Judge Richard
Holwell of the Southern District of New York made a number of rulings that may serve as useful precedents for other employees
who seek disability benefits from their employer-sponsored long-term disability plans.
These rulings include that: (1) a claimant need not undergo invasive diagnostic
testing to establish her illness, where the existing medical evidence is clinically sufficient to render a diagnosis; (2)
corroborating statements by family members and co-workers may constitute important evidence of a disability; (3) a Social
Security disability determination, as the Supreme Court has itself recently confirmed, is relevant evidence that cannot be
ignored by an insurer or claim administrator; and (4) a claimant’s “regular occupation” must be measured
by those duties routinely required by other employers of comparable size, structure, class, and location. The court reinstated benefits retroactive to the date they had been terminated and also found that Ms.
Zurndorfer was entitled to an award of her reasonable attorneys’ fees and costs.
We represented Ms. Zurndorfer both during
her internal appeal of Unum’s decision and during the lawsuit she commenced against Unum after it refused to voluntarily
overturn that decision.
Background
Facts
Ms. Zurndorfer suffered from multiple sclerosis
(“MS”), which had been first diagnosed in 2000. She was employed
in New
York City as a salesperson for a company that marketed legal services to corporate law firms. She was expected to make as many as 15 in-person sales contacts each week, and, as
result, spent 50% of her work week traveling throughout Manhattan. This generally entailed walking and stair-climbing to navigate the city’s public
transit system, as well as carrying presentation materials and/or a laptop computer.
Despite increasing symptoms of her illness,
including weakness in her left lower leg and foot, fatigue, diminished stamina, pain, balance problems, and foot drop, Ms.
Zurndorfer strived to remain employed as long as possible. She submitted her
own statements and those of two co-workers in support of her claim. A supervisor
reported that Ms. Zurndorfer had significantly reduced her number of sales calls, was visibly dragging her leg, was regularly
observed with skinned knees and bruises, and was reported by colleagues as unable to carry her laptop or manage subway stairs. A colleague reported “a decline in her activity, both in terms of the number
of visits she was making and in her mobility and energy level.” She was
so unsteady on her feet, he felt compelled to take her arm as they walked. She
fell once while doing nothing more than waiting for him to hail a cab (which she increasingly relied on, instead of walking,
for distances as short as several blocks).
Ms. Zurndorfer had long-term disability coverage
through her employer. The coverage was insured by Unum Life Insurance Company
of America. It provided for benefits if she was unable to perform the duties of her “regular occupation.”
Ms. Zurndorfer stopped working on August 16,
2002. Unum, who also managed the short-term disability plan, approved her for
short-term disability benefits on or about October 18, 2002. It also approved
her for long-term disability benefits on or about October 29, 2002. Unum thereafter
offered the services of its affiliate, GENEX, to pursue Social Security disability benefits, which were ultimately awarded.
Unum terminated benefits on February 27, 2003. As is required under ERISA, Ms. Zurndorfer first pursued an “internal appeal”
with Unum. However, it refused to reverse its determination. Although Unum had, in its initial termination decision, questioned her MS diagnosis altogether, its final
determination was largely based on its conclusion that Ms. Zurndorfer had failed to demonstrate a significant worsening of
her symptoms immediately before she stopped working. Ms. Zurndorfer filed a lawsuit
shortly thereafter.
The
District Court’s Decision
Because the long-term disability plan granted
Unum “discretionary authority” to make claim decisions, ERISA required Ms. Zurndorfer to demonstrate not merely
that Unum’s decision was against the weight of the evidence, but that it was arbitrary and capricious. Despite this difficult standard, the court found in Ms. Zurndorfer’s favor.
In its arguments to the court, Unum resuscitated
the original basis for its termination of benefits, asserting that Ms. Zurndorfer had failed to demonstrate that she had MS,
at all, or – at the very least – had failed to conclusively prove that she was suffering from the “primary
progressive” sub-type of that disease. Unum argued that an ironclad diagnosis
could be obtained only if Ms. Zurndorfer underwent a painful diagnostic spinal tap.
The court, however, rejected this argument, holding that Ms. Zurndorfer had submitted substantial evidence of her illness,
including medical records, laboratory test results, treating physician opinions, and the clinical course of her symptoms,
and that – without more – Unum could not simply reject that evidence because it preferred a more conclusive diagnostic
procedure.
Unum also argued that Ms. Zurndorfer had never
been disabled because she worked full time until she stopped working. Citing
Hawkings v. First Unum Corp. Long-Term Disability Plan, 326 F.3d 914, 918 (7th Cir., 2003), which held that
there is “no logical incompatibility between working full time and being disabled from working full time,” the
court rejected Unum’s rationale as a “bad” argument. The court
observed that while Ms. Zurndorfer continued to work full time, there was substantial evidence – particularly in the
witness statements – that she was nonetheless increasingly incapable of performing her occupational duties. The court, in this regard, faulted Unum for “refus[ing] to consider evidence from Zurndorfer, two
of her colleagues and her treating physician that Zurndorfer was increasingly unable to travel to visit her clients at their
offices”:
While defendant is entitled to come to
reasonable conclusions about the reliability of the evidence that plaintiff presented of her inability to work before August
15, 2002, it cannot ignore the evidence in favor of nothing more than a bad argument.
This holding underscores the importance of
witness statements – which sometimes provide necessary details not contained in a disability claimant’s medical
chart. Busy treating physicians may focus only on symptoms relevant for clinical
purposes, such as those they use to assess when treatment modifications are necessary,
or when a particular diagnostic benchmark has been achieved. Their records may
note the chronic symptoms of an illness, such as (in the case of MS) fatigue, pain, spasticity, imbalance, minor memory deficits,
etc., but frequently these notes provide little detail regarding these symptoms, or the ways they interfere with a claimant’s
work.
Zurndorfer stands for the proposition that where such detail is provided through witness statements, such statements are relevant
evidence and a claim administrator or insurance company acts arbitrarily when it fails to consider that evidence. An increasing number of courts have recognized this principle. See, e.g., Rekstad v. U.S. Bancorp, 451 F.3d 1114, at *15-17 (10th Cir. 2006) (arbitrary for claim administrator
to make its decision to deny disability benefits without giving full and fair consideration to affidavits submitted by claimant
and her relatives); Smith v. Group Short Term Disability Plan, 2008 U.S. Dist. LEXIS 43443, at *13-15 (E.D. Tenn.,
May 30, 2008) (arbitrary and capricious for claim administrator to reject – “without any evidentiary basis
or reasoning” – both employer’s
assessment that claimant was disabled and claimant’s description of her occupational duties). In our experience, it is not uncommon for claim administrators’ to ignore witness statements (and
to provide only medical records to their consulting physicians and medical examiners).
Zurndorfer, however, makes clear that they do so at their peril.
The court also found that Unum’s “failure to address the [Social Security Administration’s] contrary [disability]
determination is at least some evidence that [] Unum’s decision was arbitrary and capricious.” The court found this particularly troubling, since Unum – through the efforts of GENEX – had
“actively aided Zurndorfer in obtaining [Social Security disability] benefits under an arguably more exacting standard
of disability.” The court’s holding foreshadowed the recent Supreme
Court decision in Metropolitan Life Insurance Company v. Glenn, 128 S. Ct. 2343 (Jun. 19, 2008): “[T]he fact that MetLife had encouraged Glenn to argue to the Social Security Administration that
she could do no work, received the bulk of the benefits of her success in doing so (the remainder going to the lawyers it
recommended), and then ignored the agency’s finding in concluding that Glenn could in fact do sedentary work …
was not only an important factor in its own right (because it suggested procedural unreasonableness), but also would have
justified the court in giving more weight to the conflict (because MetLife’s seemingly inconsistent positions were both
financially advantageous).”
A final holding by the court is also important
for disability claimants. Insurers and claim administrators frequently argue
that disability should be measured by the claimant’s ability to perform their regular occupation “as it is performed
in the general economy.” Under this guise, important occupational duties
are commonly ignored or minimized. In this case, Unum argued that Ms. Zurndorfer’s
difficulties with stair climbing and building access were irrelevant as these duties were ‘idiosyncratic’ of her
job in Manhattan. The
court, while conceding that idiosyncratic job duties should not be considered, nonetheless determined that Unum was required
to consider the general “urban” nature of the institution where she was employed:
Unum’s own vocational expert concluded
that plaintiff’s occupation required frequent travel, by automobile, taxi, subway, plane or some combination thereof
and that some combination of presentation materials “up to 20 lbs.” would have to be carried. Thus under any scenario, and certainly in any urban location, a fair amount of walking, carrying and climbing
stairs would be material requirements of Zurndorfer’s occupation.
The court’s holding thus builds on the
Second Circuit’s opinion in Kinstler v. First Reliance Standard Ins. Co., 181 F.3d 243, 253 (2d Cir., 1999),
which held that it was erroneous for an insurer to measure a plan participant’s occupational duties by a generic government-produced
job description for “director of nursing,” and that it was required to evaluate disability based on that position
as it was typically performed for employers of the same general type, size and structure as the claimant’s employer. Zurndorfer underscores that a claimant is well-served to provide evidence that
the occupational duties performed for her employer are not “idiosyncratic,” but instead reflect those typically
performed for employers of the same general size, structure, class and location.
Conclusion
Based on the reasoning above, the court concluded
that Unum’s termination of benefits was arbitrary and capricious. Although
judges sometimes “remand” the case to the insurance company for reconsideration and reassessment of the evidence,
the court in this case concluded that because Ms. Zurndorfer had been receiving benefits at the time of Unum’s disability
determination, the proper remedy was to restore the status quo. Consequently, Unum was ordered to reinstate benefits as if its erroneous termination decision had never
occurred. The court also concluded that because, among other things, Unum “disregarded
substantial evidence of plaintiff’s disability depriving her of benefits for more than four years,” and because
“it turned a blind eye to a diagnosis of progressive MS that it had already accepted in originally granting LTD benefits,”
Ms. Zurndorfer was entitled to an award of her reasonable attorneys’ fees, as permitted by ERISA.
