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Court finds short-term disability denial arbitrary and capricious

On September 26, a U.S. magistrate judge in Ohio found that a plan administrator had engaged in an arbitrary and capricious decision-making process when it denied a Honda account representative’s short-term disability claim. 

Miller’s circumstances 

In Miller v. Sedgwick Claims Management Services, Inc., STD claimant Miller’s job included long periods of sitting in the office plus travel to conferences that required extended days with extensive walking.

 

She filed for STD through her employer-supplied plan because of multiple impairments, including spondyloarthropathy, a type of arthritis involving places “where ligaments and tendons attach to bones,” according to the American College of Rheumatology. Her type of arthritis mostly impacts the spine. 

Her medical records also mentioned diagnoses of fibromyalgia, insomnia and fatigue, Crohn’s disease, chronic pain and other impairments. 

An important piece of evidence in the record was a functional capacity evaluation or FCE, an assessment of “posture, flexibility, ambulation, hand function, and strength.” A physical therapist performed the FCE over two days, concluding the claimant’s “[o]bjective signs coincided with … discomfort” and that claimant’s condition is progressive with “physical abilities … greatly limited by her pain and discomfort.” 

Miller submitted records from her treating doctor that supported a finding of disability during the time at issue, during which he said she would not be able to travel or fly, or walk or stand for extended periods of time. 

Sedgwick initially denied the claim for a lack of objective evidence.  It denied it again on appeal after two doctors performed a review of the paper file without any physical examination. Both doctors cherry-picked through the evidence, emphasizing normal findings and ignoring much of the evidence of impairment. 

Court’s observations 

The federal law ERISA requires the reviewing court to assess whether the administrator’s claim denial was arbitrary and capricious. The court reviewed Sixth Circuit law and explained that “arbitrary and capricious” is a “deferential standard” with “some teeth.” To survive the review, there must have been some reasoning supported by “substantial evidence” upon which to base the denial. 

Specifically, the court said that the denial was arbitrary and capricious because the administrator: 

  • Relied on doctors’ paper-record reviews without ordering a physical examination when subjective, chronic pain was at issue and credibility determinations were required
  • Said that the claimant did not provide objective evidence of disability, when the FCE in the record provides that objective support for her alleged impairments and limitations
  • Discounted the claimant’s treating doctor’s opinions using cherry picked evidence, while ignoring evidence of impairment
  • Used a “flawed decision-making process” that was not “fair and reasoned” 

The court emphasized that it was the “cumulative effect” of all these mistakes that led to a finding of arbitrary and capricious decision making. 

The Miller case is available on Westlaw at 2018 WL 4610515.