In evaluating a disability insurance claim from the perspective of whether the claimant can perform his or her own occupation, what must an insurer consider? That question was recently answered by the 1st U.S. Circuit Court of Appeals.

In McDonough v. Aetna Life Insurance Co., 2015 WL 1684079 (1st Cir., April 15), plaintiff Joseph McDonough held what the court described as a “high-pressure job, with responsibility for providing support for the server infrastructure at Biogen locations around the world (24 hours a day, 365 days a year).”

In late 2008, McDonough suffered what was believed to have been a stroke – he experienced right-sided numbness, dizziness and blurred vision. Because many of his symptoms persisted, McDonough was unable to return to work.

He applied for disability benefits under his employer’s group disability insurance policy which defined “disability” as “not able to perform the material duties of [his] own occupation solely because of: disease or injury; and [his] work earnings are 80 percent or less of [his] adjusted pre-disability earnings.”

Although the claim was initially approved, it was terminated shortly thereafter following Aetna’s receipt of a report from McDonough’s primary care physician stating that he possessed a “sedentary level of functionality” and “could work five days a week and eight hours per day.” Aetna determined from that report that McDonough was able to return to his regular occupation.

McDonough challenged Aetna’s decision. He supplied medical evidence showing persistent right-sided numbness, which affected his ability to type and write, along with anxiety and panic attacks that interfered with his ability to meet the stressful and time-critical demands of his occupation. McDonough also supplied a vocational assessment deeming his functional limitations incompatible with his job duties.

In response to the appeal, Aetna retained four reviewing doctors (two from the field of occupational medicine and two psychologists), all of whom found McDonough was no longer disabled. However, the court noted that none of the medical reports discussed the demands of the plaintiff’s occupation or how his symptoms would affect his ability to perform his occupation. Based on the file reviews, though, the pre-litigation appeal was denied, and litigation ensued.

Although the plaintiff had made demand early on for all relevant plan documents, it was not until the eve of the deadline for filing dispositive motions that Aetna produced a copy of the applicable policy. Unlike the previously produced documents, the later-produced policy included language that triggered a deferential standard of review. The plaintiff then amended his complaint and sought penalties for the late production.

Faced with cross-motions for summary judgment, the district court ruled for Aetna on the merits but assessed a $5,000 penalty for late production of the policy. The plaintiff appealed both the underlying judgment and what he claimed to be an insufficient penalty. Although the court overturned the adverse ruling on the merits of the dispute, the penalty ruling was left undisturbed.

Applying a deferential standard of review, the appeals court noted that deference “is not without some bite” and pointed to Aetna’s structural conflict of interest as the “entity that both resolves benefits claims and pays meritorious claims” as a factor that had to be considered.

Turning its discussion of the merits, the court focused on the plaintiff’s principal assignment of error – “that Aetna failed to evaluate his documented functional limitations in light of the duties of his own occupation as it is normally performed in the national economy.” The plaintiff further argued that Aetna “conflated” the own-occupation standard into an “any sedentary occupation” analysis, contrary to the terms of the policy.

The court agreed with McDonough and ruled that Aetna’s determination was “not a reasoned determination” because none of the medical consultants “compared the appellant’s symptoms or impairments to any description of the physical and cognitive demands of his own occupation as that term is defined in the plan documents.” (Emphasis in original.)

Absent any consideration of the plaintiff’s actual job duties, the court ruled that Aetna’s assessment was nothing but a guess – “and a determination based on guesswork is the antithesis of a reasoned determination.”

This ruling joins Elliott v. Metropolitan Life Insurance Co., 473 F.3d 613 (6th Cir. 2006), and Miller v. American Airlines Inc., 632 F.3d 837 (3d Cir. 2011), in clearly establishing that merely assessing a job as “sedentary” in exertional demands is not enough to fulfill the insurer’s duty to conduct an own occupation evaluation.

Perhaps the force of this ruling will finally make it clear to insurance companies that both the cognitive and stress aspects of an occupation are part of the required assessment. Indeed, a district court in New Jersey recently took an insurance company to task for failing to address the stressful demands of the insured’s occupation. Morrison v. PNC Financial Services Group Inc., 2015 WL 1471865 (D. N.J., March 31).

One issue of interest that the 1st Circuit noted deserves further mention. The court suggested that Aetna never compared McDonough’s job to the categorization of occupations listed in the Dictionary of Occupational Titles.

However, the dictionary was last updated in 1991; and as the 7th Circuit pointed out in Herrmann v. Colvin, 772 F.3d 1110, 1113 (7th Cir. 2014), it is an “obsolete catalog of jobs (most of the entries in it date back to 1977).”

Finally, rather than awarding benefits outright, the court remanded the matter to Aetna for further consideration, which was surprising in view of the court’s harsh criticism of Aetna and since McDonough clearly met his evidentiary burden by supplying both medical and vocational proof of his inability to perform his occupation. Nor is there any statutory basis for a court remanding a benefit claim to the insurer.

This article was published in the Chicago Daily Law Bulletin.

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