ERISA-Eighth Circuit Holds That Plan Administrator Did Not Abuse Its Discretion In Terminating Long-Term Disability Benefits

In Siegel v. Connecticut General Life Insurance Company, No. 12-1897 (8th Cir. 2013), the plaintiff Dennis Siegel (“Siegel”) had brought suit against defendant Connecticut General Life Insurance Company (“Connecticut General”) for terminating his long-term disability (“LTD”) benefits. The district court had granted judgment to Connecticut General, after concluding that it had not abused its discretion in terminating Siegel’s benefits. Siegel appealed.

In this case, Siegel had worked as a software developer for Lockheed Martin Corporation (“Lockheed”). Lockheed had a disability benefit plan (the “Plan”), offered by Connecticut General. Under the Plan, an employee would receive LTD benefits if he became unable to perform the essential duties of his occupation due to an illness or injury. If the employee’s disability was due to mental illness, he would stop receiving benefits after the first two years unless he was “totally disabled.” That was defined as being unable to perform the essential duties of any occupation for which the employee was or could reasonably become qualified. Siegel had filed a claim for LTD benefits due to his depression. Connecticut General approved Siegel’s claim in October 1995. In November 1997 it reapproved his claim for continued benefits, concluding that he was “totally disabled” as so defined.

The Plan’s claims administrator was the Life Insurance Company of America (“LINA”). LINA began to investigate Siegel’s disability, asking him to complete a questionnaire, obtaining records from Siegel’s physicians, and hiring its own physicians to review the case. Based on this investigation, LINA determined that Siegel was no longer totally disabled, and Connecticut General terminated Siegel’s LTD benefits in 2007. This suit ensued under ERISA.

In analyzing the case, the Eighth Circuit Court of Appeals (the “Court”) noted that LINA’s determination is entitled to discretion, since the Plan documents gave LINA discretionary authority to interpret the Plan and decide questions of eligibility. As such, LINA’s determination will be upheld if it was reasonable and supported by substantial evidence. The Court ruled that LINA’s determination must be upheld. There was substantial evidence from which LINA could reasonably conclude that Siegel was not “totally disabled” as defined by the Plan. Siegel had expressed an interest in part time work and had asked LINA how much he could work and earn without losing his disability benefits. Although Siegel’s treating physicians indicated that he suffered from depression and lack of motivation, they did not identify any specific impairments or deficiencies. The physicians retained by LINA all agreed that while Siegel exhibited symptoms of severe depression, he was not totally incapable of employment. Thus, it was not an abuse of discretion to determine that Siegel was not totally disabled and terminate his LTD benefits. As such, the Court affirmed the district court’s judgment in Connecticut General’s favor.

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