their role as arbiters of disputes when they remand claims rather than deciding them, even in cases where there may only be procedural defects but not necessarily a wrong decision. Although courts are loathe to become claim administrators, they necessarily fulfill that function in numerous comparable instances such as employment disputes and insurance coverage litigation; and without any statutory basis for a remand, courts are required to fulfill that role in ERISA cases as well.''