Sherry DeLisle continued working after her car crashes in 1998 and 2000. She suffered spinal and closed head injuries. Her employer, Krandall & Sons, fired her on April 17, 2002, stating that “she was not doing her job.” Eight months later, DeLisle filed for long-term disability benefits with Sun Life, the insurer of Krandall's disability plan. She submitted medical records and statements of five treating physicians. She listed April 17, 2002, as her date of disability.
The Social Security Administration determined that DeLisle was eligible for disability benefits effective April 17, 2002. Nonetheless, Sun Life denied her claim and upheld its decision in an internal appeal. The company found that she was no “actively at work” under the policy when her claimed disability started. DeLisle filed suit in federal court. The district judge found that Sun Life’s decision was arbitrary and capricious and ordered the company to determine whether DeLisle was in fact disabled on April 17, 2002.
On remand, Sun Life reviewed DeLisle’s extensive medical evidence. Sun Life sent DeLisle’s records out for review by a clinical neuropsychologist, a psychiatrist, an orthopedist, and a rehabilitation counselor. It denied her claim again, stating that the medical evidence did “not document the presence of conditions physical, psychological, or cognitive in nature of such severity that [DeLisle] could not continue to perform her occupation on April 17, 2002 or thereafter…”
DeLisle appealed again, and Sun Life sent her records to three more records-reviewers (another neuropsychologist, another psychiatrist, and an orthopedic surgeon). Sun Life upheld its denial of
DeLisle again sued Sun Life. The district court granted her motion for judgment on the administrative record, finding that Sun Life’s denial of benefits was arbitrary and capricious. The district court sent DeLisle’s claim back to Sun Life to determine the amount of her benefits and ordered Sun Life to pay DeLisle's attorney’s fees.
On appeal, the Sixth Circuit upheld the judgment of the lower court. The Sixth Circuit ruled that:
-Sun Life acted under a conflict of interest as claims decision-maker and payor of benefits. As such, the company had a “clear incentive” to find consultants who are “inclined to find” that claimants are not disabled. The Court pointed out that nearly all of the records-reviewers chosen by Sun Life were under regular contract with the company.
-Sun Life’s in-house attorney told at least some of the records-reviewers that DeLisle had been “terminated for cause.” However, the only information communicated to Sun Life by Krandall was that DeLisle was fired “because she was not doing her job.” The assertion that DeLisle was terminated “for cause” gave the records-reviewers incomplete and potentially prejudicial information. The improper communications justified the court “giving more weight” to the conflict of interest.
-The Social Security disability determination was “far from meaningless.” The failure of Sun Life to mention DeLisle’s Social Security award, especially when the policy required her to apply for Social Security disability benefits, was not lost on the court: “Sun Life’s silence here does not make its denial arbitrary per se, but is among those ‘serious concerns’ that, ‘taken with some degree of conflicting interests,’ provide a proper basis for concluding that the administrator abused its discretion.”
-After reviewing the quality and quantity of the medical evidence, the court found that “the entirety of the medical evidence available to Sun Life was not reviewed in a ‘deliberate’ or ‘principled’ fashion, which is a factor suggesting that Sun Life’s ultimate determination was arbitary.”
-The fact that DeLisle worked for two weeks after leaving her employer and listed “lack of work” as her reason for leaving her employer did not amount to persuasive evidence that she was able to complete the duties of her job on April 17, 2002.
For these and other reasons, the Sixth Circuit agreed with the district court and concluded that Sun Life had acted arbitrarily and capriciously.
The case is DeLisle v. Sun Life Assurance Co. of Canada, 2009 U.S. App. LEXIS 4251 (6th Cir. March 4, 2009).