Summary Judgment Upholding Denial Of Long-Term Disability Benefits Requires A Remand When Lower Court Did Not Adequately Explain Its Treatment Of The Then-Recent Supreme Court Opinion In Glenn
RAYBOURNE v. CIGNA LIFE INSURANCE COMPANY (August 6, 2009)
After 23 years on the job, Edward Raybourne went on long-term disability. He was about to have the first of four surgeries on the big toe of his right foot. His disability plan provided payments for 24 months upon a showing that he was unable to perform his regular job. After 24 months, he had to show that he was unable to perform any job in order to continue receiving benefits. After an independent medical examination concluded that Raybourne could return to work, Cigna terminated his long-term disability benefits. Raybourne's treating physician continued to state that he was unable to return to work. After his internal appeals were unsuccessful, Raybourne brought suit under ERISA. The district court granted summary judgment to Cigna, concluding that it had not abused its discretion. Raybourne appeals.
In their opinion, Judges Rovner, Wood and Williams vacated and remanded. An abuse of discretion standard, stated the Court, is appropriate when the plan administrator has discretionary authority. The Court found that Cigna had such authority, notwithstanding Raybourne's contention that the grant of discretion is not included in a plan document. Under that standard, an administrator's decision will be upheld as long as it is supported by evidence in the record and specific reasons are communicated to the claimant. Here, however, the Court noted that the Supreme Court released its opinion in Glenn just a few days before the district court's summary judgment decision. Glenn held that one factor in the abuse of discretion analysis is the structural conflict of interest when a plan administrator is both the arbiter of claims and the payor of successful claims. The Court concluded that the district court's passing reference to Glenn required a remand for a proper analysis of the structural conflict.
Although Paul Krolnik ceased working because of a hernia and back pain, he failed to return to work because, at least in part, of his depression. Prudential paid him long-term disability benefits for two years. It stopped the benefit stream after two years because the policy at issue caps the benefit at two years if the inability to work is caused, even in part, by a mental illness (including depression). Krolnik brought an ERISA suit against Prudential. The court below barred all discovery on medical issues, struck Krolnik's medical affidavits and granted summary judgment to Prudential.