Seitz v. Metropolitan Life Insur. Co., 2006 U.S.App.LEXIS 486 (8th Cir. 1/10/2006)(Issue: Job versus Occupation).  This is a case we litigated.  The plaintiff, a pharmaceutical sales representative, suffered from degenerative spinal disc disease which worsened to the point where he could no longer maintain employment.  After a job training session in early 2002, Seitz’s pain flared up to such an extent he had to cease work altogether.  When Seitz applied for benefits under Merck’s disability plan, his manager completed a job description which indicated that the job required the need to sit for five to six hours per day.  Under the terms of the plan, “Totally disabled means you are unable to perform all material aspects of your occupation during the Eligibility Period and during the first 24 consecutive months that benefits are paid under the Long-Term Disability Plan. After the first 24 consecutive months of disability, you must be unable to engage in any Gainful Employment for which you are or may become reasonably qualified by education, training or experience.” 

After Seitz’s treating doctor and an independent examiner limited Seitz to sitting for two hours per day, MetLife sent the claim to be reviewed by an orthopedic surgeon who concurred with the limitations set forth by the treating doctor.  Indeed, MetLife’s reviewing doctor “said that work activities would exacerbate Seitz's condition and render him ‘incapable of performing the essential duties of his job.’" *5.  Nonetheless, MetLife denied the claim, finding that Seitz’s capability of performing light work meant that he was not “unable to perform all material aspects of [his] occupation.”

The district court upheld MetLife’s finding; however, the Court of Appeals reversed despite applying an arbitrary and capricious standard of review to MetLife’s determination.  The court explained: 

MetLife does not dispute that Seitz was limited to sitting only two hours a day. Metlife instead argues that, despite the limitation on sitting, Seitz does not meet the Plan's definition of "totally disabled." The district court stated that MetLife's argument is that Seitz is not totally disabled because he can do some of the material aspects of his job. In its brief, MetLife argues that Seitz is not totally disabled because he can do all of the material aspects of his job, albeit to a limited degree. We reject both of these arguments. *8-*9.

Citing Dowdle v. National Life Insur.Co., 407 F.3d 967 (8th Cir. 2005), the court explained that in construing an own occupation definition of disability, the ability “to perform some job duties is insufficient to deny benefits.” *9 (emphasis in original).  The court also cited cases from the Ninth and Seventh Circuits:

Saffle v. Sierra Pac. Power Co. Bargaining Unit Long Term Disability Plan, 85 F.3d 455, 458 (9th Cir. 1996) (rejecting the insurer's position that a claimant "is not totally disabled if she can perform any single duty of her job, no matter how trivial . . . as 'total disability' would only exist if the person were essentially non-conscious."). We also find unreasonable an interpretation of the Plan that would deny benefits when a claimant is able to perform all material aspects of his job for some limited period of time. See McFarland v. Gen. Am. Life Ins. Co., 149 F.3d 583, 588 (7th Cir. 1998) (holding that a claimant can be totally disabled when "an injury or sickness would not physically prevent an employee from performing any given task, but the injury instead renders the person unable to perform enough of the tasks or to perform for a long enough period to continue working at his regular occupation.").  *9-*10.

The court added:

Seitz's job required him to sit for five to six hours per day. Sitting for up to two hours does not fulfill that material aspect of the job. Furthermore, these interpretations are not "consistent with the goals of the Plan" which are "to provide an umbrella of financial protection for [employees] and [their] families against substantial economic loss as well as provide a level of economic security." Torres, 405 F.3d at 680 (stating that one of the factors to be considered in determining if there has been an abuse of discretion is "whether the administrator's interpretation is consistent with the goals of the Plan").

The court also rejected a contention that Seitz could not qualify for benefits because he continued to work after receiving his diagnosis.  The court explained:

We reject this argument because there is no dispute that Seitz's physical abilities were limited at the time he quit working. Thus, adopting MetLife's position would unfairly punish individuals who test their limitations and attempt to keep working before seeking benefits.

Thus, the court granted Seitz’s request for summary judgment and awarded benefits with interest.  However, the court denied attorneys’ fees, finding that although the court disagreed with MetLife’s interpretation of the plan language, it was not “without merit or a demonstration of bad faith.”

Discussion:      This ruling sensibly rejects a line of cases which include Gallagher v. Reliance Standard Life Insur.Co., 305 F.3d 264 (4^th Cir. 9/25/02)(October 2002), Carr v. Reliance Standard Life Insur.Co., 363 F.3d 604 (6^th Cir. 4/14/2004)(May 2004), and Ellis v. Liberty Life Assur.Co. of Boston, 2004 U.S.App.LEXIS 24199 (5^th Cir. 11/19/2004)(December 2004), which stand for the proposition that the ability to perform some duties precludes an award of benefits.  Citing the majority view as to the meaning of “disabled” under an own occupation disability policy, the court sensibly ruled that Seitz qualified for benefits when he was unable to meet the essential requirements necessary to perform his job.

The court also followed the principles enunciated in Hawkins v. First Union Corp., 326 F.3d 914 (7^th Cir. 4/22/03)(May 2003), in rejecting the argument that Seitz’s ability to work after he was first diagnosed would preclude an award of benefits.  Again, the court applied reason and common sense.

However, the denial of fees is inexplicable.  The court determined that MetLife’s interpretation was contrary to the terms of the benefit plan and also defeated the purpose of the plan yet the court nonetheless denied fees.  Although the Eighth Circuit does not follow other circuits’ presumption in favor of a fee award (Martin v. Ark. Blue Cross & Blue Shield, 299 F.3d 966 (8th Cir. 2002)), fees would still be proper – it appears the court misconstrued the “bad faith” issue.  According to Production & Maintenance Employees' Local 504, Laborers' Int'l Union v. Roadmaster Corp., 954 F.2d 1397, 1405 (7th Cir. 1992), 

Despite the references to Agood faith@ and Aharassment,@ we do not read [Meredith v. Navistar Int'l Transp. Co., 935 F.2d 124, 129 (7th Cir. 1991)] to mean that a party must actually show subjective bad faith to justify a fee awardYRequiring a showing of subjective bad faith would defeat the purpose of this presumption (modest though it may be) because of the difficulty of proving subjective bad faith. Attorney's fee litigation is time-consuming and tedious enough without adding subjective inquiries into litigants' and attorneys' good or bad faith. Instead, we take Meredith's reference to Agood faith@ and Aharassment@ simply to mean that a party who pursues a position that is not substantially justified--that is, a position without a Asolid basis@ --has, in an objective sense, really done nothing more than harass his opponent by putting him through the expense and bother of litigation for no good reason.    

The Eighth Circuit ruled that MetLife’s position was not substantially justified.  To be Asubstantially justified,@ the losing party's position needs to be Amore than merely not frivolous, but less than meritorious.@ Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820, 830 (7th Cir. 1984).  MetLife’s own reviewing doctor supported the limitations that precluded Seitz from performing his job, leading the Eighth Circuit to conclude that no genuine issues of material fact precluded the entry of judgment in plaintiff’s favor.  Fundamental fairness and equity also require an award of fees.  As explained in Hooper v. Demco, Inc., 37 F.3d 287, 291 (7th Cir. 1994):  

We note that the primary purpose of ERISA, to protect the participants in employee benefit plans, is achieved by >establishing standards of conduct, responsibility, and obligations for fiduciaries of employment benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the federal courts.= ERISA ' 2(b), 29 U.S.C. ' 1001(b). To encourage aggrieved parties to seek redress under ERISA, the statute gives the trial court discretion to award attorney's fees to a prevailing party.   

Despite a ruling that affords greater protection to Merck’s 63,000 employees (http://www.hoovers.com/merck-&-co.,-inc./--ID__10986--/free-co-factsheet.xhtml) and also gives greater security to participants in disability benefit plans administered in the Eighth Circuit by clarifying the legal interpretation of total disability, the court denied Seitz an award of fees.  Contrary to ERISA's purpose of Aprotect[ing] . . . the interests of participants in their employee benefit plans and their beneficiaries@ 29 U.S.C. '1001(b), the fee denial simply encourages more claim denials; and at the same time, fee denials hinder claimants= ability to secure legal counsel to litigate their claims.  Indeed, fee awards provide the only incentive for insurers to pay ERISA claims since the ERISA law disallows claims for punitive damages or extracontractual damages.  Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41 (1987).  Moreover, ERISA is a law of equity (Great West Life & Annuity Insurance Company v. Knudson, 122 S.Ct. 708 (2002)); and without a fee award, Seitz’s victory is inequitable because it fails to afford him a make whole remedy.