Tenth Circuit Rules in Favor of Employee in Disability Appeal

On Aug. 13, 2018, in McMillan v. AT&T Umbrella Benefit Plan No. 1, No. 17-5111 (10th Circ. Aug. 13, 2018), the U.S. Court of Appeals for the Tenth Circuit affirmed a federal judge’s decision to reverse an AT&T benefit plan’s denial of short-term disability (STD) benefits to an employee. The issue in the case was whether the plaintiff, McMillan, was entitled to 26 weeks of STD benefits due under the plan due to his inability to perform “all of the essential functions of his job” as a Senior IT Client Consultant. The court highlighted the employer’s improper administration of the ERISA disability claim and upheld the district court judge’s award of 26 weeks of disability benefits.

As background, McMillan received STD insurance under AT&T’s income benefit program. He submitted an STD claim due to his sleep apnea, diabetes, stage III kidney disease, shortness of breath, chronic obstructive pulmonary disease, inability to stand or walk for long periods of time, and an inability to focus, concentrate and retain short-term memory. Upon review of the physician statements and conversations with McMillan regarding his job duties, the plan administrator denied the claim, asserting that his job duties were sedentary and, therefore, the medical findings were insufficient to conclude he was unable to perform his job duties. McMillan followed the appeal procedures and submitted additional medical substantiation but was denied again. He then sued for judicial review of the decision under ERISA, and the district court reversed the plan administrator’s denial of McMillan’s STD benefits.

Upon review, the Tenth Circuit first reviewed the plan document, which provided that an employee is totally disabled if “because of Illness or Injury, [he or she is] unable to perform all of the essential functions of [his or her] job.” Further, the court stated that an ERISA plan must consider whether the claimant can actually perform all the job requirements and that a denial is arbitrary and capricious if premised on medical reports that fail to consider one or more of the claimant’s essential job functions. Although the plan consulted with five doctors with different specialty areas, who all came to the conclusion that McMillan was not disabled, the court noted that none of them explained how McMillan could have a job which required some weeks of 100% travel when he had difficulty walking. As such, the court ruled that the plan failed to consider McMillan’s ability to perform the travel and cognitive requirements of his position and remanded McMillan’s claim back to the plan for further processing.

This case serves as a good reminder that employers should properly administer ERISA disability claims. Upon receipt of a claim, an employer should always review the plan terms to determine what steps are required and what specific evidence is necessary to review the claim. An employer should be very detailed in the claim review and follow the plan terms. Additionally, any doctors that are reviewing the claim on behalf of the plan administrator should be provided all pertinent information and encouraged to complete a thorough analysis of the participant’s claims. In the event of a denial, they should be very specific as to why the claim does not meet what’s required under the plan to receive the benefit. It’s also an important reminder that even when an employer turns to a third party to handle the administration of the plan, the employer remains ultimately responsible.

Order and Judgment »