ERISA-First Circuit Reviews Plan Administrator’s Decision To Deny Life Insurance Benefits De Novo, And Concludes That The Estate Is Entitled To Those Benefits Due To Decedent’s Disability

In Scibelli v. Prudential Insurance Company of America, No. 11-1372 (1st Cir. 2012), the plan administrator, Prudential Life Insurance Company of America (“Prudential”), did not reserve to itself discretion as to the interpretation and administration of its policy (the “Group Policy”). The Group Policy constituted the employee benefits plan in this case. The benefits at issue are life insurance proceeds from the Group Policy, in the sum of $300,000. These benefits were claimed by the estate of Walter Jajuga (“Jajuga”), who died on December 31, 2008. Whether the estate gets those benefits turns on whether Jajuga was “totally disabled” on May 6, 1997, when he stopped working for Mercedes-Benz USA. If he was so disabled on that date, then-under the terms of the Group Policy, and in particular a premium waiver due to the total disability- the estate would be entitled to the $300,000. Prudential had determined that Jajuga was not totally disabled on that date, and this suit ensued. Since it did not reserve discretion for itself in the Group Policy to interpret and administer the policy, the Court reviewed Prudential’s determination de novo.

In analyzing the case, the Court said that, under de novo review, its task-as an appellate court-is to independently weigh the facts and opinions in the administrative record to determine whether the claimant has met his burden of showing that he is disabled within the meaning of the Group Policy. No deference is accorded to the administrators’ (or district court’s) opinions or conclusions. After reviewing the administrative record, the Court concluded that the plaintiffs-the claimant here – have carried their burden of showing that, when Jajuga stopped working on May 6, 1997, he was “totally disabled” under the terms of the Group Policy. That is, the plaintiffs have sufficiently demonstrated that, in the words of the Group Policy, Jajuga was “not able to perform for wage or profit, the material and substantial duties of any job for which [he was] reasonably fitted by [his] education, training or experience.” In this case, reports of a treating physician, a board certified neurologist, attested to Jajuga’s total disability at the time he stopped working. This physician’s assessment was based on objective evidence, including an MRI. Prudential did not have any credible evidence to the contrary. Further, Prudential itself concluded that Jajuga was “totally disabled” with respect to an individual policy that Prudential had with Jajuga.

Having concluded that Jajuga was totally disabled on May 6, 1997, the Court ruled that his estate was entitled to the $300,000 life insurance proceeds under the Group Policy.

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