Lasser v. Reliance

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Lasser v. Reliance Standard Life Insur.Co., 2003 U.S.App.LEXIS 19345 (3d Cir. 9/18/03)( Issues: Job versus Occupation; Risk of Disability; Working While Disabled) This case marks a complete circle for the Disability E-News Alert!  Our very first issue, in September 2001, reported on the district court decision finding for the plaintiff ( Lasser v. Reliance Standard, 146 F. Supp. 2d 619 (D.N.J. 2001)), which the Third Circuit affirmed in this ruling.  For those of you who have been with us for the beginning, a factual recitation is unnecessary, but for the rest of you, in brief, this case involves an orthopedic surgeon who suffers from coronary artery disease.  Despite undergoing coronary artery bypass surgery in 1986, when Dr. Lasser was 46, he suffered a heart attack ten years later.  Thereafter, his treating cardiologist prescribed a reduction in work related stress; and acting in accordance with medical advice, Dr. Lasser reduced his patient load by 50%.  Although Reliance Standard approved the claim and began paying benefits, after a little more than one year, Reliance terminated the claim after evaluating Dr. Lasser’s general occupation as physician, and finding that he could return to those duties.  In addition, after the benefit termination, Dr. Lasser was forced, for economic reasons, to return to work on a full-time schedule, including being “on call” for emergency surgical duties, thus leading Reliance to reaffirm its determination.

In the district court, Judge Alfred Wolin wrote a scholarly opinion finding in Dr. Lasser’s behalf on all issues; and that ruling was affirmed.  In the Court of Appeals, the court first found that Reliance Standard operated under a conflict of interest, which required diminution of the arbitrary and capricious standard of review.  As to the merits, the court first examined Dr. Lasser’s regular occupation, since the policy affords benefits if the insured is unable to perform his material job duties (the court analyzed the case as a residual disability claim since Dr. Lasser had not ceased working altogether).  In analyzing “regular occupation,” the court found the term was not ambiguous and constituted “the usual work that the insured is actually performing immediately before the onset of disability. Applying the text as written, Dr. Lasser's regular occupation was as an orthopedic surgeon responsible for emergency surgery and on-call duties in a relatively small practice group and within a reasonable travel distance from his home in New Jersey.” *9.  Even if the term were ambiguous, the court held that under an arbitrary and capricious standard of review, the insurer’s interpretation of the definition of “regular occupation” would still need to be reasonable.  Citing O'Bryhim v. Reliance Standard Life Ins. Co., 188 F.3d 502 (Table), 1999 WL 617891 (4th Cir. 1999) (unpublished per curiam), Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 253 (2d Cir. 1999), and Dawes v. First Unum Life Insurance Co., 851 F. Supp. 118, 122 (S.D.N.Y. 1994), the court ruled that regular occupation must apply some consideration of the actual duties performed by the insured prior to the onset of disability.

Therefore, in evaluating Dr. Lasser’s capability of engaging in his “regular occupation,” the question becomes whether he could perform the duties of surgery, taking “call,” and performing emergency surgery.  In evaluating the district court’s finding that all of those duties were material, a comparison of Dr. Lasser’s pre-disability and post-disability earnings, which show a decline of over 50%, supports the contention that Dr. Lasser was unable to perform material duties of his regular occupation.  In its evaluation, Reliance Standard commissioned a labor market survey as to whether one could be an orthopedic surgeon without “on-call” duties or performance of emergency surgeries.  The survey was sent to 100 orthopedic surgeons, but only nine surveys were returned.  Based on the responses received, the Third Circuit agreed with the district court that surgery and on-call duties are material job functions.

Turning, then, to whether Dr. Lasser’s condition precluded him from performing those duties, Reliance argued that its examiner found no cardiac abnormalities during treadmill testing.  Other examiners retained by Reliance after the benefit termination supported disability, though.  One of the physicians clearly opined that stress was a risk factor that could precipitate another heart attack and sudden death or cause failure of a bypass graft.  Because it turned out that the reporting physician practiced with a medical group from whom Dr. Lasser had sought an evaluation, which biased his findings, another independent examiner concurred that stress was a risk factor and that on-call and emergency surgical duties should be restricted.  The plaintiff’s own treating doctor, as well as two other doctors consulted by Lasser, concurred that stress presented a risk of adverse medical complications.  The court explained the significance of these findings:

Thus, all evaluating physicians -- with the exception of Dr. Burke, whose report the others discredited -- agreed that Dr. Lasser's heart condition precludes him from safely performing on-call duties and emergency surgery. Reliance's conclusion to the contrary thus is arbitrary and capricious. To the extent that Reliance's determination of non-disability was that "it was unreasonable . . . to expect Reliance . . . to simply accept the opinion   [that stress would exacerbate Dr. Lasser's condition] without any range of the probability or actual proof that Dr. Lasser was at increased harm," we believe its determination was faulty. **24-*25.

The court next turned to Lasser’s burden of proof and found that while the plaintiff ultimately has the burden of proving disability, “to require him to provide statistics detailing the harm that working in his regular occupation might precipitate – as the dissent would require – raises the bar too high.” *25.  In an interesting footnote, the court explained the entire issue of “risk of disability”:

The dissent states that the risk that stress will cause future injury is insufficient to constitute a present disability. However, whether risk of future effects creates a present disability depends on the probability of the future risk's occurrence. While Lasser's doctors have not precisely quantified the risk in his case, their reports suggest that the risk is high. While of course stress does not necessarily incapacitate an individual (note, for example, Vice President Cheney), in Lasser's case his doctors have opined that stress is incapacitating. *25 n.12.

Nor was Dr. Lasser disqualified from receiving benefits due to a resumption of his duties following the termination of benefits.  First, Dr. Lasser argued that he has not resumed performance of those duties at the same level of frequency.  However, even if he had, because his doctors advised against performing on-call and emergency surgical duties, he is doing so to his detriment.  The court explained:

A claimant's return to work is not dispositive of his or her disability when economic necessity compels him or her to return to work. Hawkins v. First Union Corp. Long-Term Disability Plan, 326 F.3d 914, 918 (7th Cir. 2003) ("A desperate person might force himself to work despite an illness that everyone agreed was totally disabling."); Levinson v. Reliance Standard Ins. Co., 245 F.3d 1321, 1326 n.6 (11th Cir. 2001) (a claimant's status as a full-time employee should not constitute reliable evidence that he is able to perform the material duties of his occupation on a full-time basis); Stark v. Weinberger, 497 F.2d 1092 (7th Cir. 1974) (even if a claimant returns to work, her doing so does not mean she is not disabled). This principle is especially persuasive here, where Dr. Lasser's disability was not observable and did not make it physically impossible for him to perform his job for a limited period. **26-27.

Accordingly, the district court was affirmed, although a dissent was written by Judge Garth, who criticized the majority for upholding a decision using a Kearney type “paper” trial, which has not been approved by the Third Circuit.  The dissent was also critical of the majority’s findings on every issue in the case—from its determination of material job duties of an orthopedic surgeon to its risk of disability determination, and ultimately, on the question of whether disability benefits are payable when the insured returns to work.

Discussion:      This is an interesting decision because it squarely lays out the debate on the issues presented.  Both the majority and the dissent marshaled supporting authority on all three major issues presented: 1) what are the material job duties of a person’s occupation; 2) is the risk of disability a present disability; and 3) can an individual still qualify to receive benefits if they return to work.  The procedural issues in this case are also fascinating; and the dissent is correct in pointing out that the Third Circuit appears to have accepted the notion of a paper trial to resolve disputed issues of fact, although it can also be pointed out, using the language of the majority opinion, that Reliance Standard’s position on each of the three major issues was arbitrary and capricious.  The evidence was overwhelming that if “on-call” and emergency surgery was removed from the occupation of “orthopedic surgeon,” it would be a different occupation.  The evidence was also overwhelming that Dr. Lasser was at substantial risk, albeit not a quantifiable risk, of serious complications due to a return to work.  Finally, on the last issue, the Third Circuit may have saved Dr. Lasser’s life – one should not have to risk death out of economic necessity.  It fascinates us that the majority opinion represents the viewpoint of the majority of rulings on these issues, and that the dissent expresses the views of the minority of rulings on the issues presented.  Obviously, there is room for disagreement, although it is unfortunate that the outcome of these cases can depend on the peculiar facts presented and the predilections of the judges hearing these cases.

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