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Insurer Failed to Apply Own Occupation – W.D. Ark.

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  • Insurer Failed to Apply Own Occupation – W.D. Ark.

    Here’s a new case out of the Western District of Arkanasas, Dinora Reyes v. USAble Life. In this matter, the court finds that the plaintiff was deprived a full and fair review of her claim because it at all stages of the review process, defendant failed to follow the definition of disability (specifically the own occupation definition) as written in the policy. The court remands the case to the plan administrator and awards attorney’s fees. The court first finds:

    The administrative record includes a WACGC job description, but the Court is mindful that there may be certain functions or duties material to Reyes’s job that were not detailed in the job description, or, alternatively, it may include duties that are not material at all. Either way, without sufficient evidence in the record, the Court is left to speculate as to what duties are material to Reyes’s regular occupation, and cannot make a finding necessary to the disability analysis. The Court is also unable to determine whether USAble correctly denied Reyes’s initial application for benefits because USAble, by failing to identify and consider the material duties of Reyes’s occupation, failed to follow the Plan’s definition of “disability.” The Court finds that this failure denied Reyes of a “full and fair review” she is due under 29 U.S.C. § 1133(2) and has left the administrative record factually incomplete. The appropriate remedy for this ERISA violation is not an award of benefits, but remand with instructions to reopen the administrative record, with this Court to retain jurisdiction over the case until such time as it determines the claim is fully resolved. See Brown v. J.B. Hunt Transp. Servs., Inc., 586 F.3d 1079, 1087–88 (8th Cir. 2009) (finding that the appropriate remedy for violation of § 1133(2) is not an award of benefits but to remand the case to the plan administrator); see also Shelby Cty. Health Care Corp. v. Majestic Star Casino, 581 F.3d 355, 373 (6th Cir. 2009) (“Remand is therefore appropriate in a variety of circumstances, particularly where the plan administrator’s decision suffers from a procedural defect or the administrative record is factually incomplete.”).

    On remand, USAble should evaluate Reyes’s claim in light of the definition of “disability” as written in the policy. USAble must identify the material duties of a Mental Health Professional, and consideration should be given to each of those duties, not merely the physical demands of Reyes’s occupation. Consideration must be given to the terms of the Policy, and the terms of the Policy require such a process. In the event USAble determines that Reyes meets the standard for disability under section 1 of the Test, the administrator must then consider whether she meets the standard for disability under section 2.
    Regarding attorney’s fees, the court concludes:

    Though USAble is culpable for the instant dispute, there is no evidence demonstrating that USAble acted in bad faith. In determining whether Reyes qualified for benefits, USAble failed to correctly apply the definition of “disability” under its own policy. USAble has made no argument that it cannot satisfy an award of fees and costs. An award of fees and costs would not deter plan participants and beneficiaries from asserting their rights and might deter USAble from abandoning its ERISA obligations in the future. Reyes’s action here benefits all participants and beneficiaries by holding USAble accountable for departing from the policy’s definition of disability. The relative merits of this lawsuit are clearly in Reyes’s favor—while it is of course possible that a full and fair review will result in eventual denial of her claim, the administrative record makes clear that she was denied a full and fair review before bringing this action.

    In light of these factors, the Court finds that it is appropriate to award Reyes her reasonable fees and costs. The parties may submit briefs on what amount that should be.
    The opinion is attached below.

    Attached Files