In deciding whether an insurer properly terminated the plaintiff’s benefits, the 6th U.S. Circuit Court of Appeals in Osborne v. Hartford Life & Accident Insur. Co., 2006 U.S.App.LEXIS 24640 (Oct. 3), first noted the issue turned on the meaning of the insured’s ”own occupation” as used in the policy. The plaintiff was the chairman and president of an insurance agency and administrative company that was a wholly owned subsidiary of the company that owns the Shoney’s restaurant chain. Bruce Osborne was a participant in the Shoney’s disability plan underwritten by Hartford.
In 1996, Osborne had a major heart attack and began receiving disability benefits. Those benefits continued until 2001 when Hartford concluded he was no longer disabled after an investigation showed that he golfed frequently and played cards at his country club for several hours at a time. Classifying his occupation under the Dictionary of Occupational Titles as ”President, Financial Institution,” a sedentary occupation, Hartford found that Osborne could perform such work.
Osborne appealed, and Hartford retained a cardiologist to review the file. The cardiologist concluded that Osborne was capable of performing sedentary work even though Osborne’s treating cardiologist certified Osborne’s continuing disability. Hartford upheld its determination, and Osborne then brought a suit in state court, which was removed to federal court based on ERISA preemption. The court upheld Hartford’s determination.
The main issue in the district court was whether Hartford’s use of the DOT adequately described Osborne’s occupation. The plaintiff maintained that Hartford had to look at his actual duties, including the extensive travel he had to engage in prior to the onset of disability. Applying a deferential standard of review, the district court found no abuse of discretion in Hartford’s determination. The Court of Appeals affirmed.
”We agree with the district court that Hartford’s use of the Dictionary to determine Osborne’s ‘own occupation” was not arbitrary and capricious, but on the contrary was ‘reasonable,’ ” the opinion stated. ”The word ‘occupation’ is sufficiently general and flexible to justify determining a particular employee’s ‘occupation’ in light of the position descriptions in the Dictionary rather than examining in detail the specific duties the employee performed. ‘Occupation’ is a more general term that seemingly refers to categories of work than narrower employment terms like ‘position,’ ‘job,’ or ‘work,’ which are more related to a particular employee’s individual duties. Although reasonable persons may disagree over the most appropriate methodology for determining a particular employee’s ‘occupation,’ we cannot say that Hartford transgressed the boundaries of its broad discretion under its insurance policy and the ERISA plan to make disability determinations. Gallagher v. Reliance Std. Life Ins. Co., 305 F.3d 264, 272 (4th Cir. 2002) (stating that use of a Dictionary job description is an acceptable reference when the description ‘involve[s] comparable duties’).”
Although the 6th Circuit could find no published Circuit decision supporting its conclusion, it cited Schmidlkofer v. Directory Distrib., Assocs., 107 Fed. Appx. 631, No. 03-5755, 2004 WL 192184 (6th Cir. Aug. 25, 2004), for the conclusion that ”[m]any courts have upheld a plan administrator’s interpretation of ‘regular occupation’ as meaning a general occupation rather than a particular position with a particular employer.”
Although that case involved a definition of disability that related to ”regular occupation,” while this case involved ”own occupation,” the court explained the ”relatively minor difference in language does not warrant a different result. The critical issue in both cases is whether the insurance company acted reasonably and rationally in relying on the Dictionary to determine the employee’s ‘occupation.’ ”
The plaintiff contended the policy language was ambiguous and should be construed against its drafter; however, the court found no ambiguity since the dispute was not over the policy terms but over the methodology Hartford used to determine Osborne’s occupation. The court also found no reason to believe that Hartford’s conflict as payor and administrator of benefits influenced its decision. Also, the court determined that Osborne’s argument presented for the first time in his reply brief that Hartford selected the wrong occupation from the DOT, and that the proper occupation should have been ”Sales Agent, Insurance,” came too late and was waived.
Judge R. Guy Cole Jr. filed a dissent. He first criticized the majority’s lenient review of Hartford’s findings by citing Moon v. Unum Provident Corp., 405 F.3d 373, 379 (6th Cir. 2005), which explained:
”[M]erely because our review must be deferential does not mean our review must also be inconsequential. While a benefits plan may vest discretion in the plan administrator, the federal courts do not sit in review of the administrator’s decisions only for the purpose of rubber-stamping those decisions…. Indeed, deferential review is not no review, and deference need not be abject.”
Turning then to the merits, the dissent asked whether ”it was reasonable for Hartford to fix the meaning of Osborne’s ‘own occupation’ by reference to the Dictionary definition for ‘President, Financial Institution,’ to the exclusion of Osborne’s actual job duties.” The dissent focused on the majority’s citation to the unpublished Schmidlkofer ruling and found that contrary to the majority’s conclusion, there is a difference between ”regular” and ”own” occupation:
”Whatever the meaning of ‘regular’ is, it is not synonymous with ‘own.’ Mizzell v. The Paul Revere Life Ins. Co., 118 F.Supp.2d 1016, 1021 (C.D. Cal. 2000) (commenting, while comparing a disability policy that spoke in terms of the claimant’s ‘regular occupation,’ with one that spoke in terms of the claimant’s ‘own occupation,’ that ‘[i]f anything, the phrase ‘regular’ seems more general in nature than ‘own’).Used as an adjective, as it is here, ‘own’ means ‘belonging to oneself or itself’; ‘used to specify an immediate or direct relationship.’ Webster’s Third New International Dictionary 1612 (1986). Construing the policy language according to its ‘plain meaning in an ordinary and popular sense’ then, ‘own occupation’ refers to Osbourne’s actual job duties. Williams v. Int’l Paper Co., 227 F.3d 706, 711 (6th Cir. 2000). If it was otherwise, if the policy language really meant the generic responsibilities associated with Osbourne’s occupation, there would have been no reason to include the word ‘own.’ The same meaning could have been accomplished by couching the definition of ‘total disability’ in terms of ‘your occupation,’ rather than ‘your own occupation.’ This Hartford did not do. As a result, it seems to me that we ought not render ‘own’ surplusage by reading it out of the policy language. See Union Inv. Co. v. Fid. & Deposit Co. of Md., 549 F.2d 1107, 1110 (6th Cir. 1977) (‘A contract will not be construed so as to reject any words as surplusage if they reasonably can be given meaning.’); see also Cunningham v. The Paul Revere Life Ins. Co., 235 F.Supp.2d 746, 756 (W.D. Mich. 2002) (interpreting ‘own occupation’ in a disability policy as referring to the claimant’s actual job duties rather than the general description contained in the Dictionary); Mizzell, 118 F. Supp. 2d at 1021-22.”
The dissent then criticized Hartford for failing to offer a ”reasoned explanation, based on the evidence, for relying on the Dictionary [of Occupational Titles].” The court noted that in initially reviewing the claim, Hartford asked for a specific job description from Osborne’s employer; and that document described frequent travel. Moreover, benefits were granted based on a record including that job description. Since Hartford makes no argument that the job description was ”inaccurate or insufficient to enable Hartford to understand the nature of Osborne’s responsibilities,” and because there was no dispute by Hartford in relation to the extensive travel requirements, Hartford abused its discretion. Moreover, the dissent found no evidence in the record that ”business travel is not in fact a typical feature of Osborne’s occupation as it is performed by other persons at comparable institutions.” The dissent relied on both Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 253 (2d Cir. 1999) (holding that the institution where the plaintiff was employed had to be considered in defining her ”regular occupation”) and Lasser v. Reliance Standard Life Insur. Co., 344 F.3d 381 (3d Cir. 2003) (concluding that survey evidence of other orthopedic surgeons showed that emergency surgery and being on-call were material aspects of the plaintiff’s occupation). Hence, the dissent found it could not ”conclude that Hartford’s reliance on the Dictionary was reasonable.”
The dissent appears to have the better argument. In addition to the two appellate rulings cited, Robinson v. Aetna Life Insur. Co., 443 F.3d 389 (5th Cir. 2006), concluded that a sales representative had to drive extensively and that the insurer had misused the DOT to characterize the job generically to exclude such a material duty of the insured’s occupation. Numerous lower court cases have also challenged the use of the DOT to mischaracterize the claimant’s occupation, and many of the decisions involved the travel requirements inherent in the insured’s job. One of the best written rulings was Ebert v. Reliance Standard Life Insurance Co., 171 F. Supp. 2d 726 (S.D. Ohio 2001). In addition, Shahpazian v. Reliance Standard Life Insur. Co., 2005 U.S.Dist.LEXIS 21462 (N.D.Ga. 9/27/2005), and Wirries v. Reliance Standard Insur. Co., 2005 U.S.Dist.LEXIS 22152 (D.Idaho 9/1/2005), are key rulings on this issue, along with Freling v. Reliance Standard Life Insur. Co., 315 F.Supp.2d 1277 (S.D.Fla. 2004) (ob/gyn found disabled because unable to perform the two material duties of his occupation as he performed it – automatic application of DOT rejected – relying on Ebert; Lasser). In yet another ruling, Shipp v. Provident Life & Accident Insur. Co., 214 F. Supp. 2d 1241 (M.D.Ala. 2002), the court was critical of an insurer for mischaracterizing an insured’s occupation by misuse of a generalized Dictionary of Occupational Titles generic job to disregard the travel requirements of the job. Given the weight of contrary authority, this opinion is aberrational.
This article was initially published in the Chicago Daily Law Bulletin.