&uot Erisa and Disability Benefits Law Blog: Federal Court Finds Surveillance Did Not Justify Termination of ERISA Disability Claim
08 | 29 | 2006 Posted By John Wood
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Federal Court Finds Surveillance Did Not Justify Termination of ERISA Disability Claim

This is an interesting ERISA disability case out of Wisconsin.  The plaintiff, Mark Holoubek, suffered from the effects of fibromyalgia and chronic headaches diagnosed by his physicians.  He eventually left his job as a materials manager for Johnson Controls, Inc. 

Holoubek engaged in a lengthy battle with Unum Life Insurance Company of America, the plan administrator, over his entitlement to benefits.  Unum paid Holoubek for over two years, but then terminated his disability claim.  Unum relied on opinions from its in-house physician, a clinical consultant, and a nurse.  The company obtained surveillance that it claimed showed Holoubek performing activities that were inconsistent with his reported limitations.  Holoubek submitted several internal appeals before filing suit in federal court.

The court held that Unum's termination of benefits was arbitrary and capricious.  It reasoned that the contents of the record at the time of the initial denial actually supported the continued payment of benefits.  Moreover, although surveillance showed Holoubek doing things such as operating a forklift at an apartment construction worksite, the court found that the surveillance did not provide a justification for claim termination.  During the appeals process, Holoubek described his situation as "desperate" and explained that he had worked because he feared losing his financial investment in the apartments under construction.  Statements of persons from the worksite indicated that Holoubek had doubled-up on his medication and that, while working, he would lose his place in discussions, repeat himself, and suffer muscle spasm, dizziness, and headaches.  

Quoting Hawkins v. First Union Corp. Long-Term Disability Plan, 326 F.3d 914, 918 (7th Cir. 2003), the court ruled that a desperate person might "force himself to work despite an illness that everyone agree[s] [is] totally disabling."  The court stated that "even a desperate person may not be able to maintain such a level of effort indefinitely.  Accordingly, [Unum's] four days of surveillance is of little value because it fails to demonstrate that [Holoubek] could sustain such a level of activity on a continuous basis."

The court ordered Unum to pay Holoubek’s past-due benefits and reinstate his ongoing benefits.  The court dismissed Unum's counterclaim to recover an alleged overpayment of benefits resulting from his receipt of Social Security disability benefits.  The court concluded that Unum was impermissibly seeking legal relief, rather than equitable relief, under ERISA. 

This case is worth reading in its entirety.  The cite is Holoubek v. Unum Life Ins. Co. of Amer., 2006 WL 2434991 (W.D. Wis. Aug. 22, 2006).

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