Courts are often stymied by how to conclude Employee Retirement Income Security Act benefit claim litigation, but not U.S. District Judge Fernando Olguin of the U.S. District Court for the Central District of California. In Tam v. First Unum Life Insurance Co. on Sept. 30, the court decisively ruled for the plaintiff, Sandra Tam, in her claim for ERISA-based disability benefits.
Tam had to stop working as a system engineer for a bank in June 2017 on account of chronic fatigue syndrome and related illnesses. After Tam stopped working, she applied for disability benefits under her employer’s short-term disability plan and was approved after undergoing a psychiatric evaluation with a psychiatrist chosen by the plan administrator, who diagnosed major depression “secondary to enterovirus infection unspecified and chronic fatigue syndrome.” The examiner attributed the psychiatric condition to chronic physical illness.
When the short-term disability benefits expired, Tam applied for long-term disability benefits. However, her application was denied following a review of her records by two Unum in-house physicians who lacked experience in treating the plaintiff’s illnesses. A Unum psychiatrist also reviewed Tam’s file, but he offered no comment on her physical illness and found no psychiatric illness present.
Tam appealed the Unum denial and submitted additional evidence that included a cardiopulmonary exercise test report confirming her markedly impaired lack of energy and stamina, a neuropsychological evaluation that supported significant cognitive impairments, and firsthand witness testimonials.
Concurrent with her application for benefits from Unum, Tam also applied for Social Security disability benefits, which were approved during the course of the court proceedings relating to her disability insurance claim. Although the specific rationale for the Social Security approval was not provided, Tam supplied a declaration stating that the Social Security Administration reviewed the same evidence she had submitted to Unum.
The court applied the de novo standard of review and followed the U.S. Court of Appeals for the Ninth Circuit’s leading case on chronic fatigue syndrome, Salomaa v. Honda Long Term Disability Plan, in concluding that Tam was disabled.
The court examined Tam’s regular occupation as a software engineer and noted the significant cognitive demands of that occupation, which the evidence established she could not perform. Corroborating her work restrictions, the court was also impressed by evidence establishing that Tam was also unable to take care of her children and household without assistance, since performing even basic activities triggered extreme fatigue.
Ultimately, the court concluded:
Unum erred in relying on the opinions of five doctors who did not examine [the] plaintiff and had no experience or a specialization in the area of [myalgic encephalomyelitis/chronic fatigue syndrome] or infectious disease over the opinions of the doctors who examined [the] plaintiff.
The court also found that “in-person evaluations and observations are more persuasive than the paper review conducted by Unum’s five doctors.” Additionally, the court was persuaded by the cardiopulmonary exercise test findings and neuropsychological test results; and by the Social Security Administration’s award of disability benefits.
After finding Tam disabled, the court addressed the remedy it would award the plaintiff and rejected Unum’s request for a remand to assess Tam’s disability beyond the initial 24-month benefit period. For the first 24 months, Tam was required to prove her inability to perform her regular occupational duties, but after 24 months, Tam needed to prove her inability to engage in any occupation in order to continue receiving benefits.
Unum maintained it should be allowed to have the first crack at addressing that issue, but the court overruled Unum’s objection, explaining:
[I]n denying benefits and determining that Tam could perform her regular occupation, Unum necessarily determined that she could do other, less demanding jobs. As the Ninth Circuit stated in the Social Security context, “[a]llowing [Unum] to decide the issue again would create an unfair ‘heads we win; tails, let’s play again’ system of disability benefits adjudication.” [The] [p]laintiff has already waited approximately three years for a disability determination. “Remanding a disability claim for further proceedings can delay much needed income for claimants who are unable to work and are entitled to benefits, often subjecting them to tremendous financial difficulties while awaiting the outcome of their appeals and proceedings on remand.” In light of the severity of [the] plaintiff’s medical condition as reflected in the record, the court is convinced that [the] plaintiff is unable to perform the duties of any gainful occupation.
The court thus ordered Unum to pay benefits through the date of the court’s ruling.
The court plainly found Tam’s evidence persuasive and viewed Unum’s adjudication process as inadequate and lacking in “higher-than-marketplace quality standards” as the U.S. Supreme Court, in Metropolitan Life Insurance Co. v. Glenn in 2008, directed benefit claim adjudicators to utilize. The biggest takeaway from this ruling, though, was the court’s refusal to remand the case to Unum. Most courts would have chosen to remand the matter to the insurance company rather than awarding benefits outright. But why?
ERISA authorizes claimants to bring a civil action to recover benefits claimed under employee benefit plans, but the statute says nothing about remands. In 2014, the U.S. Court of Appeals for the Second Circuit ruled in Mead v. Reliastar Life Insurance Co. that remand orders issued in ERISA benefit cases are nonfinal orders and therefore nonappealable; and recognized that remand orders are problematic.
Unlike court reviews of Social Security benefit denials conducted pursuant to Title 42 of the U.S. Code, Section 405(g), Mead pointed out that the ERISA law “does not contain any provisions governing remands to plan administrators once those actions have been initiated, nor does it explain how judicial review of determinations made on remand is to occur” — comparing ERISA and Social Security court proceedings and pointing out that the Social Security statute grants district courts power to remand claims to the agency.
Despite Mead’s concern about the basis of ERISA remands, the practice of remanding ERISA benefit cases persists due to courts’ misapplication of an administrative law analogy to the adjudication of ERISA benefit disputes. ERISA cases are not administrative law proceedings, though. They are civil actions; and under Article III of the U.S. Constitution, federal courts are prohibited from issuing advisory judicial opinions and mandated to issue final judgments of conclusive character.
The constitutional requirement that federal court judgments resolve all of the issues presented in an insurance dispute was addressed by the Supreme Court in Aetna Life Insurance Co. v. Haworth in 1937, a declaratory judgment action involving disability insurance benefits.
The court concluded that a declaratory judgment resolving a dispute over entitlement to benefits satisfied the finality rule because it resulted in an “immediate and definitive determination of the legal rights of the parties in an adversary proceeding upon the facts alleged,” even in the absence of a monetary judgment. In contrast, a remand of an ERISA benefit dispute without deciding all of the issues presented fails to meet those constitutional requirements.
Although federal judges may be uncomfortable resolving ERISA cases that involve complex medical or disability issues, that is what courts do every day. Courts regularly hold trials and issue judgments in complex cases such as medical malpractice and personal injury cases that involve medical judgments.
Moreover, unlike administrative agencies that possess specialized expertise or utilize independent administrative law judges as fact finders, as the U.S. Court of Appeals for the Third Circuit’s 1991 opinion in Luby v. Teamsters Health, Welfare and Pension Trust Funds teaches, ERISA plan administrators are usually laypersons who lack technical expertise. Moreover, as employees of the company that funds the benefit payments, they are completely lacking in independence.
Thus, unlike court remands to administrative agencies, when courts fail to issue final judgments awarding benefits and instead remand a case to a conflicted insurer that has been found to have acted improperly or even arbitrarily, the validity of the arguments against remand raised by Judge Olguin in Tam are apparent. Accordingly, the extrastatutory and likely unconstitutional practice of remanding ERISA benefit cases must be brought to an end.
Mark DeBofsky is a shareholder at DeBofsky Law.
This article was published in Law360 on October 20, 2020 https://www.law360.com/articles/1320721/disability-claim-ruling-correctly-discredits-erisa-remand
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
 2020 WL 5904804 (C.D. Cal. September 30, 2020).
 Chronic fatigue syndrome, also known as myalgic encephalomyelitis, is, according to the Centers for Disease Control, “a serious, long-term illness that affects many body systems.” See, “Myalgic Encephalomyelitis/Chronic Fatigue Syndrome” at https://www.cdc.gov/me-cfs/index.html.
 642 F.3d 666 (9th Cir. 2011).
 Citing Salomaa, 642 F.3d at 676 (finding medical opinions rendered following in-person examination more persuasive than contrary opinions from an administrator’s paper-only review).
 Benecke v. Barnhart , 379 F.3d 587, 595 (9th Cir. 2004).
 Benecke, 379 F.3d at 595 (internal quotation marks omitted).
 554 U.S. 105, 115 (2008).
 29 U.S.C. § 1132(a)(1)(B).
 768 F.3d 102 (2d Cir. 2014).
 Judicial review of Social Security benefit denials is pursuant to 42 U.S.C. § 405(g).
 768 F.3d at 112.
 300 U.S. 227 (1937).
 300 U.S. at 241.
 944 F.2d 1176, 1183 (3d Cir. 1991).
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