A recent decision by the 6th U.S. Circuit Court of Appeals presented a checklist of issues that were found to have demonstrated arbitrary and capricious conduct in the denial of disability benefits.

The case of Shaw v. AT&T Umbrella Plan No. 1, 2015 WL 4548232 (6th Cir. July 29), involved Raymond Shaw, a 39-year-old customer service representative for AT&T who sought disability benefits on account of chronic neck pain from a herniated disk that prevented him from working.

Although Sedgwick Claims Management Services Inc., which administers both AT&T’s short- and long-term disability benefit programs, approved Shaw’s short-term disability claim, it denied his claim for long-term benefits.

Sedgwick’s denial came after a “job accommodation specialist” performed a transferrable skills assessment that identified three sedentary occupations that Shaw could ostensibly perform: information clerk, telephone solicitor and customer service representative. Although Shaw submitted his own vocational report, along with medical records and reports, and proof of an award of Social Security disability benefits, Sedgwick upheld the denial based on file reviews performed by a neurosurgeon and a physiatrist.

The district court agreed with Sedgwick’s determination, but the appeals court reversed. Although the court applied a deferential standard of judicial review, the court made it clear that an arbitrary and capricious review is “not a rubber stamp.”

The court identified four separate bases for determining that Sedgwick’s decision was arbitrary and capricious: Sedgwick ignored favorable evidence the plaintiff submitted, selectively reviewed the evidence, failed to have Shaw examined, and heavily relied on non-treating physicians.

The court was initially troubled by Sedgwick’s disregard of the evidence presented and its misrepresentation that the plaintiff failed to supply measurements of range of motion or motor strength, when in fact such evidence was provided. The court also found an absence of any evidence that contradicted the functional capacity evaluations presented by the plaintiff. Instead, Sedgwick simply ignored the evidence.

The court was also disturbed about the disingenuous manner in which Sedgwick’s doctors claimed the treating doctors were uncooperative by failing to respond to their calls. The court found the consultants’ demands for responses within 24 hours presented an “unreasonable deadline.”

The court recognized that busy physicians “cannot always return calls immediately”; thus, the “cursory manner” in which the consultants attempted to reach the treating doctors demonstrated arbitrary and capricious conduct, citing a prior ruling, Cooper v. Life Insurance Company of North America, 486 F.3d 157, 168 (6th Cir. 2007), which determined, “We find that [the doctor’s] haste to complete his report in disregard of his explicit instructions to interview [the claimant’s] treating physicians was unreasonable, especially because he allowed so little time before he ‘pulled the trigger.'”

The court turned to Sedgwick’s selective review of the evidence. The court could not square the consulting neurosurgeon’s benign findings with his acknowledgment of positive results from a clinical test that demonstrated Shaw suffered from nerve compression.

And Sedgwick’s physiatrist, Dr. Jamie Lee Lewis, came in for even harsher criticism. Lewis had deemed Shaw non-compliant with treatment because he declined to undergo fusion surgery after being informed of the risks of the procedure and advised that he could first attempt to undergo more conservative treatment.

The court found that Shaw’s choice to try conservative treatment first did not constitute a lack of compliance with treatment. Nor did the plan require that Shaw undergo surgery as a condition of eligibility to receive benefits.

The court further observed that Lewis’ opinions had been questioned in numerous cited cases in which Sedgwick had hired him. The court’s skepticism concerning Lewis was also based on the Supreme Court’s concern that “physicians repeatedly retained by benefits plans may have an incentive to make a finding of ‘not disabled’ in order to save their employers money and to preserve their own consulting arrangements.” (Citing Black & Decker v. Nord, 538 U.S. 822, 832 (2003).)

The 6th Circuit also questioned why Sedgwick failed to obtain an independent examination, which the plan gave it the right to compel. The court found that failure “especially troubling because the plan’s physician advisors ‘second-guess[ed] [Shaw’s] treating physicians’ and made ‘credibility determinations.'” (Citing Judge v. Metropolitan Life Insurance Co., 710 F.3d 651, 663 (6th Cir. 2013).)

The court also cited an 11th Circuit case: “There is, quite simply, no laboratory [ ] test to diagnose chronic pain syndrome. … Chronic pain syndrome is a severely debilitating medical condition that may be fully diagnosed only through long-term clinical observation.” Lee v. BellSouth Telecommunications Inc., 318 F.App’x 829, 837 (11th Cir. 2009).

Thus, the 6th Circuit concluded, “Because chronic pain is not easily subject to objective verification, the plan’s decision to conduct only a file review supports a finding that the decision-making was arbitrary and capricious.”

After finding the plan acted arbitrarily, the court ordered AT&T to pay benefits, rather than remanding the matter. The court said sending the case back would be a “useless formality” since the objective evidence presented clearly demonstrated Shaw’s disability.

There was a short dissent by Judge Raymond Kethledge, who found AT&T’s decision reasonable.

This ruling presents a blueprint for plaintiffs on how to challenge a benefit denial in a case such as this. The court identified several key areas in which Sedgwick’s review was deficient: ignoring evidence, selectively considering evidence, relying on file reviews, and failing to obtain an independent examination.

In addition to the points listed, the court did not even discuss two other issues that it mentioned: the disregard of the Social Security determination and ignoring the vocational assessment that Shaw presented. The court also presented a persuasive rationale for eschewing a remand.

This decision should give employers that regularly utilize Sedgwick to administer claims, such as AT&T and Walgreen Co., serious concern about continuing to use that organization as their claim administrator. And given the court’s treatment of Lewis and its suggestion of outright bias, his future as a file reviewer is in doubt.

This article was initially published in the Chicago Daily Law Bulletin.

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