ERISA-Seventh Circuit Rules That Insurer’s Decision To Stop Disability Benefits Was Not Arbitrary Or Capricious

In Aschermann v. Aetna Life Insurance Company, No. 12-1230 (7th Cir. 2012), the plaintiff, Carol Aschermann (“Aschermann”), had worked for AstraZeneca Pharmaceuticals as a sales representative. Back pain left her unable to perform her duties. Between 2003 and 2009 she received disability payments under AstraZeneca’s disability plan (the “Plan”). For two years from the onset of a disability, the Plan provides benefits to a participant who can’t do her old job. After that, the question becomes whether she can perform any job in the economy as a whole. The Plan’s insurer, Lumbermens Mutual Casualty Company (“Lumbermens”), stopped paying disability benefits to Aschermann in fall 2009, concluding that she could do sedentary work. This suit ensued under ERISA. The district court granted summary judgment against Aschermann, upholding Lumbermen’s decision to stop the benefits on the grounds that the decision was not arbitrary or capricious.

Aschermann does not deny that her education (she has a B.S. in psychology and a master’s degree in social work) and experience suit her for many desk-bound positions, but she contends that the defendants erred in finding that she is able to perform any of them. Aschermann’s physician, Dr. Arbuck, believes that she cannot work more than four hours a day. The defendants concede that, if that is so, Aschermann is entitled to disability benefits.

In analyzing the case, the Court said, first, that when-as here- the Plan confers on its claims reviewer discretion to interpret and implement its terms, deferential judicial review of the claims reviewer’s decision is appropriate. Thus-as the district court concluded- Lumbermens’ decision to stop benefits should be overturned only if it is arbitrary or capricious. The Court said next that, in this case, Dr. Arbuck and the physicians reviewing Aschermann’s claim for Lumbermens disagreed on whether Aschermann could do any work. It is not arbitrary or capricious for the claims reviewer to resolve such a conflict in either direction. Finally, the Court noted that Aschermann argued that procedural errors were made, so that she is entitled to a do-over and may present additional evidence. The Court found that correspondence from the defendants gave Aschermann a reasonable opportunity to supplement the file as needed and to receive a full and fair review of her claim. As such, the Court concluded that Lumbermanns’ decision to stop the benefits was not arbitrary or capricious, and it affirmed the district court’s summary judgment.

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