Plan Administrator’s Denial of Disability Benefits Found to Be An Abuse of Discretion, Attorneys Fees Awarded

While ERISA plan administrators’ discretion in interpreting a plan are generally given deference by the courts, there is a limit—and in the case of Rote v. Titan, CA8 Nos. 09-2510/28900, the administrator was found to have abused that discretion. The case came at the end of what was a long strike for the union that the participant was a member in. The participant had surgery to replace the joints in both of her thumbs. While recovering from the surgery in April 1998, the strike began—a strike that did not end until October 2001.

When the strike ended, she asked to return to work and was evaluated by a physician that the administrator selected to determine if she could return to work. The physician determined there were substantial restrictions on her abilities, and the company informed her that no jobs existed at the plant that were compatible with the required restrictions.

The employer maintained a long term disability plan that covered participants who were permanently and totally disabled so as to be unable to perform the work of any classification at the plant. The employee, after much difficulty in obtaining the paperwork, filed for the long term benefits. The physician who performed her surgery noted that her restrictions had not changed and in his opinion. However, the employer summarily dismissed her claim, saying only she was not disabled under the plan.

The employee filed suit, and the District Court found the decision purely conclusory and lacked the explanation of a denial required under ERISA, and remanded the case for further consideration. On remand, additional evidence was submitted on the question of whether her disabilities were permanent. The sponsor focused on a technical reading that since her attorney initially only asked if these restrictions would continue indefinitely, that wasn’t permanent under the plan. She asked for a review, and her doctor clarified that when he said indefinitely, he meant that he intended the restrictions to be permanent.

The District Court and the Eighth Circuit found that the sponsor had abused its discretion in denying the benefits, finding the case “wasn’t a close matter” and ordered the benefits to be paid. As well, the sponsor was ordered to pay the participant’s attorney fees for both cases and the administrative claim.

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