LTD Benefits Denied Due To 'Substantial Evidence'
Based on "substantial evidence" and its discretionary authority to determine a participant's eligibility, an insurance company's decision to terminate a beneficiary's long-term disability (LTD) benefits was reasonable, according to a ruling by the Eighth Circuit U.S. Court of Appeals.
In issuing the ruling (McGee v. Reliance Standard Life Insurance Co., No. 03-2372EM), the appeals court overturned an earlier decision by the U.S. District Court for the Eastern District of Missouri, which had concluded that termination of the LTD benefits had been arbitrary and capricious. Not so, said the appeals court after a review of the records.
Robert C. McGee, who was an employee of Hasco International, Inc., filed a claim in December 1999 seeking short-term disability benefits. He stated he was unable to work because of major affective disorder, anxiety, and various physical pains. Reliance Standard, Hasco's insurer, granted the short-term benefits from December 1999 to March 2000. In March 2000, McGee sought long-term benefits based on the same disabilities. Although it initially approved the LTD benefits, Reliance Standard eventually determined McGee should have returned to work by June 1, 2000, based on medical records provided by physicians and a psychologist.
Reliance Standard ultimately hired a psychiatrist to review McGee's medical records. In a letter to Reliance Standard, the psychiatrist wrote: "The records do not substantiate that Mr. McGee has a significant psychiatric impairment that would interfere with his ability to function in a work setting." In the end, the psychiatrist concluded McGee was not disabled, leading Reliance Standard to terminate his LTD benefits.
After the district court found in favor of McGee, Reliance Standard appealed to the circuit court of appeals, arguing that its decision was based on substantial evidence, including inconsistent medical records from McGee's caregivers. The district court, Reliance Standard said, had erred in its review of the evidence by substituting its own judgment for that of Reliance Standard.
Under the deferential standard of review accorded to a plan administrator's denial of benefits, the court of appeals concluded that Reliance Standard's decision was reasonable and it reversed the district court's judgment.
