The plaintiff, a loan originator, originally became disabled in 1993 due to an ankle injury. Although her ankle improved, she was also involved in a serious car accident, and her benefits were continued until 1996 when Hartford cut off the benefit payments even though she continued to suffer from pain, fatigue, problems with memory and concentration, and mental confusion.

Subsequently, Rekstad's condition improved sufficiently to allow her to go back to work, and she worked for another bank in 1997 and 1998. However, she left that job to go back on disability with a different insurer, and she was receiving benefits from both Liberty Mutual and the Social Security Administration based on a 1998 onset. Thus, the issue before the 10th U.S. Circuit Court of Appeals was whether Rekstad was disabled after January 1996 when Hartford terminated her benefits. Rekstad v. U.S. Bancorp, 2006 U.S.App.LEXIS 15170 (June 21, 2006).

In reviewing the evidence, the court noted that Hartford relied on two physicians from the Medical Advisory Group who reviewed Rekstad's medical records and concluded that she was capable of working. That, along with other evidence showing Rekstad's return to work, as well as an application to work in 1996, led Hartford to conclude that it properly terminated benefits. After exhausting pre-suit appeals, Rekstad brought suit; and the district court awarded her summary judgment. On appeal, the 10th Circuit reversed.

The Court of Appeals applied an arbitrary and capricious standard of review, which it explained meant:

''Indicia of an arbitrary and capricious decision include, inter alia, lack of substantial evidence. Substantial evidence is such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the decision maker. It requires ''more than a scintilla but less than a preponderance.'' Sandoval v. Aetna Life & Cas. Ins. Co., 967 F.2d 377, 382 (10th Cir. 1992). 'In determining whether the evidence in support of the administrator's decision is substantial, we must take into account whatever in the record fairly detracts from its weight.' Caldwell, 287 F.3d at 1282 (internal quotations and alterations omitted). Moreover, 'substantiality of the evidence is based upon the record as a whole.'

Further, applying Fought v. Unum Life Insur.Co. of America, 379 F.3d 997, 1004 (10th Cir. 2004), the court explained the degree of deference is lessened by any ''conflict of interest between the administrator's duty to act in the interest of the plan participant and the administrator's self interest.'' In such cases, deference is diminished ''in proportion to the seriousness of the conflict.'' Applying that standard, the 10th Circuit concluded that the decision made by Hartford was arbitrary and capricious due to the insurer's failure to examine a material portion of the relevant evidence; however, the court was unable to conclude ''whether Rekstad is totally disabled, nor whether U.S. Bancorp's decision was incorrect.''

The court faulted the defendant for determining that Rekstad's post disability employment, application for employment, and her enrollment in classes constituted evidence she was not disabled, despite affidavits that had been submitted in the pre-suit appeal showing she could not maintain employment anywhere or complete any course work due to her physical and cognitive impairments. The insurer explicitly stated that it did not consider the affidavits as they were ''not deemed pertinent to the disability determination, as these individuals are no [sic] medical professionals.'' The court rejected that rationale, finding:

''It was arbitrary for U.S. Bancorp to make its decision to deny disability benefits without it giving full and fair consideration to the affidavits submitted by Rekstad and her relatives. As noted, evidence of Rekstad's post-accident employment and education played a significant role in ITT's determination that Rekstad is not totally disabled. But its consideration of this evidence was impermissibly one-sided. While Rekstad's ability to pursue and attain employment and attend post-graduate level courses may support a determination that she is not totally disabled, her inability to hold that employment or finish her course work because of problems associated with her physical and cognitive impairments may support a contrary conclusion. See Wilcott v. Matlack Inc., 64 F.3d 1458, 1460-61 (10th Cir. 1995). Evidence regarding the latter need not have been furnished by a medical professional to warrant its consideration.''

Because that evidence had not been properly considered, the court found the plan's decision arbitrary and capricious and remanded the matter to the employer for a redetermination, holding:

''This is not a case where it is so clear-cut that it was unreasonable for U.S. Bancorp to deny Ms. Rekstad benefits. But because ITT's one-sided consideration of Ms. Rekstad's post-accident employment and education permeated U.S. Bancorp's decision, we are unable to determine the substantiality of the evidence supporting it. See Gaither v. Aetna Life Ins. Co., 388 F.3d 759, 773 n.5 (10th Cir. 2004) (concluding that merely reviewing a plan administrator's decision under reduced deference per Caldwell is inappropriate where the failure to investigate left inadequate grounds for the court to determine whether it could still be within the bounds of reason); see also Quinn v. Blue Cross & Blue Shield Ass'n., 161 F.3d 472, 477 (7th Cir. 1998) ('[T]he proper remedy in an ERISA case, as well as a conventional case, is to remand for further findings or explanations, unless it is ''so clear cut that it would be unreasonable for the plan administrator to deny the application for benefits on any ground.'' ') (quoting Gallo v. Amoco Corp., 102 F.3d 918, 923 (7th Cir. 1996). Moreover, we are not convinced that U.S. Bancorp would arrive at its previous conclusion once full and thorough consideration is given to all relevant evidence. And we will not substitute our judgment for that of U.S. Bancorp. See Quinn, 161 F.3d at 478; Miller v. United Welfare Fund, 72 F.3d 1066, 1073-74 (2d Cir. 1995). We therefore remand to the district court with instructions that the case be returned to U.S. Bancorp for reconsideration.''

This ruling makes one excellent point, but it also confuses ERISA law with administrative law and ends with an unsatisfying conclusion. The focus of the court on the statements from the claimant and her relatives is a key aspect of the pre-suit appeal. Medical records and reports often fail to give any insight whatsoever into how the claimant is functioning in the real world. Such records may also be misleading. A single isolated note in a medical chart cannot be the basis for ignoring the context of the physician's overriding opinions according to Gawrysh v. CNA Ins. Co., 8 F.Supp.2d 791 (N.D.Ill. 1998) and Thorpe v. Cont'l Cas. Co., 2002 U.S. Dist. LEXIS 24405, (E.D.Pa. 2002) (citing Skretvedt v. E.I. Du Pont de Nemours & Co., 268 F.3d 167 (3d Cir. 2001)), which both stand for the proposition that one needs to consider the entire context of the record. Individual notations of ''improved'' or feeling a ''bit better'' cannot disprove disability. Therefore, observations made by persons with first-hand knowledge can be very useful in helping to understand how someone functions in activities of daily living on a daily basis. Third-party observations were also found to be significant evidence in both McDonald v. Western-Southern Life Insur. Co., 347 F.3d 161 (6th Cir. 2003)and DiPietro v. Prudential Insurance Company of America, 2004 U.S.Dist.LEXIS 5004 (N.D.Ill. 3/26/2004). Hence, the main lesson that can be drawn from this ruling is that providing third-party observations can be a valuable part of many ERISA claims and should always be considered in presenting a pre-suit appeal.

The decision to remand the case, though, is unsatisfactory. Ultimately, because the claimant returned to work for more than a year before she became disabled again, depending on her pre-disability income and policy terms that were not disclosed in the appellate ruling, the benefits at issue here might only be those due from January 1996 through mid-1997. The court noted at the end of its ruling that due to the remand order, it was refusing to rule on whether the benefits were ongoing. The remand order itself, though, seems to run afoul of Hackett v. Xerox, 315 F.3d 771, 776 (7th Cir. 2003), which ruled that where benefits are terminated under defective procedures, ''[r]emedying the defective procedures requires a reinstatement of benefits.'' Also see, Schneider v. Sentry Group Long Term Disability Plan, 422 F.3d 621 (7th Cir. 2005) (defective termination procedures required benefit reinstatement).

Other courts have reached similar conclusions. For example, in Zervos v. Verizon New York Inc., 277 F.3d 635, 648 (2d Cir. 2002), the court remarked, ''[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.'' Likewise, in Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1163 (9th Cir. 2001), the court held: ''[A] plan administrator will not get a second bite at the apple when its first decision was simply contrary to the facts.'' Also see, Cook v. Liberty Life Assur. Co. of Boston, 320 F.3d 11, 24 (1st Cir. 2003) (quoting from Zervos and Grosz-Salomon).

In yet another ruling, Fleet v. Independent Credit Union, No. 1:04-cv-00507-DFH-TAB, 2005 U.S.Dist.LEXIS 11778 (S.D.Ind. 5/18/05), the court characterized a remand when the insurer improperly denied benefit payments as a ''mulligan'' and explained, ''If the procedure were to become routine, it would pose a serious risk of simply allowing 'mulligans' to sloppy plan administrators — at the expense of both the courts and plan participants and beneficiaries.''

Indeed, the whole notion of remanding ERISA benefits claims after the parties have fully exhausted pre-suit appeals and the record is complete is contrary to the doctrine that federal courts are not to issue advisory opinions and creates confusion with administrative law claims where there is specific statutory grounds for remands that are absent from the ERISA statute.

According to Preiser v. Newkirk, 422 U.S. 395, 401-402, 95 S.Ct. 2330, 45 L.Ed.2d 272 (1975), ''the exercise of judicial power under Art. III of the Constitution depends on the existence of a case or controversy. As the Court noted in North Carolina v. Rice, 404 U.S. 244, 246 (1971), a federal court has neither the power to render advisory opinions nor ''to decide questions that cannot affect the rights of litigants in the case before them.'' Its judgments must resolve '' 'a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.' '' (citations omitted).

Finally, the 7th Circuit's observation in Dabertin v. HCR Manor Care Inc., 373 F.3d 822, 832 (7th Cir. 2004) is relevant:

''The defendants state that it is 'quite likely that the Committee could consider additional evidence that would produce a reasonable conclusion permitting denial of Ms. Dabertin's claim,' yet they fail to inform the court what that evidence might be or why the Committee did not consider it in the first place. It would be a terribly unfair and inefficient use of judicial resources to continue remanding a case to the Committee to dig up new evidence until it found just the right support for its decision to deny an employee her benefits. See Vega, 188 F.3d at 302 n. 13 (parties must make their full records before coming to the federal courts as 'allowing the case to oscillate between the courts and the administrative process prolongs a relatively small matter that, in the interest of both parties, should be quickly decided.').''

Had such principles been applied, Rekstad would have received her benefits instead of having to undergo what might prove to be yet another round of litigation.