This month’s Friday Five explores recent decisions that illustrate the importance of the administrative record built by a claims administrator, and the impact that the depth and thoroughness of the record will have on litigation over claims decisions. Whether reviewing claims under the de novo standard or the abuse of discretion standard, courts clearly prefer more detailed records and provide greater deference where decisions are based on well-developed, comprehensive records.

1. Will an appellate court affirm judgment in favor of a claims administrator where the claims administrator terminated LTD benefits based on covert surveillance evidence demonstrating that the insured could perform sedentary work? Yes, where the reasoning articulated by the claims administrator is supported by a review of all of the evidence submitted for the claim. Gielissen was a physical therapist who qualified for LTD benefits after receiving a cochlear implant resulted in significant balance problems, both under the “own occupation” standard and subsequently the “any occupation” standard. As part of a periodic review of eligibility, the claims administrator ordered covert surveillance, which showed Gielissen walking a dog for at least twenty minutes, negotiating snow-covered walkways and walking with a widened gait without an assistive device like a walking stick. The claims administrator terminated Gielissen’s LTD benefits. The claims administrator upheld the decision through an internal appeal, during which an independent physician and a vocational rehabilitation specialist concluded that Gielissen could perform sedentary work. The district court reviewed de novo the decision to terminate LTD benefits, and entered judgment in favor of the claims administrator. On appeal, the Tenth Circuit also reviewed de novo the decision to terminate LTD benefits, which the appellate court explained to mean that it confined its review to the reasons given by the claims administrator for discontinuing benefits giving no deference to the claims administrator’s reasoning. The appellate court rejected Gielissen’s argument that the claims administrator required expert medical testimony to interpret the surveillance videos, ruling that “[t]he relevance of that evidence to her disability status is beyond question.” The court reasoned that the claims administrator properly relied upon the surveillance evidence in its decision to terminate benefits, and therefore affirmed the judgment in favor of the claims administrator. Gielissen v. Reliance Std. Life Ins. Co., No. 21-1377, 2022 WL 5303482 (10th Cir. Oct. 7, 2022).
2. Will a district court award fees to a claims administrator that is eligible for an award because it was awarded summary judgment on the insured’s claim for benefits? No, where the district court determines that, even though the claims administrator is eligible for an award of attorney’s fees, the court determines that its discretion weighs against awarding fees. Caccavo brought a claim against the claims administrator arguing that it improperly reduced his disability benefits. The district court awarded summary judgment to the claims administrator, which decision was affirmed on appeal. Following the appeal the district court considered the claims administrator’s application for attorney’s fees. The insured argued that the claims administrator was barred from pursuing the claim in the district court because the appellate court had rejected a similar claim by the claims administrator, and claim preclusion should therefore apply. The district court rejected that argument, ruling that the appellate court’s decision not to award fees in the appeal was a separate issue. To determine whether the claims administrator was entitled to fees in the district court, the court analyzed whether the claims administrator was eligible and whether several factors weigh in favor of such an award. The court determined that the claims administrator was eligible for a fee award because obtaining summary judgment satisfied the criteria that it attain “some degree of success on the merits.” The court then analyzed the five factors identified in Chambless v. Masters, Mates & Pilots Pension Program, 815 F.2d 869 (2d Cir. 1987). The court noted initially that the Chambless factors “very frequently suggest that attorney’s fees should not be charged against ERISA plaintiffs.” The court determined that, even though the administrative record supported the claims administrator’s decision, the insured had a colorable basis for his claim and therefore could not have been found to have acted culpably or in bad faith. The court also determined that an award of fees in favor of the insured may discourage valid claims from being brought in the future. The court ruled that the insured had the ability to satisfy an award and that the relative merits of the underlying case favored the claims administrator, and that the impact on plan participants as a group was neutral, but determined that the overall weight of the factors favored denying the claims administrator’s request for fees. Caccavo v. Reliance Std. Life Ins. Co., No. 19-cv-6025, 2022 WL 16631101 (S.D.N.Y. Nov. 2, 2022).  
3. Can a district court evaluate the persuasiveness of conflicting evidence as part of a de novo review of a claim administrator’s decision to deny LTD benefits? Yes, where that assessment is part of a “bench trial on the record.” Plaintiff was awarded STD benefits following a hospital stay for chest pain and hypertension, but denied LTD benefits because the claims administrator determined that he could not establish total disability. After plaintiff filed suit the district court held a “bench trial on the record” where the court examined the administrative record de novo to “evaluate the persuasiveness of conflicting testimony.” In reviewing the record, the court found most credible the information from the insured’s primary care physician, who had treated the insured for seventeen years, and who made detailed, contemporaneous notes in narrative form following each of the insured’s office visits. The court accepted the treating physician’s assessment that the combination of chest pain and work-related stress rendered the insured unable to work. The court gave little weight to the opinions of the nurse and doctor hired by the claims administrator to examine the insured because they did not adequately address the interplay of chest pain and work stress which formed the basis of the treating physician’s judgment that the insured was unable to work. Similarly, the court gave little weight to the findings of the doctor hired by the claims administrator to perform a file review, because he failed to discuss the combination of factors identified by the treating physician. Based on its evaluation of the claim file, the district court retroactively reinstated LTD benefits. Cameron v. Sun Life Assurance Co. of Canada, No. 2:21-cv-02092, 2022 WL 16635235 (C.D. Cal. Nov. 2, 2022).
4. Will a court reject a claim contesting the termination of LTD benefits after those benefits had been paid for fourteen years? Yes, where the court determines that the claims administrator developed a record with substantive evidence that the insured was no longer eligible for benefits. In 2005 the insured obtained LTD benefits following a kidney transplant and treatment for hypertension and angina. After the insured received benefits for fourteen years, the claims administrator performed a review of continued benefit eligibility, and determined that the insured was no longer eligible for benefits because his kidney and cardiac issues were stable. After the claims administrator denied an internal appeal, the insured filed a claim in district court. In reviewing cross-motions for summary judgment, the court first concluded that the claims administrator had discretionary authority in making benefit determinations, and was therefore entitled to an arbitrary and capricious standard of review. In reaching that decision, the court rejected the insured’s argument that Maine’s anti-discretionary clause statute, 24-A M.R.S.A. § 2847-V, applied retroactively to the language that was in force at the time LTD benefits were initially awarded. The court then determined that the claims administrator’s decision to terminate LTD benefits was not inconsistent with prior decisions because the claims administrator had updated, substantive evidence underlying the termination decision. The court also rejected the insured’s argument that the claims administrator’s decision was the product of a conflict of interest because the claims administrator was no longer collecting premium on the underlying policy. The court granted summary judgment in favor of the claims administrator. Giberson v. Unum Life Ins. Co. of Am., No. 1:21-cv-305, 2022 WL 7139763 (S.D. W.Va. Oct. 12, 2022).
5. Is an insured entitled to a copy of all materials generated by a claims administrator during an administrative appeal as well as an opportunity to respond to those materials? No, following the majority of circuit courts that have considered the issue. Dr. Bulas was a neuroradiologist who spent some of his professional time on diagnostic imaging and some on surgical procedures. He was awarded LTD benefits because visual impairments impacted his ability to perform surgery. After receiving LTD benefits for four years, the claims administrator determined that he was no longer eligible for benefits because he could practice diagnostic radiology even though he could no longer return to surgical interventional radiology. The claims administrator upheld its decision following an internal review. Among other claims, Bulas sought relief against the claims administrator for not providing him with a “full and fair review” because it did not give him an opportunity review or respond to expert opinions obtained during the review of his eligibility. The court granted the claims administrator’s motion to dismiss that claim, reasoning that the claims administrator was not required to produce all materials generated in an appeal to the insured and give him an opportunity to respond. Bulas also sought a declaration that he was totally disabled under the policy, and filed a motion for judgment on the pleadings as to that claim. The court reviewed the facts in dispute and determined that those disputes precluded judgment on the pleadings. Bulas v. Unum Life Ins. Co. of Am., No. 2:22-cv-112, 2022 WL 14813537 (S.D. Ohio Oct. 26, 2022).