A recent ruling from the 6th U.S. Circuit Court of Appeals, DeLisle v. Sun Life Assurance Company of Canada, 2009 U.S.App.LEXIS 4251 (March 4), illustrates how courts are now engaging in a more probing and thorough review of ERISA benefit denials. Sherry DeLisle, who sustained significant injuries in an automobile accident, was fired from her job as director of operations for a retail jewelry operation. Shortly thereafter, DeLisle applied for unemployment compensation and later tried working elsewhere; however, her work efforts were unsuccessful. DeLisle then applied for disability benefits both from her employer's group long-term disability insurer, Sun Life, as well as from the Social Security Administration. The Social Security Administration determined DeLisle was disabled as of the date she last worked for the jewelry operation. Sun Life denied her claim, though, asserting that she was not active at work when her disability arose. Litigation ensued, and a district court found the benefit denial arbitrary and capricious and ordered Sun Life to reexamine whether DeLisle was disabled on the date she last worked for the jewelry operation. The 6th Circuit affirmed.

As the Supreme Court directed in Metro.Life Insur. Co. v. Glenn, 128 S.Ct. 2343 (2008), which affirmed a 6th Circuit ruling (Glenn v. MetLife, 461 F.3d 660 (2006)), the court was required to consider multiple factors in assessing the claim, including the insurer's conflict of interest, the plan administrator's consideration of the Social Security determination, the quality and quantity of the medical evidence and opinions presented, as well as Sun Life's reliance on non-medical evidence. The court found substantial evidence of a conflict of interest, particularly in view of its cognizance that ''physicians repeatedly retained by benefits plans may have an incentive to make a finding of 'not disabled' in order to save their employers money and preserve their own consulting arrangements.'' Black & Decker Disability Plan v. Nord, 538 U.S. 822, 832 (2003). The court also recognized its own precedent holding that when a plan administrator both decides claims and pays benefits, ''it has a 'clear incentive' to contract with consultants who are 'inclined to find' that a claimant is not entitled to benefits.'' Kalish v. Liberty Mutual/Liberty Life Assurance, 419 F.3d 501, 507 (6th Cir. 2005).

In view of those precedents, the 6th Circuit noted, ''Five of the six file reviewers Sun Life relied on were under regular contract with Sun Life.'' The court also expressed concern that Sun Life's in-house attorney had misleadingly advised the medical file reviewers that DeLisle was terminated for cause. The court commented that the record supported a conclusion that DeLisle was fired because she was unable to perform her job duties. Given the lack of clarity in the record, the court found, ''the bald assertion that she was fired 'for cause' gave the file reviewers incomplete and potentially prejudicial information, which should have been irrelevant to an impartial assessment of DeLisle's ability to perform her job on a particular day.'' Consequently, the court determined Sun Life's conduct created ''an increased risk of bias in the medical file review process when a conflicted plan administrator gives information to regular independent contractor-consultants that portrays the claimant in a negative light.''

The court next addressed the Social Security finding, explaining that while a Social Security award does not automatically mean the claimant is entitled to benefits under a private disability plan, ''[i]f the plan administrator (1) encourages the applicant to apply for Social Security disability payments; (2) financially benefits from the applicant's receipt of Social Security; and then (3) fails to explain why it is taking a position different from the SSA on the question of disability, the reviewing court should weigh this in favor of a finding that the decision was arbitrary and capricious.'' (citing Bennett v. Kemper Nat'l Servs., 514 F.3d 547, 554 (6th Cir. 2008)).

The court then determined that while SunLife's failure to consider the Social Security award ''[did] not make its denial arbitrary per se,'' it did give rise to concern that the administrator abused its discretion.

After disposing of those issues, the court then assessed the quality and quantity of the evidence presented, and determined that the medical records leading up to DeLisle's job termination demonstrate a host of severe medical symptoms and recommendations that she cut back on work; and the court added: ''That the medical providers who were treating DeLisle before her firing did not explicitly include in their medical opinions statements indicating that she was disabled is of little consequence because DeLisle affirmatively wanted to work through her ailments.'' The court was also critical of the insurer's consultant physicians for failing to consider one of the treating doctor's remarks as to the ''progressive nature of [DeLisle's] medical conditions,'' which would not manifest itself by a ''significant change'' on a particular date. Thus, the court found significant deficiencies in Sun Life's medical review.

Finally, the court assessed Sun Life's reliance on ''non-medical evidence,'' which it described as the significance of the fact that the plaintiff worked up to her date of termination and her failure to apply for benefits until several months after the termination. On that issue, the court relied heavily on Rochow v. Life Ins. Co. of N. Am., 482 F.3d 860 (6th Cir. 2007), which presented similar circumstances; and the court concluded that because Rochow's condition was complex and was diagnosed retrospectively, it was reasonable that the plaintiff would continue working even after he began suffering mysterious, unexplained symptoms. The court in Rochow further noted, ''there is no 'logical incompatibility between working full time and being disabled from working full time.' '' (quoting Hawkins v. First Union Corp. Long-Term Disability Plan, 326 F.3d 914, 918 (7th Cir. 2003)).

The court also rejected Sun Life's arguments that DeLisle's work activity after her termination and her application for unemployment compensation undermined her claim.

Instead, the court found, ''It is not reasonable to conclude from a brief, ultimately unsuccessful attempt to work, that DeLisle was not disabled from her job at Krandall on the day she was fired. Finally, DeLisle's application for unemployment benefits and listing 'lack of work' as her reason for Krandall firing her does not, in the face of the substantial medical evidence indicating that she was suffering from a traumatic head injury and major depression at the time, amount to persuasive evidence that DeLisle was able to complete the duties of her job on April 17. And this is especially true where the progressive nature of her diagnoses may have made it difficult for her to acknowledge her disability.''

Hence, the court found Sun Life's denial of benefits an abuse of the insurer's discretion. A dissenting opinion was filed by Judge Alice Batchelder.

DeLisle is very a significant ruling. The court obviously took seriously the Supreme Court's directive in Glenn, by virtue of its citation of by virtue of its citation of Universal Camera Corp. v. NLRB, 340 U.S. 474, 490, 71 S. Ct. 456, 95 L. Ed. 456 (1951), that ''courts must now assume more responsibility for the reasonableness and fairness of [ERISA plan administrators'] decisions than some courts have shown in the past.'' Thus the court found that DeLisle, while highly motivated to keep working, was obviously incapable. The 6th Circuit carefully examined all aspects of this case to conclude that from a logical standpoint, Sherry DeLisle was a disabled individual who qualified for benefits under the income protection insurance policy that her employer prudently purchased.

In addition to casting doubt on the objectivity of the insurer's file reviewers, of particular note was the court's point about DeLisle's efforts to try working after she lost her job. While it is easy to envision situations where such efforts might undermine a disability claim, the Social Security case law provides helpful guidance in this area. For example, while a claimant's statement that he is ready, willing and able to work for the purposes of seeking unemployment compensation may adversely affect the credibility of his claim of total disability for the same time period, it is not conclusive. See, e.g., Jernigan v. Sullivan, 948 F.2d 1070, 1074 (8th Cir. 1991); Perez v. Secretary of HEW, 622 F.2d 1, 3 (1st Cir. 1980); Bartell v. Cohen, 445 F.2d 80, 82 (7th Cir. 1971). Indeed, Bartell makes that point that a disability claimant's attempts to find a job are ''relevant only to her motivation and not to whether she was, in fact, disabled.'' Those cases also sensibly recognize that some claimants exaggerate their capabilities, seek work that would accommodate their disabilities, or the claimant's may simply be desperate financially. In this ruling, the 6th Circuit recognized the reality of DeLisle's situation and based on Glenn's mandate that the court review the totality of the circumstances and assess a combination of factors, the 6th Circuit appropriately found error in the insurer's determination.