This month’s Friday Five covers cases relating to: what constitutes adequate consideration by an insurer of a disability claimant’s Social Security disability award; an analysis of various factors for consideration when a plaintiff alleges disability based on subjective complaints, including chronic fatigue and pain; offset of disability benefits based on settlement proceeds received by a claimant; dismissal of a claim for LTD benefits where the claimant failed to exhaust STD benefits; and an analysis of whether attorney’s fees are available on remand to state court after removal based on ERISA.

1. Insurer adequately considered Social Security disability award despite allegation of “boilerplate language” that it did so. In Addington, the Third Circuit affirmed summary judgment in favor of the insurer and plan administrator regarding the termination of the plaintiff’s LTD benefits. The plaintiff stopped working due to chronic knee, back, and neck conditions and was approved for LTD benefits. The Social Security Administration (“SSA”) awarded the plaintiff Social Security disability (“SSDI”) benefits, shortly after which the insurer terminated LTD benefits. The plaintiff appealed, and the insurer reinstated benefits retroactively. One and a half years later, the insurer again terminated benefits. The plaintiff appealed and a few days later, in August 2016, the insurer again determined that benefits were payable. Meanwhile, the insurer referred the plaintiff’s medical records for additional peer review, after which the insurer again terminated LTD benefits and then affirmed its decision on appeal. The plaintiff argued, among other things, that the insurer failed to consider the award of SSDI benefits and instead merely included “boilerplate language” stating that it had considered the award. The court ruled that this argument was “unsubstantiated” because the insurer explained in its “letters why it was taking a different position from the SSA, stating on both occasions that its review included vocational and medical assessments that were not considered by the SSA.” The plaintiff also argued that the insurer “abruptly reversed course during his appeals process by deciding to pay his benefits before finally terminating them one month later based on substantially the same record.” The court rejected that argument and noted that the August 2016 letter approving benefits “was not a final determination,” but “an interim determination while a full investigation was being carried out.” Addington v. Senior Vice President Human Resources Consol Energy, Inc., No. 19-2959, 2020 WL 7774952 (3d Cir. Dec. 30, 2020).
2. The plaintiff’s claim for disability benefits based on chronic fatigue and pain failed because the medical record lacked objective evidence and the plaintiff’s subjective reports lacked credibility. In Lukianczyk, the plaintiff sought LTD benefits based on chronic fatigue syndrome and pain related to chronic rheumatoid arthritis and sleep difficulties. The court acknowledged “that neither fatigue itself nor its severity are readily susceptible to diagnosis by objective testing,” and that “[c]hronic fatigue syndrome present[s] problems in the world of disability law.” The court noted that, “[n]evertheless, while there is no test for chronic fatigue syndrome, ‘there are a variety of tests and evaluations designed to measure an individual’s cognitive, psychological, and physical functioning.’” The court therefore began by looking to the objective evidence in the record. While the record included evidence to support diagnoses of rheumatoid arthritis and chronic fatigue syndrome, the objective medical evidence was insufficient to persuade the court that the plaintiff’s condition rendered her disabled under the terms of the policy. The court next looked to the subjective evidence in the record. The medical records that supported the plaintiff’s claim “were based almost entirely on subjective evidence and her self-reported symptoms.” Although the court noted that a plaintiff might carry their burden on subjective evidence alone, the court gave little credibility or weight to the plaintiff’s treating physicians’ opinions or the plaintiff’s subjective reports. The court noted that the weight of the physician’s opinions “turns not only on whether they report subjective complaints or objective evidence of disability, but on (1) the extent of the patient’s treatment history, (2) the doctor’s specialization or lack thereof, and (3) how much detail the doctor provides supporting his or her conclusions.” The court found those factors lacking. The court also concluded that the plaintiff lacked credibility in light of her activities (including long road trips and vacations) that were inconsistent with her reported symptoms. Additionally, the court ruled that the plaintiff’s “lack of compliance with treatment plans, the shifting explanations for the lack of compliance that she gave to her treating physicians and [insurer], and the differing symptoms she reported during the elimination period and the appeals process are inconsistent with the reported severity of her symptoms.” Lukianczyk v. Unum Life Ins. Co. of Am., No. 220CV00223WBSCKD, 2020 WL 7122007 (E.D. Cal. Dec. 4, 2020).
3. LTD benefits properly offset based on lawsuit settlement proceeds received by the claimant where settlement agreement did not explain allocation of funds. In Haddad, the plaintiff brought claims against the insurer and the plan for wrongful denial of LTD benefits. Following remand from the Ninth Circuit, the plaintiff’s LTD claim was submitted to the insurer for reconsideration. The insurer began paying LTD benefits but withheld amounts based on offsets, including settlement proceeds the plaintiff received in a separate lawsuit involving an injury that the insurer believed led to the plaintiff’s disability claim. The district court held that the settlement offset was appropriate. The judge noted that, “[a]ccording to publicly available pleadings” in the settled lawsuit, the plaintiff “sought lost income damages covering the same period of time that [he] was seeking LTD benefits.” The insurer sought a copy of the settlement agreement from the plaintiff and notified the plaintiff of its intent to treat some or all of the settlement as an offset of “lost income.” “Because the settlement agreement did not explain how the settlement funds were allocated – between lost income, pain and suffering damages, etc. – and because the terms of the LTD Plan require the claimant to provide proof of how much of a lump sum payment covered lost income,” the insurer asked the plaintiff to provide his position on the matter. However, in response, the plaintiff simply provided the insurer with a document identifying fees and costs deducted from the settlement. The judge found that the insurer therefore appropriately applied the offset per the terms of the plan. Haddad v. Smg Long Term Disability Plan, No. 16-CV-01700-WHO, 2020 WL 5642372 (E.D. Cal. Sept. 22, 2020).
4. A claimant was not eligible for LTD benefits because she failed to exhaust STD benefits. In Simmons, the court held that the insurer correctly terminated STD benefits and denied the plaintiff’s claim for LTD benefits. The STD policy provided that “a person covered by the policy ceases to be insured when she ‘is no longer in an eligible class’ or when she ‘stops active work.’” In other words, “an employee that stopped performing active work would cease to be a member of the eligible class and would, accordingly, lose her insurance.” As the court explained, the STD policy “permits the policyholder to continue to insure an employee on a short-term basis, even if she is unable to perform active work, if she becomes disabled.” The LTD policy provided that benefits could only be obtained once a claimant exhausted her STD benefits. The plaintiff ceased working and submitted claims for benefits under her employer’s STD and LTD plans. The insurer paid STD benefits for two months and then terminated benefits. A few days later, the insurer denied the plaintiff’s claim for LTD benefits. The court held that the insurer correctly decided both claims. Specifically, the court agreed that the plaintiff’s medical records demonstrated that she was no longer disabled as of the STD termination date. The court further held that, because the plaintiff “did not return to active work[,] she was no longer a class member, and she was not eligible for [STD] benefits following” the termination date. The court ruled that, “[t]herefore, Plaintiff was also not eligible [for] long term benefits because short term benefits were not exhausted.” Simmons v. Sun Life Assurance Co. of Canada, No. 5:19-CV-395-LCB, 2020 WL 6807473, at *1 (N.D. Ala. Oct. 13, 2020).
5. Award of attorneys’ fees incurred in relation to remand to state court not appropriate unless a defendant’s removal based on ERISA was “objectively unreasonable.” In Newton, the plaintiff filed an action in state court alleging state law claims centered on her allegation that her employer had terminated her LTD benefits plan without informing her, and had continued to take deductions from her paycheck despite terminating the plan. The defendant removed the case to federal court on the basis that the plaintiff’s claims arose under ERISA. The court remanded the case to state court because the plaintiff “asserted[ed] her state law claims based on the absence of benefits under a policy that would have been governed by ERISA if such a policy had still been in effect, not a claim to seek benefits under the policy.” Following remand, the plaintiff filed a motion for attorneys’ fees relating to the remand. The court denied the motion. Specifically, the court noted that, absent unusual circumstances, courts may award attorneys’ fees under 28 U.S.C. 1447(c) “only where the removing party lacked an objectively reasonable basis for seeking removal.” The court held that, although it referred to the defendant’s jurisdictional argument as “nonsensical” in its remand opinion, the defendant’s “arguments for removal were not so ‘objectively unreasonable’ as to warrant granting Plaintiff's motion for attorneys’ fees and costs.” Newton, v. South Jersey Paper Products Co., No. 119CV17289NLHKMW, 2020 WL 7396258 (D.N.J. Dec. 17, 2020).