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Physical Impairments Not Enough to Overcome Mental/Nervous Limitation – 5th Cir.

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  • Physical Impairments Not Enough to Overcome Mental/Nervous Limitation – 5th Cir.

    Physical Impairments Not Enough to Overcome Mental/Nervous Limitation – 5th Cir.

    Attached is a case out of the Fifth Circuit, Hayes v. Dearborn National Life Insurance Company. This case in on appeal from the district court’s grant of summary judgment to defendant. Plaintiff seeks entitlement to ERISA governed long term disability benefits beyond the 24 month “mental/nervous limitation” contained in the policy. Plaintiff asserted that his physical disabilities prevent him from performing any occupation. Plaintiff argued that he is entitled to benefits based on a conflict of interest, failure to consider his award for Social Security Disability benefits, changing reasons for denial, and cherry-picking medical evidence. Ultimately, the Fifth Circuit affirms the district court’s ruling.


    A. Procedural Unreasonableness

    Hayes first contends that, in light of Dearborn National’s conflict of interest, the process it used to evaluate his claim was procedurally unreasonable. Here, the plan administrator “both evaluates claims for benefits and pays benefits claims.” Truitt v. Unum Life Ins. Co. of Am., 729 F.3d 497, 508 (5th Cir. 2013) (citation omitted). This conflict is “one factor among many” that courts consider in evaluating whether the administrator abused its discretion. Hagen, 808 F.3d at 1027 (citation omitted). “[A]ny one factor may ‘act as a tiebreaker when the other factors are closely balanced[.]’” Id. at 1027–28 (quoting Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008)). A conflict of interest will be more important “where circumstances suggest a higher likelihood that it affected the benefits decision,” and less important “where the administrator has taken active steps to reduce potential bias and to promote accuracy.” Glenn, 554 U.S. at 117. Accordingly, “a plan administrator’s procedural unreasonableness informs how ‘much weight to afford the apparent conflict.’” Truitt, 729 F.3d at 510 (citation omitted).

    Hayes accuses Dearborn National of ignoring his Social Security benefits award, changing reasons for termination of benefits, and cherry-picking the record. He contends each is evidence of procedural unreasonableness.

    The failure to address a Social Security disability award is a “factor that can render the denial” of benefits an abuse of discretion. Schexnayder v. Hartford Life & Accident Ins. Co., 600 F.3d 465, 471 (5th Cir. 2010) (citation omitted). However, Dearborn National did not ignore Hayes’s Social Security award, as Hayes asserts. Instead, it extended Hayes’s benefits and invited him to submit additional documentation of physical disabilities for review. But, in light of Hayes’s failure to submit documentation of physical disabilities and the different eligibility criteria for Social Security benefits, Dearborn National determined Hayes was not eligible for additional benefits under the policy.

    We are similarly unpersuaded by Hayes’s assertion that Dearborn National’s changing reasons for denial of benefits is evidence of procedural unreasonableness. Hayes is correct that inconsistent reasons for benefit denials may be evidence of procedural unreasonableness. This is because ERISA procedures are meant to “ensure meaningful review of [a] denial [of benefits].” Rossi, 704 F.3d at 367–68 (quoting Wade, 493 F.3d at 539). A plan administrator’s “changing its basis for denial of benefits” prevents both the applicant and the reviewer from contemplating the specific reasons for denial. Id. at 368. Accordingly, where a plan administrator repeatedly moves the ball to avoid a full and fair review, the court will vacate a denial of benefits for procedural unreasonableness. See id. at 367–68.

    Here, the changing reasons for Dearborn National’s denial of benefits did not prohibit, but instead provided evidence of, a “full and fair review.” 29 U.S.C. § 1133; cf. Rossi, 704 F.3d at 367–68. For example, Dearborn National initially found insufficient evidence of physical disabilities but, upon receiving further information and referring the file to an independent consultant, accepted his physical limitations. Accordingly, Dearborn National referred the case for an independent employability analysis. That it was ultimately determined that he could perform seven occupations, and was therefore ineligible for additional benefits, does not render the process unreasonable.

    Finally, Hayes’s assertion that Dearborn National cherry-picked the record appears to be an argument that substantial evidence supports a finding that Hayes was entitled to benefits. But this does not help Hayes. So long as substantial evidence supports Dearborn National’s decision, it must be upheld, even if substantial evidence also supports Hayes. E.g., Gooden v. Provident Life & Accident Ins. Co., 250 F.3d 329, 333–35 (5th Cir. 2001).

    In sum, Dearborn National reviewed Hayes’s medical records and submissions, and it used multiple independent consultants to evaluate Hayes’s claim. It invited Hayes to submit additional evidence on multiple occasions, attempted to arrange an FCE, and conducted an additional review after learning Hayes had received Social Security benefits. Because these circumstances do not “suggest a high[] likelihood that [the conflict] affected the benefits decision,” we accord the conflict of interest little weight. See Glenn, 554 U.S. at 117. Hayes has not shown Dearborn National’s evaluation was so procedurally unreasonable that it warrants vacatur.

    B. Substantial Evidence

    Hayes also appears to claim Dearborn National’s denial of benefits is unsupported by substantial evidence. Dr. Lumpkins accepted Hayes’s diagnoses of fibromyalgia, chronic fatigue syndrome, and hip pain, and he suggested certain restrictions should be placed on Hayes’s physical activities. Even if physically disabled, though, Hayes was entitled only to a continuation of benefits if those physical problems rendered him incapable of performing any gainful occupation.
    Accepting these restrictions, independent vocational rehabilitation specialist Zukowski found Hayes was able to perform seven different jobs given his education, training, and experience. Accordingly, Dearborn National’s decision that Hayes did not meet the “any Gainful Occupation” requirement bears a “rational connection” to Zukowski’s report. See George, 776 F.3d at 353. There was then, substantial evidence to support the denial of benefits.
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