ERISA Plans: Part-time employee entitled to disability benefits

In Van Steen v. Life Insurance Company N.A., the Tenth Circuit Court of Appeals upheld the grant of long-term disability benefits to an employee working part-time.

Carl Van Steen was employed as a systems integration business analyst for Lockheed. In October of 2011, he suffered a mild traumatic brain injury after being physically assaulted while walking his dog. Van Steen claimed the injury caused cognitive dysfunction that prevented him from performing his job.

Benefits initially approved

Van Steen applied for and initially began to receive long-term disability benefits from the Lockheed Martin Group Benefits Plan, an ERISA plan administered and funded by Life Insurance Company of North America (LINA). Van Steen was off work from October 2011 until September 2012. In September of 2012, after being cleared for part-time work by his primary treating physician, Dr. Reinhard, Van Steen began working every other day, working up to a part-time daily schedule that included time working at home so that he could nap when necessary.

Although Van Steen returned to work on a part-time basis, he experienced ongoing cognitive fatigue and headaches, resulting in an inability to stay organized, keep track of deadlines, and remain on task. As a result, he received poor feedback on his job performance.

A year later, benefits were denied

A year after approving Van Steen’s claim for partial long-term disability benefits, LINA contacted Dr. Reinhard, who indicated the restrictions were permanent and not likely to improve. Despite this information, one week later, in April of 2013, LINA sent Van Steen a letter terminating benefits. LINA claimed medical documentation did not preclude a full-time work schedule.

Van Steen exhausted his administrative appeals under the plan and then sought relief in district court. The district court reversed the denial of benefits, finding LINA’s decision arbitrary and capricious. The arbitrary and capricious standard applies to review of a benefits decision where, as here, the plan grants the administrator discretionary authority to determine eligibility for benefits. Under this standard, the decision by the plan administrator would be upheld so long as the decision was made on a reasoned basis and supported by substantial evidence.

The plan language controls

Lockheed’s plan defined “disabled” as “he or she is unable to perform each and every material duty of his or her regular occupation.” An employee is “residually disabled” if: “he or she is unable to perform each and every material duty of his or her regular occupation on a full-time basis.” Here, under the plan, full-time meant eight hours a day and five days a week.

To reverse the finding of eligibility for benefits by the district court, LINA needed to show Van Steen could perform “each and every material duty” of the system analyst job on a “full-time” basis. LINA argued it based its decision on updated medical evidence reviewed by case managers, an on-staff physician, and an independent board certified clinical neuropsychologist. Problem was none of LINA’s medical evidence established Van Steen was capable of performing all of the material job duties of the system analyst job on a full-time basis.

LINA’s experts gave opinions about Van Steen’s ability to lift 10 to 20 pounds and his ability to sit, stand and walk for an eight-hour workday. Another said a “structured, graduated schedule of work reintroduction would appear prudent.” The court noted that this was not useful, as Van Steen was already working part-time. A neuropsychologist concluded Van Steen’s cognitive limitations did not “entirely preclude continuous gainful employment.” Another doctor conceded Van Steen was mildly impaired with respect to rapid information processing and said it would take him longer to complete tasks.

On the other hand, Van Steen’s physician gave the opinion he would not be able to perform the material duties of the system analyst job on a full-time basis. The physicians and experts who did analyze the distinction between part-time and full time work all concluded Van Steen’s current cognitive limitations rendered him not capable of working at the system analyst position for an eight-hour day.

Looking at the definition of residual disability in the plan, LINA needed medical evidence to show Van Steen was capable of performing each and every material duty of the systems analyst position on a full-time basis. While LINA had discretion in interpreting and administering the plan, this discretion did not permit LINA to ignore the language of the plan.

Practical takeaway

Under ERISA, the language of the plan at issue controls decisions made under the plan.

As Lockheed’s administrator, LINA had full discretionary authority to interpret the terms of the ERISA plan. To interpret a plan, an administrator must know exactly what the plan provides. Here, LINA relied on evidence from several medical and vocational experts regarding Van Steen’s condition. However, none gave an opinion about Van Steen’s ability to perform each and every material duty of the system analyst position on a full-time basis.

When making any decision about benefits under an ERISA plan, the language of the plan must be consulted. In addition to reviewing the plan language, vocational or medical experts must be given the job description and a clear explanation of the job requirements to express an opinion relevant to the plan language and the job duties.

Van Steen v. Life Insurance Company N.A., No. 16-1405 (10th Cir. 2018)