In this case, Kenneth Baker (“Baker”) was an employee who worked for Dunkin Donuts. Through his employment there, he held a policy for long-term disability benefits. Unfortunately, Baker lost all of his administrative appeals with the insurance companies. He also lost at the lower Federal Court. The opinion below relates to Baker’s appeal of the trial court’s ruling in favor of Sun Life and Health Insurance Company (“Sun Life”), the administrator of the policy. The lower court ruling denied Baker’s claim that Sun Life ended his long-term disability benefits in error.
Here, the Court of Appeals stated that “the [disability plan] administrator has discretionary authority to determine eligibility for benefits,” but any decision of denial of those benefits “must be reviewed under an arbitrary and capricious standard.” “Under this ‘highly deferential’ standard, an administrator’s interpretation of a plan may be disturbed ‘only if it is without reason, unsupported by substantial evidence or erroneous as a matter of law.’” Therefore we see that the Court of Appeals could not and would not “substitute [its] own judgment for that of the [plan administrator,].” It would only overturn any part of the lower court’s summary judgment where it could be shown that Sun Life’s decision was “without reason.”
The Court of Appeals held that the lower court was correct in deciding that the issues to be determined are: (1) Baker’s level of cognitive impairment and (2) “whether [Baker] is able to perform the duties of ‘Any Occupation,’” which the policy defines as “[a]ny gainful occupation that [the claimant is] qualified for on the basis of education, training or experience.”
The two deciding factors that led Sun Life to decide that Baker was capable of performing the duties of any occupation are: (1) the opinions of a Dr. Barr, a Dr. Ross, and a Dr. Pier, all of which stated that he did not have a cognitive impairment; and (2) surveillance which indicated that he was able to work from home, go on-site, and meet with employees on location. In addition, Sun Life conducted a vocational evaluation which concluded that Baker would be suitable as a business owner, retail store manager, or operations manager. Because of the above deciding factors, the Court of Appeals agreed with the lower court’s belief that Sun Life’s decision was not made “without reason.”
Baker made an additional argument that the lower court’s decision was in error by “completely dismiss[ing] the opinions of Plaintiff’s treating physicians[,] all of whom had been treating and clinically evaluating Mr. Baker for years . . . and therefore were in the best position to attest to and observe the cognitive decline.” This is called “The Treating Physician Rule”. However, the Court of Appeals believed that the lower court appropriately discounted the opinions of those physicians because none of them held a specialty in cognitive care. More specifically “the treating physicians . . . did not specialize in cognitive functioning and they did not provide sufficient support for their conclusions regarding [Appellant’s] alleged cognitive decline.”
Baker also claimed that the court should not have accepted the opinions of one of Sun Life’s experts, Dr. Barr, who Baker argued “issued a report which was fundamentally inconsistent with the results of his own neuropsychological testing.” However, Dr. Barr’s conclusion was supported by Dr. Ross, another neuropsychologist, who opined that, based on “neuropsychological evaluations and [Dr. Barr’s] raw data”, Baker’s results were “consistent with generally intact cognitive functioning[,] . . . [which] would not translate into a permanent chronic impairment.” Because of this additional information, the Court of Appeals affirmed the lower court’s holding that it was reasonable for Sun Life to rely on that statement.
Another point that Baker argued is that the lower court did not properly consider Sun Life’s conflict of interest in deciding the claim. However, the Court of Appeals thought that argument was without merit. The lower court recognized the fact that Sun Life was both an administrator and payor of the plan. The lower court properly considered that conflict of interest as a factor in its decision-making process, and yet still concluded that there was not a “sufficient causal link between Sun Life’s financial incentives . . . and Plaintiff’s denial of benefits.”
Baker made another argument that the lower court was in violation of Federal Rule of Civil Procedure 56 because it failed to draw all reasonable inferences in favor of Baker. The Court of Appeals held that the “arbitrary and capricious” standard of review calls for an affirmation of the claim determination if the claim is supported by “substantial evidence.” Further, the decision of a Plan administrator (Sun Life in this case) “will not be disturbed if reasonable.” The Court of Appeals held that Sun Life had substantial evidence in support of its decision. It also felt that Sun Life did not base its entire decision on the opinions of its experts. It further relied on the information gathered from its surveillance where Baker was seen performing job duties by going to “Dunkin’ Donuts locations for two or more hours at a time, while carrying a binder, standing behind the counter, and having discussions with employees.”
Baker’s last argument was that he was deprived of a full and fair review because of his denial of partial disability benefits. Under Baker’s policy, after a twenty-four month period, a claimant can be considered “Partially Disabled” if he is “unable to perform the duties of Any Occupation; and [he is] performing at least one of the material duties of [his or her] Regular or Any Occupation on a Full-time Basis or Part-time Basis.” The lower court decided that because Baker was not “unable to perform the duties of Any Occupation,” he was also unable to qualify for partial disability payments. The Court of Appeals agreed with the lower court’s reasoning.
Because of all the above reasoning, the Court of Appeals affirmed the lower court’s judgment. This means that the Court of Appeals ruled in favor of Sun Life and against Baker, and confirmed Baker’s denial of long-term disability benefits.[Note: this claim was not handled by the Ortiz Law Firm. It is merely summarized here for a better understanding of how Federal Courts are handling long term disability insurance claims.]
Here is a copy of the decision in PDF: Baker v. Sun Life