A corporate benefits department abused its discretion when it denied a worker’s claim for continued benefits under a long-term disability income plan without addressing substantial evidence that she was disabled, a U.S. District Court judge has ruled.

The plan administrator argued that it properly denied the benefits application because the worker, who allegedly suffered from a series of debilitating back ailments, failed to fully cooperate with necessary medical evaluations.

But Judge Douglas P. Woodlock, of the USDC in Boston, disagreed and remanded the case to the plan administrator after concluding that evidence of plaintiff Cheryl Petrone’s disability had been arbitrarily disregarded.

“Ultimately, I find that the LTD Plan’s failure properly to engage with the evidence fatally undermines its conclusion that Ms. Petrone violated the provision of the plan requiring her to cooperate with testing,” he wrote. “To determine reasonably that Ms. Petrone was so uncooperative during testing as to justify denying her long term disability benefits, the LTD Plan must engage in a more reasoned and fulsome way with the evidence in the record.”

The 44-page decision is Petrone v. Long Term Disability Income Plan for Choices Eligible Employees of Johnson & Johnson and Affiliated Companies.

Sticking to the plan

Jonathan M. Feigenbaum, counsel for the plaintiff, said his client’s inability to work was not in doubt. But the Boston lawyer said it is extremely difficult for a plaintiff in an ERISA case to convince the court that a plan’s decision-making process was arbitrary and capricious.

“Unfortunately, what happens in ERISA long-term disability litigation is that if the plan fiduciary has discretionary authority to make a decision, all it has to do is come up with substantial evidence supporting its position,” he said. “I’ve seen judges in other cases around the country comment that their hands are tied because the decision-maker is cloaked with all these benefits of a fiduciary. The problem is that the decision-maker doesn’t really have to be right.”

In recent years, the U.S. Supreme Court and a number of circuit courts have started requiring plans to offer well-reasoned grounds for their decisions, Feigenbaum said.

“The trend right now is that the [plan] better be able to really explain away why this person is not disabled under the plan, particularly when the Social Security Administration has found this person disabled,” he said. “Judge Woodlock’s analysis fits into that trend and brings things into the fold here in Massachusetts.”

Woodlock concluded the plan’s failure “to engage with the evidence” contradicted its own determination that she could not work in any occupation, Feigenbaum said.

David C. Henderson of Boston’s Nutter, McClennen & Fish, counsel to the defendant plan, argued that Petrone did not meet the LTD plan’s definition of “Total Disability” because she was not incapable of performing “any job” for which she may reasonably become qualified. Under current caselaw, he said, the long-term disability plan appropriately considered all the information that was part of an extensive administrative record.

The judge’s ruling means the case goes back to the plan, which still has the ability to decide the matter any way it believes is appropriate, Henderson said.

“The court … wanted the LTD plan to ‘engage’ more closely the evidence in its analysis, which is why it kicked the case back to the plan administrator,” he said. “The judge didn’t find the ultimate decision was wrong; he simply found the administrator should have given closer analysis to the evidence.”

Mitchell J. Notis of Brookline, Mass., represented a plaintiff in a 2005 1st U.S. Circuit Court of Appeals decision that was cited by Woodlock. In Buffonge v. Prudential Insurance Co., the 1st Circuit held that a remand was appropriate if the integrity of a plan’s decision-making process was in question or if there were deficiencies in its procedures, Notis said.

“A plaintiff has many limitations and difficulties in challenging a fair and thorough analysis of his claims by a medical provider,” Notis said. “It can’t be a mere disagreement with what appears to be a fair analysis by a medical analyst from the plan. But if the expert’s conclusions don’t make sense or reveal that he hasn’t reviewed everything or reveal internal inconsistencies, the fairness of the plan comes into question, and the plaintiff has every right to bring a challenge.”

Back pain

The plaintiff was a finish operator at DePuy Orthopaedics, Inc., a subsidiary of Johnson & Johnson.

She developed back pain in 2007, underwent surgery, and was eventually diagnosed with radiculopathy and post-lumbar laminectomy syndrome, known as failed back syndrome.

The plaintiff received short-term disability benefits for 26 weeks. Reed Group, a third-party claims service organization to which the pension committee delegated the responsibilities of administering benefit claims, approved her application for long-term disability benefits.

The plaintiff’s LTD benefits were governed by the terms of the long-term disability income plan. The plan stated that the plaintiff would remain eligible for LTD benefits until she retired, began to receive a pension, turned 65 or died, as long as she had a “Total Disability.”

The LTD plan also specified that failure to cooperate with the plan could result in termination of the benefits. The administrative record in the case reflected that more than 12 different medical professionals had weighed in on the plaintiff’s ability to return to work. Half concluded that she was totally disabled and unable to work in any job, while the others believed she was capable of some level of work.

Her benefits continued until January 2009 when Reed Group denied her claim. The LTD plan asserted that it was justified in doing so both as a clinical matter because her medical examinations revealed that she did not meet the definition of “Total Disability,” and as an administrative matter for violation of the cooperation requirement.

The plaintiff appealed and Reed Group ultimately denied her claim in July 2009.

During the same time period, the Social Security Administration granted the plaintiff’s request for Social Security disability income.

An administrative law judge found she had “severe impairment of her ability to concentrate and persist at tasks due to her pain” and was “unable to lift … more than 10 pounds occasionally, do any postural activities or perform prolonged sitting, standing or walking.”

The plaintiff filed her final appeal in September 2009. The following April, the plan issued a final determination denying her claim. She then filed suit in U.S. District Court.

Need to engage

In remanding the case, Woodlock concluded that the plan abused its discretion in determining that the plaintiff did not qualify as “Totally Disabled” by ignoring or failing to address “meaningfully substantial evidence” in the record.

Woodlock found that the plan’s final determination letter did not appropriately address numerous medical opinions about the plaintiff’s injuries and her ability to work.

Although the letter arbitrarily disregarded evidence, Woodlock said, the plaintiff’s case was not so overwhelming as to compel summary judgment.

“The record contains significant evidence in support of both Ms. Petrone’s position and that of the LTD Plan,” he wrote. “In this case, I deny the LTD Plan’s motion for summary judgment, not because Ms. Petrone is ‘clearly entitled’ to the benefits she seeks, but because of deficiencies in ‘the integrity of [the Plan’s] decision making process.’”

The judge said the plan’s conclusion that she failed to cooperate also appeared to be an abuse of discretion. The plan’s final determination letter did not address a witness statement that Petrone was “cooperative throughout testing.” It also ignored the fact that a doctor observed only one of the various signs of symptom exaggeration that the plan relied on in making its decision, Woodlock said.

“[T]he LTD Plan language may not be construed in such a fashion as to permit the plan to rely on the breadth of its discretion to shield it from challenges such as this where the plan administrator failed to appropriately engage with the evidence presented,” the judge wrote.