A recently issued decision from the U.S. Court of Appeals for the Eighth Circuit in McIntyre v. Reliance Standard Life Insurance Co., which was the second ruling on the same case, illustrates how difficult it can be for Employee Retirement Income Security Act governed disability benefit claimants to qualify for benefits when a court applies a deferential standard of judicial review.
Although Melissa McIntyre, a former Mayo Clinic nurse, was twice successful in convincing the U.S. District Court for the District of Minnesota that she was entitled to benefits due to Charcot-Marie-Tooth disease, a degenerative neurological impairment, the court of appeals overturned both rulings.
The first appellate decision in McIntyre v. Reliance Standard Life Insurance Co.[1] resulted in a remand, in which the plaintiff prevailed; however, the most recent ruling ended the litigation in Reliance Standard’s favor.[2]
Both rulings raise concerns about whether benefit dispute cases adjudicated under ERISA[3] are meeting the law’s intended goal of protecting employees’ income security.[4]
Briefly recapping the facts, McIntyre’s condition caused her to experience balance issues, weakness and fatigue. However, Reliance Standard determined that McIntyre had the capacity to work and terminated her benefit payments based on social media posts relating to her hobby of breeding and showing dogs, and on surveillance that showed her performing various activities.
Reliance also required McIntyre to be examined by a doctor of its choosing, and although the examination validated her symptoms, the examiner maintained she could work on a fulltime basis so long as the work did not involve tasks that required balance.
McIntyre challenged the benefit termination but was unsuccessful. However, the denial of her prelitigation appeal was issued well after the time permitted by the ERISA regulations, even with permitted tolling of the appeal time while the insurer seeks additional medical records.[5]
The district court initially found that the tardy decision required the application of the de novo standard of judicial review, which led to a ruling in McIntyre’s favor. The court of appeals reversed and remanded, however.
On remand, the district court again found for McIntyre after concluding that Reliance Standard acted under a conflict of interest which tainted the outcome of the appeal, and because the evidence relating to the plaintiff’s CMT disease supported a conclusion that McIntyre could not work on a full-time basis due to pain, fatigue and her inability to perform any task for more than 30 minutes.
The court of appeals reversed the district court a second time.
The court concluded that Reliance Standard’s decision was supported by substantial evidence based on McIntyre’s ability to perform household tasks and chores and her dog breeding activities, as well as the examination findings.
The court also found the delay in deciding the appeal did not support a conclusion that the ultimate decision “was unfair or biased against McIntyre.”
One of the judges on the appellate panel, U.S. Circuit Judge Michael J. Melloy, dissented on several grounds. First, Judge Melloy maintained that the delay in issuing a decision on the claim appeal was a procedural irregularity that should have been considered in the court’s abuse-of-discretion analysis.
The dissent also expressed concern that Reliance Standard’s excuses for the delay were inappropriate and suggested, “Reliance showed either a misunderstanding of the rules or a blatant disregard of the rules in failing to give proper notices and adhere to clear time limitations.”
Judge Melloy also challenged the panel’s substantial-evidence finding based on McIntyre’s fatigue and her need for frequent breaks, as well as her inability to perform tasks for more than 30 minutes at a time. Nor was Judge Melloy persuaded that the surveillance evidence could support a conclusion that McIntyre could perform a full-time job.
The dissent also criticized the findings made by the doctor hired to examine McIntyre, concluding that the examiner’s findings relating to her lower extremity weakness, sensory loss and medication side effects were inconsistent with sedentary employment.
There is much that is troubling in this opinion, especially when viewed within the framework of ERISA’s fiduciary requirements.
In Metropolitan Life Insurance Co. v. Glenn,[6] the U.S. Supreme Court held in 2008 that ERISA imposes a fiduciary obligation on insurers adjudicating benefit claims that mandates them to apply “higher-than-marketplace quality standards.”[7] Those standards include strict compliance with ERISA deadlines.
The ERISA regulations themselves state that noncompliance with the regulations deprives claimants of their statutory right to a full and fair review.[8]
Thus, the Eighth Circuit’s ruling upholding the application of a deferential standard of review conflicts with rulings issued by other federal circuit courts that have found the issuance of a tardy decision requires application of the de novo standard of court review, irrespective of the benefit plan’s discretion-granting language.[9]
The McIntyre ruling is also in conflict with views expressed by other courts as to the meaning of what constitutes substantial evidence.
The U.S. Court of Appeals for the Fifth Circuit’s 2021 opinion in Michael J.P. v. Blue Cross and Blue Shield of Texas pointed out that in accordance with the Supreme Court’s 1951 ruling in Universal Camera Corp. v. National Labor Relations Board,[10] substantial evidence in the ERISA context does not permit a claim denial merely because there is some evidence supporting such a conclusion.
Instead, the claim determination must be consistent with the plan terms and the record as a whole.[11]
In this case, the plaintiff suffered from a degenerative neurological condition that was steadily worsening, and he had been approved to receive benefits for more than four years, which raises skepticism about whether the denial was warranted.
Further, the conclusion reached by Reliance Standard was based in significant part on surveillance and social media postings. Yet there was no proof whatsoever that McIntyre’s dog breeding hobby was indicative of full-time work capacity. Nor did the surveillance show the plaintiff’s ability to work eight hours a day, five days a week.
In view of the medical findings relating to McIntyre’s muscle weakness, fatigue, poor balance and an inability to focus on a task for more than 30 minutes, it is self-evident that her off-task time would render her unemployable. Court rulings have recognized that being off-task for more than 10% of the workday would be incompatible with the demands of fulltime work.[12]
Relatedly, courts have found that a disability claimant “would be unemployable … if he required unscheduled breaks longer than one to two minutes,” as the U.S. Court of Appeals for the Seventh Circuit articulated in its 2020 Reinaas v. Saul decision.[13] Thus, the dangers of overreliance on surveillance and social media are apparent.
While no one would disagree that claimants who lack evidentiary support for their benefit claim should not receive benefits, McIntyre was hardly undeserving due to the undisputed severity of her diagnosis and resulting symptoms.
However, Reliance Standard failed to connect the dots and was bailed out by the court of appeals’ application of a standard of judicial review that proved unfair to claimants such as McIntyre.
Absent abrogation of deferential review of ERISA benefit disputes, there should be a judicial reassessment of the substantial-evidence standard so that it is applied in a manner that is consistent with the intended purpose of the benefit plan, which is to provide financial security for those who are unable to work due to illness or injury.
Mark DeBofsky is a shareholder at DeBofsky Law Ltd.
This article was first published by Law 360 on July 28,2023.
[1] McIntyre v. Reliance Standard Life Insurance Company, 972 F.3d 955 (8th Cir. 2020) was the subject of a prior Law360 article that I authored – “ERISA Ruling Shows Daunting Review Standard for Claimants,” Law360 (September 9, 2020).
[2] 2023 U.S. App. LEXIS 18556, 2023 WL 4673615 (8th Cir. July 21, 2023).
[3] 29 U.S.C. § 1001 ,et seq.
[4] See, 29 U.S.C. § 1001(b) (setting forth Congress’ intent in enacting ERISA).
[5] 29 C.F.R. § 2560.503-1(i).
[6] Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008).
[7] 554 U.S. at 115.
[8] 29 U.S.C. § 1133; 29 C.F.R. § 2560.503-1(h).
[9] See, e.g., Fessenden v. Reliance Standard Life Ins. Co., 927 F.3d 998 (7th Cir. 2019); Halo v. Yale Health Plan, 819 F.3d 42 (2nd Cir. 2016).
[10] Universal Camera v. N.L.R.B., 340 U.S. 474 (1951). Universal Camera was also extensively cited by the Supreme Court in Glenn, supra. n. 4.
[11] See, DeBofsky, “5th Circ. Opinion is Right to Question ERISA Review Norms,” Law360 (October 5, 2021) (discussing 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 (unpublished).
[12] See, DeCamp v. Berryhill, 916 F.3d 671 (7th Cir. 2019).
[13] Reinaas v. Saul, 953 F.3d 461, 464–65 (7th Cir. 2020).
