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What is the Meaning of "Regular Occupation" in a Disability Insurance Policy?

Most people assume that if they become unable to perform their usual work on account of sickness or injury, that they would qualify to receive benefits under their work-sponsored long-term disability insurance coverage. That may not be the case, though. In Nichols v. Reliance Standard Life Ins. Co., 2019 WL 2223614 (5th Cir. May 23, 2019), the court permitted a disability insurer to classify the work of an inspector in a poultry processing plant as that of a "sanitarian," a quite different occupation. Although the district court delivered a blistering indictment of Reliance Standard's review of Juanita Nichols's claim for disability benefits (2018 WL 3213618 (S.D. Miss. June 29, 2018)), the Court of Appeals reversed and awarded judgment to the insurance company. The lower court was so incensed by the insurer's behavior, it cited over 100 examples of Reliance Standard's arbitrary and capricious conduct in other litigation and found similar misconduct in its treatment of Nichols. The Fifth Circuit had a different view, though.

Nichols worked in a chicken processing plant operated by Peco Foods, Inc. as a "Hazard Analysis Critical Control Point Coordinator," a job that routinely exposed her to temperatures around 40 degrees. She ceased working in January 2016 alleging that she suffered from an auto-immune disorder, Reynaud's disease, that could cause her to experience gangrene if she continued working in a cold environment. After she stopped working, Nichols applied for disability benefits from Reliance Standard, her employer's group disability insurer. The policy in question defined "total disability" as the inability of the employee to work in his or her "regular occupation," which was defined to mean the job as it is "normally performed in the national economy" and not the way it is "performed for a specific employer or in a specific locale."

Although Reliance Standard was provided with a detailed job description by Nichols's employer, the insurer utilized the Department of Labor's Dictionary of Occupational Titles ("DOT") to determine the claimant's regular occupation was "sanitarian," the characteristics of which did not include employment in a poultry processing facility or environmental conditions such as regular exposure to cold. Even though Reliance Standard acknowledged that Nichols could not tolerate exposure to cold temperatures and that her work required her to be regularly exposed to a cold work environment, the insurer denied the claim by finding the environmental conditions to be "job-site specific" and concluding that exposure to cold was not required of a "sanitarian."

Nichols challenged the benefit denial but did not provide evidence that an alternative DOT title was more descriptive of her job. Nonetheless, although a physician retained by Reliance Standard to review the claim found that Nichols "suffer[ed] from a significant impairment when exposed to the cold environment as part of the regular duties of her job," the benefit denial was upheld when a second Reliance Standard in-house vocational consultant also utilized the "sanitarian" occupation from the DOT.

In the litigation that ensued, Nichols's counsel urged the court to take judicial notice that all chicken processing facilities must be kept cold; and the lower court agreed that the work performed by Nichols in any facility involved working in a cold environment. The district court concluded that there was no reliable evidence supporting Reliance Standard's conclusion; and that its history of biased claim adjudications pointed to the influence of a conflict of interest in its assessment of Nichols's claim.

The Court of Appeals disagreed. The court observed, "[O]ur precedent does not require that an administrator consider each of a claimant's job duties to determine his regular occupation." The court also maintained that the insurer's decision was based on substantial evidence. The court relied heavily on its prior ruling in House v. American United Life Insurance Co., 499 F.3d 443, 453 (5th Cir. 2007), where the court found "'regular occupation' in an LTD plan [i]s 'a general occupation rather than a particular position with a particular employer.'" The court ruled that House's occupation should be classified as "lawyer" rather than "trial lawyer." Other Fifth Circuit precedents have recognized and permitted the use of the DOT to determine a claimant's regular occupation. Thus, the court upheld Reliance Standard's use of the DOT to identify the claimant's occupation as sanitarian.

The court turned away the plaintiff's arguments as to the universality of working in cold environments in poultry processing plants by remarking.

Accepting Nichols's factual contentions as true, any requirement to work in the cold is specific to a subset of sanitarians who work in poultry processing plants. In other words, the requirement that Nichols worked in the cold was specific to her "particular position with a particular employer." House, 499 F.3d at 453. It is not part of her "regular occupation" as defined by the plan and our precedent. Under House, we may not determine the material duties of Nichols's regular occupation by differentiating between sanitarians generally--who might work at a variety of food processing plants--and a sanitarian who works at a poultry processing plant.

The plaintiff also cited to the district court's conclusion that a different DOT title should have been used - Cooler Room Worker (Meat Products). However, as the court of appeals noted, that definition was not contained in the claim record and it was suggested by the district court sua sponte and argued by the plaintiff for the first time on appeal. The court also acknowledged that Fifth Circuit precedent views "regular occupation" in a different manner than other courts. The district court cited Lasser v. Reliance Standard Life Insurance Co., 344 F.3d 381, 387 n.5 (3d Cir. 2003) and Kinstler v. First Reliance Life Insurance Co., 181 F.3d 243, 253 (2d Cir. 1999); however, the reviewing court pointed out:

  • But our definition of "regular occupation" established in House is different from the definition endorsed by the Second and Third Circuits. Compare Lasser, 344 F.3d at 386 (" '[R]egular occupation' is the usual work that the insured is actually performing immediately before the onset of disability."), and Kinstler, 181 F.3d at 252 (defining regular occupation as "a position of the same general character as the insured's previous job, requiring similar skills and training, and involving comparable duties" (citation omitted)), with House, 499 F.3d at 453 (defining regular occupation as "a general occupation rather than a particular position with a particular employer"). See also Darvell v. Life Ins. Co. of N. Am., 597 F.3d 929, 935-36 (8th Cir. 2010) (observing that "[t]he circuits are split" on whether to define regular occupation based on the "claimant's actual job duties" or "the insured's occupation as it is performed in a typical work setting in the general economy"). No matter what other circuits require, our precedent dictates that regular occupation is to be defined generally and need not account for each of a claimant's unique job duties.

The Fifth Circuit also rejected the lower court's conflict of interest finding since there was no evidence the conflict influenced the decision. Moreover, the district court, not Nichols, raised the conflict issue for the first time and never gave Reliance Standard an opportunity to respond. The court of appeals thus overruled the district court's finding of a conflict, also pointing out that in addition to the cases finding abusive conduct by Reliance Standard, its findings were upheld in other cases.

Discussion: This ruling is emblematic of everything that is wrong with ERISA. In what kind of logical world is it possible for a court to render a determination that sanctions an insurance company's misclassification of an insured's occupation? The policy provided income protection to an employee who became unable to perform his or her regular occupation due to sickness or injury. The entire world understands that sanitation requirements necessitate poultry processing in a cold environment, and the policy was purchased to insure workers at a poultry processing plant. Yet Juanita Nichols was denied coverage because Reliance Standard was permitted to utilize an "occupation" that bore no resemblance to her own.

The Fifth Circuit has a precedent it failed to cite, Lain v. Unum Life Ins. Co. of Am., 279 F.3d 337 (5thCir. 2002). The case involved an attorney who became disabled; and the court pronounced what it viewed as the "legally correct" meaning of "regular occupation:" "A fair reading of the Policy supports the view that in order to be considered disabled, an insured must be unable to perform only a single material duty of her occupation." 279 F.3d at 345. Instead of common sense, the court allowed Reliance Standard to randomly pick a classification from the DOT despite the fact that the DOT was last updated in 1991, making it a questionable resource for describing jobs more than 25 years later. See, e.g., Herrmann v. Colvin, 772 F.3d 1110, 1113 (7thCir. 2014) (calling the DOT an "an obsolete catalog of jobs."); Browning v. Colvin, 796 F.3d 702, 709 (7thCir. 2014) ("A further problem [with the DOT] is that the job descriptions used by the Social Security Administration come from a 23-year-old edition of the Dictionary of Occupational Titles, which is no longer published, and mainly moreover from information from 1977--37 years ago. No doubt many of the jobs have changed and some have disappeared.").

But even if the DOT was a permissible resource for Reliance Standard to have utilized, it was arbitrary for Reliance Standard to have randomly selected a generic job title rather than utilize the claimant's actual occupation. A quartet of federal appellate rulings have firmly established that such a practice is arbitrary and capricious; and that the insured's actual occupational duties must be analyzed when conducting an own-occupation assessment of disability. See, e.g., Doe v. Standard Ins. Co.,852 F.3d 118, 123-4 (1st Cir. 2017) ("Although a generic DOT "position description" may suffice if it involves duties equivalent to those of the claimant's own occupation, id.at 381 (citing Tsoulasv. Liberty Life Assurance Co. of Bos., 454 F.3d 69, 78 (1st Cir. 2006)), that is not the case here'); McDonough v. Aetna Life Ins. Co.,783 F.3d 374, 381 (1st Cir. 2015) ("To assess a claimant's ability to perform his own occupation, a decisionmaker must be aware of, and apply, the requirements of the occupation."); Miller v. Am. Airlines, Inc.,632 F.3d 837, 855 (3d Cir. 2011) (ruling that an ERISA plan administrator must "consider whether the claimant can actually perform the specific job requirements of a position."); Elliott v. Metro. Life Ins. Co., 473 F.3d 613, 619 (6th Cir. 2006) (determining that plan administrator's decision could not be considered "reasoned" when there was no discussion of claimant's duties or her ability to complete them in light of diagnoses). Reliance Standard's vocational assessment and use of a generic DOT title violated those standards and was thus arbitrary; and the Fifth Circuit should have easily affirmed the district court's ruling.

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