ERISA-Sixth Circuit Upholds Insurer’s Denial of Long-Term Disability Benefits

In Frazier v. Life Insurance Company of North America, No. 12-6216 (6th Cir. 2013), the plaintiff, Kimberly Frazier (“Frazier”), had filed this lawsuit against Life Insurance Company of North America (“LINA”) under ERISA to obtain long-term disability (“LTD”) benefits. The district court granted judgment for LINA, reasoning that LINA had the discretionary authority to deny Frazier’s claim, and that the denial of benefits was neither arbitrary nor capricious. Frazier appeals.

In this case, Frazier was a “sorter” for Publishers Printing Company, LLC (“Publishers”). In this position, she was covered by Publishers’ employee benefit plan (the “Plan”), which provided disability benefits. In July 2009, she left her job at the age of 42 due to pain in her back that radiated down both legs. Frazier underwent an MRI of her lumbar spine in early July 2009, which revealed mild disc dislocation at the L4-5 level. Later that month, she visited her family physician, Dr. Brian Eklund, who ultimately issued an opinion, which he provided to LINA in 2010, that Frazier was unable to return to work at regular capacity.

After visiting Dr. Eklund in July 2009, Frazier began a course of physical therapy aimed at decreasing pain. Her discharge summary for this therapy indicates she had met all treatment goals. Following completion of physical therapy, Frazier began seeing another physician, Dr. Kyaw Htin, for an evaluation of her chronic pain. After prescribing a treatment plan consisting of lumbar epidural injections, Dr.Htin issued a discharge instruction permitting Frazier to return to work.

LINA was the named fiduciary under the Plan for deciding benefit claims, and any appeals of denied claims. Under the Plan, Frazier is considered disabled if she is unable to perform the material duties of her regular occupation. In January 2010, Frazier submitted a claim to LINA for LTD benefits due to lower back pain and radiation of pain down both legs. LINA denied the claim in February 2010 after reviewing the medical evidence described above and the job descriptions from Publishers and the U.S. Department of Labor. It concluded that the evidence did not show enough physical difficulties to entitle Frazier to the LTD benefits.

Frazier appealed LINA’s initial decision in March 2010, and submitted as additional documentation a Functional Capacity Evaluation (“FCE”) which indicated that Frazier “is currently functionally capable of meeting the lower demands for the Medium Physical Demand level on a 8 hour per day basis according to the U.S. Department of Labor Standards.” LINA affirmed its decision to deny the claim in April 2010, concluding that Frazier’s “current functional ability would allow [her] to perform the material duties of [her] regular occupation.” This suit ensued.

In analyzing the case, the Sixth Circuit Court of Appeals (the “Court”) applied the arbitrary and capricious standard of review to LINA’s decision to deny Frazier’s claim for LTD benefits, since the plan document-here the Plan’s insurance policy- granted LINA discretionary authority to review and decide benefit claims and appeals thereof. Under this standard, the Court found that LINA’s decision was rational and the claim denial was reasonable, since LINA’s decision was supported by the medical evidence, in view of the Plan’s definition of disability. As such, the Court concluded that LINA’s decision to deny the claim for LTD benefits must be upheld, and the Court affirmed the district court’s judgment.

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