In the case of Van Steen v. Life Insurance Company of North America ,WL 256806 (10th Cir. Jan. 2, 2018) the Tenth Circuit, affirmed the district court’s decision, finding that Life Insurance Company of North America’s decision to terminate Mr. Van Steen’s benefits was arbitrary and capricious. Mr. Van Steen was diagnosed with mild traumatic brain injury as the result of a physical assault. Initially he was prevented from working in any capacity. However, he was eventually cleared to return to work on a part time basis; but with noted limitations including the ability to rest frequently and work from home as necessary. At the time of his disability, Mr. Van Steen was employed by Lockheed Martin Corporation which provided disability coverage under the Lockheed Martin Group Benefits Plan. The short term and long term disability plans were both administered by Life Insurance Company of North America (LINA) and controlled by the Employee Retirement Income Security Act (ERISA).
Mr. Van Steen’s long-term disability benefits were approved on March 30, 2012. Approximately one year later, a LINA representative contacted his primary physician’s office to obtain updated information about Mr. Van Steen’s medical condition and current restrictions. The nurse at Mr. Van Steen’s treating physician’s office advised that Mr. Van Steen’s restrictions were permanent and that his prognosis was poor. Despite medical records detailing Mr. Van Steen’s ongoing medical issues and limitations and the statement of disability from his physician’s office, LINA determined there was insufficient support to justify ongoing disability benefits and notified Mr. Van Steen that his long-term disability benefits were being terminated because in their opinion he could return to a full time work schedule.
Mr. Van Steen appealed the decision twice, both times providing strong proof that he remained incapable of full time work. LINA denied both administrative appeals allowed under the Plan and advised Mr. Van Steen that if he planned to further pursue his claim then he would need to file a lawsuit. Mr. Van Steen, filed his lawsuit and the district court found him to be disabled. LINA appealed that decision and, as noted above, the 10th Circuit Court of Appeals agreed with the District Court’s findings and found LINA’s denial of benefits not only wrong, but arbitrary and capricious.
As noted by the Appellate Court, the Court must initially look at all the evidence to determine if there is proof of disability. As part of Lockheed’s plan, an employee is considered to be disabled if because of injury or sickness, (1) he or she is unable to perform each and every material duty of his or her regular occupation; and (2) after monthly benefits have been payable for 24 months, he or she is unable to perform each and every material duty of any occupation for which he or she may reasonably become qualified based on education, training or experience. However, in order to overturn LINA’s decision to terminate benefits, under ERISA the Court must find that there was substantial evidence in the record to show that Mr. Van Steen is unable to perform every material duty of his occupation eight hours a day five days a week. In other words, LINA’s denial may be upheld unless the Court finds that their decision was arbitrary and capricious, not just wrong.
Upon review of the evidence, the Court found that the evidence did not indicate that Mr. Van Steen could return to full time work as alleged by LINA and that the evidence clearly showed that he was not capable of performing all of his material duties on a fill-time basis. The court determined that the language of the plan cannot be dismissed. The plan states that for residual disability, a determination that the insured is able to perform each and every material duty of his job on a full time basis is required. Thus, to terminate benefits under this Plan, LINA had to have medical evidence confirming that Mr. Van Steen was capable of performing each and every material duty of his occupation.