1st Circuit Rules on Own Occupation Definition Under LTD Plan

The U.S. Court of Appeals for the First Circuit has found that a district court made an error in granting summary judgment to Aetna regarding the cancellation of a long-term disability (LTD) policy in which the benefit recipient was unable to perform his “own occupation” as defined in the Plan Document.

The case is McDonough v. Aetna Life Insurance Company.

The case involves Joseph McDonough who worked in the information technology division of Biogen Inc. In March of 2007, he took the position of Senior Analyst III, Systems Administrations. This was a high pressure job and required McDonough to be on call 24 hours a day, 365 days a year, to provide support for the company’s infrastructure.

In November 2008, McDonough suffered stroke like symptoms including the sudden onset of right-side numbness, dizziness, and blurred vision. He was hospitalized and provisionally diagnosed with a stroke. Although this diagnosis could not be confirmed, some of his symptoms persisted and he did not return to work.

McDonough was eligible for disability benefits through a plan underwritten by Aetna. Aetna had the discretion to determine whether and to what extent employees and beneficiaries were entitled to benefits.

McDonough successfully applied for LTD benefits and he and his health-care providers kept Aetna informed of his treatment and prognosis.

McDonough continued to experience physical symptoms and also suffered from anxiety, panic attacks, and other mental health issues. With this in mind, McDonough’s primary care physician (PCP) referred him for mental health care in June 2009. Some of his health-care providers suggested that his physical symptoms might be a reaction to stress associated with the demanding nature of his job.

In September of 2009, McDonough’s PCP reported that he would be able to work a sedentary job 5 days a week and 8 hours per day. Based on the PCP’s report, Aetna started evaluating McDonough’s continued eligibility for benefits. Two of McDonough’s mental health providers reported that because he suffered from terrible panic attacks, sleeplessness, and anxiety he would be unable to work for a year.

On October 29, 2009, Aetna informed McDonough that his LTD benefits would be terminated by October 31, 2009. Aetna determined that McDonough no longer met the plan’s definition of disability, based on his PCP’s statement that he would be able to work 40 hours per week.

McDonough challenged his termination of benefits through Aetna’s internal appeals procedure. He provided support with medical records from physicians, mental health providers, and physical therapists, highlighting how his health prevented him from performing his job.

Aetna engaged four doctors to review McDonough’s medical records and other documents submitted in support of his appeal. In November of 2010, Aetna denied the internal appeal stating that his symptoms did not preclude him from working in his sedentary level occupation.

McDonough sued in Federal district court for wrongful termination of benefits. The district court determined Aetna had not abused its discretion as claims administrator and granted summary judgment to Aetna. McDonough appealed and stated that Aetna improperly reviewed the medical and vocational evidence regarding the cognitive demands of his own occupation and his current condition.

The 1st Circuit found that Aetna’s decision to terminate McDonough’s case was not well reasoned. None of the reviewers that Aetna used to investigate McDonough’s health compared his condition to the demands of his high-stress job. The court stated that under the “own occupation” standard, medical evidence is only part of the equation. The court said that the decision maker must be aware of other requirements of the job, which Aetna did not consider.

This case should be instructive to LTD claim administrators and remind them to become informed about all of the requirements of a job.

About John Garner

John Garner has over thirty five years of experience in employee benefits. He specializes in compliance, health care reform, the Health Insurance Portability and Accountability Act (HIPAA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Employee Retirement Income Security Act (ERISA). He helps clients with life, health, and disability benefits, cost containment, flexible benefits, and claim consulting.

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