Disability benefit cases governed by the Employee Retirement Income Security Act are not only about whether someone qualifies for benefits, but often involve benefit terminations.

While many courts have confronted that situation, the guidelines for assessing ongoing disability benefit claims have varied, especially under a deferential standard of judicial review.

A Dec. 27, 2021, ruling from the U.S. Court of Appeals for the Eighth Circuit, however, has established a road map for future courts that conduct continuing disability reviews.

The recently decided case of Roehr v. Sun Life Assurance Co. of Canada,[1] involved an Iowa anesthesiologist, Todd Roehr, who developed intermittent tremors in his hands and fingers in 2006.

Although Dr. Roehr had a family history of Parkinson’s disease, he never received a definitive diagnosis as to the cause of his tremors. Nonetheless, the plaintiff’s disability insurer, Sun Life, acknowledged Dr. Roehr’s disability and paid him benefits for nearly 10 years before deciding in late 2017 that he was fit to return to work.

Dr. Roehr challenged the benefit denial, but Sun Life denied his appeal, and he lost in the U.S. District Court for the Southern District of Iowa as well. However, the Eighth Circuit overturned the lower court ruling and ordered Dr. Roehr’s benefits reinstated.

Although the court applied a deferential standard of review, it determined there was an abuse of discretion since benefits were terminated in the absence of evidence that Dr. Roehr’s condition had improved.

The court relied heavily on the 2002 Eighth Circuit ruling in McOsker v. Paul Revere Life Insurance Co.,[2] which found that while a disability insurer is not barred from changing its mind after initially approving benefit payments, “unless information available to an insurer alters in some significant way, the previous payment of benefits is a circumstance” to be considered when evaluating the propriety of the benefit termination.

Although Sun Life argued its decision was supported by (1) the absence of a specific diagnosis, (2) temporary improvement, and (3) the insured’s failure to undergo a recommended psychological evaluation to determine whether the tremors were psychogenic, the court determined that none of those reasons were adequate — especially since the doctors hired by Sun Life suggested further evaluation by a neurologist specializing in movement disorders.

The court was troubled by Sun Life’s willingness to accept Dr. Roehr’s evidence for nearly 10 years before doing an abrupt about face without any indication of a material change in the claimant’s medical condition. The court concluded that “a plan administrator’s reliance on the same evidence to both find a disability and later discredit that disability does not amount to a reliance on ‘substantial evidence.'”

Instead, the court viewed Sun Life’s actions as “nothing more than a sudden change of heart on essentially the same record after almost a decade — and with no notice to Roehr prior to his benefits’ termination.” The court thus held that in the absence of substantial evidence supporting Sun Life’s determination, Dr. Roehr was entitled to reinstatement of his benefits.

There are a number of valuable lessons taught by this ruling.

Before addressing the main issue regarding the continuing disability review, it should be noted that one of the court’s critical findings stems from comments about Sun Life’s failure to follow up on its consultant’s recommendation that Dr. Roehr should be evaluated by a neurologist specializing in movement disorders.

Not only is the U.S. Supreme Court’s 2008 admonition in Metropolitan Life Insurance Co. v. Glenn[3] — that insurers need to apply “higher-than-marketplace quality standards” in assessing disability claims — relevant, but in Gaither v. Aetna Life Insurance Co. in 2004,[4] the U.S. Court of Appeals for the Tenth Circuit made the point even more directly when it found:

[F]iduciaries cannot shut their eyes to readily available information when the evidence in the record suggests that the information might confirm the beneficiary’s theory of entitlement and when they have little or no evidence in the record to refute that theory …. [citations omitted].

Thus, the failure to obtain the type of review that its consultant recommended was viewed by the court as a serious deficiency.

The second point that deserves mention is that the court applied a substantial evidence review that was more in line with what U.S. Circuit Judge Andrew Oldham from the U.S. Court of Appeals for the Fifth Circuit described in Michael JP v. Blue Cross and Blue Shield of Texas in September 2021[5] as the proper means of evaluating ERISA claims under a deferential review standard.

Rather than searching the record for some evidence to support a claim denial, Judge Oldham opined that the Supreme Court’s ruling in 1951 in Universal Camera Corp. v. NLRB,[6] dictated that the proper application of the substantial evidence standard necessitated a holistic assessment requiring “serious consideration [be given] to ‘the record as a whole,’ ‘taking into account contradictory evidence or evidence from which conflicting inferences could be drawn.”

That is precisely what the Eighth Circuit did in this case.

The most significant point made by the court, though, was its determination that after approving Dr. Roehr’s claim and paying benefits for nearly 10 years without interruption, Sun Life needed to offer more of an explanation than a change of mind in order to justifiably terminate benefit payments. The Eighth Circuit is not the first court to express such a conclusion. Other major decisions issued by other courts of appeals that have addressed similar circumstances have come to comparable conclusions.

For example, the U.S. Court of Appeals for the Third Circuit in 2010 in Miller v. American Airlines, Inc.,[7] when faced with a similar circumstance overturned a disability benefit termination, finding the absence of new information justifying the insurer’s change in position was “an irregularity that counsels towards finding an abuse of discretion.”

The U.S. Court of Appeals for the Seventh Circuit was more dubious of drawing a conclusion
that a benefit termination after a claim had been paid for a significant amount of time was arbitrary. However, in 2009 in Leger v. Tribune Company Long Term Disability Benefit Plan[8] the court observed that a disability benefit termination was arbitrary and capricious due to a failure to consider the “voluminous medical record” documenting ongoing disability subsequent to the initial benefit approval.

Finally, the U.S. Court of Appeals for the Ninth Circuit in 2008 in Saffon v. Wells Fargo & Co. Long Term Disability Plan,[9] reinstated a claimant’s benefits because the condition for which benefits had initially been approved was chronic and degenerative; and while further degeneration was not necessary for benefits to continue, the court remarked, “one would expect the MRIs to show an improvement, not a lack of degeneration” before benefits could justifiably be terminated.

Thus, the biggest lesson to draw from the Roehr decision is that while an initial approval of benefits is not a guarantee of ongoing payment, insurers need to tread carefully when they terminate benefits in the absence of new findings that either cast doubt upon or alter the initial decision to approve the payment of disability benefits.

Mark DeBofsky is a shareholder at DeBofsky Law.

This article was first published by Law 360 on January 7,2022.

[1] Roehr v. Sun Life Assur. Co. of Canada , 2021 U.S. App. LEXIS 38130, 2021 WL 6109959 (8th Cir. December 27, 2021).

[2] McOsker v. Paul Revere Life Ins. Co. , 279 F.3d 586, 589 (8th Cir. 2002).

[3] Metro. Life Ins. Co. v. Glenn , 554 U.S. 105, 115 (2008).

[4] Gaither v. Aetna Life Ins. Co. , 394 F.3d 792, 807-808 (10th Cir. 2004).

[5] Michael J. P. v. Blue Cross and Blue Shield of Texas , 2021 U.S. App. LEXIS 28704, 2021 WL 4314316 (5th Cir. September 22, 2021) (non-precedential).

[6] Universal Camera Corp. v. NLRB , 340 U.S. 474, 487, 490, 71 S. Ct. 456, 95 L. Ed. 456 (1951). [7] Miller v. American Airlines, Inc. , 632 F.3d 837, 848 (3d Cir. 2011).

[8] Leger v. Tribune Company Long Term Disability Benefit Plan , 557 F.3d 823, 833 (7th Cir. 2009).

[9] Saffon v. Wells Fargo & Co. Long Term Disability Plan , 522 F.3d 863, 872 (9th Cir. 2008).

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