AMPLE CREDIBLE EVIDENCE SUPPORTED DISABILITY BENEFIT TERMINATION

In Geiger v. Aetna Life Insurance Company, No. 16-2790, 2017 U.S. App. LEXIS 245 (7th Cir. Jan. 6, 2017), the Seventh Circuit Court of Appeals upheld the U.S. District Court for the Northern Illinois’s grant of summary judgment in favor of Aetna on its decision to terminate long-term disability benefits under a policy that was part of an employee welfare benefits plan governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). The appeals court also upheld the trial court’s denial of plaintiff’s attempt to conduct limited discovery to address an alleged conflict of interest in Aetna’s handling of the claim.

Donna Geiger worked as an account executive at Sprint Nextel from 2001 to 2009 and was a participant in the company’s employee welfare benefit plan, governed by ERISA. Aetna issued and was the claims administrator for the plan’s disability policy. In October 2009, Geiger stopped working at Sprint and claimed short term disability, which was approved by Sprint, due to lumbar back pain caused by a previous discectomy, and severe ankle pain. In January 2010, she had surgery on both ankles and eventually underwent a full ankle replacement in December 2010. During that time, Aetna determined that Geiger was disabled from her occupation as an account executive under the Plan and approved her claim for long term disability benefits.

To receive benefits during the first two years, the Plan required that Geiger be totally disabled from performing the duties of her own occupation. After two years, the Plan required that she be disabled from performing the duties of any occupation and as the two-year anniversary was approaching, Aetna began a review of the claim. The company terminated Geiger’s benefits in August 2012 after her initial 24-month period of LTD benefits expired which Geiger appealed. As part of the review, Aetna obtained peer reviews from two independent physicians, one of which concluded that Geiger’s ankle condition would not preclude her from sedentary work. It also consulted Geiger’s anesthesiologist, who agreed that Geiger was capable of sedentary work. The other independent physician reached the opposite conclusion, finding that Geiger could not perform sedentary work and on May 1, 2013, Aetna reinstated Geiger’s benefits, finding “sufficient medical evidence to support a functional impairment which precluded the employee from performing the material duties of her own occupation.”

In May 2014, Aetna again terminated Geiger’s benefits after determining that she was not totally disabled. The impetus for this termination was that Geiger had been observed on surveillance video getting into and driving an SUV, shopping at numerous locations and carrying bags during those activities, all with no apparent difficulty. Geiger again appealed, and the decision was once again upheld in February 2015, after which Geiger filed suit in the Northern District of Illinois.

Both parties moved for summary judgment and the court granted summary judgment to Aetna, holding that Aetna’s decision was not arbitrary and capricious under Section 1133 of ERISA because, among other things, Aetna had, during the process, conducted “an Independent Medical Examination, three Independent Physician Peer Reviews, a Comprehensive Clinical Assessment, a Transferrable Skills Assessment, activity report surveillance, multiple communications with Ms. Geiger’s team of physicians, and even reversed its first termination after a holistic review of Ms. Geiger’s medical history and claim application.” As such, the judge determined that the termination decision was reasonable. The court also denied plaintiff’s attempt to conduct limited discovery into Aetna’s alleged conflict of interest stating that Aetna took measures to ensure that it followed “a reasonable procedure with sufficient safeguards to prevent a detrimental conflict of interest,” including those mentioned above.

Geiger appealed claiming that the district court had erred both in granting summary judgment to Aetna and in denying discovery on the conflict issue. Geiger argued that Aetna’s termination of her benefits was arbitrary and capricious because it relied on the same evidence it had previously considered when reinstating her benefits, yet reached the opposite conclusion. The court disagreed determining that the new surveillance evidence supported one of the independent doctor’s opinions and refuted the other’s. It further noted that Aetna was entitled to seek and consider new information, change its mind in appropriate cases, and perform a periodic review of a beneficiary’s disability status. As such, it held that Aetna’s termination was not arbitrary and capricious and affirmed the district court’s decision.

The court also affirmed the lower court’s ruling denying discovery on the conflict of interest issue. It noted that a conflict of interest exists when, a plan administrator has both the discretionary authority to determine eligibility for benefits and the obligation to pay benefits when due, which was undisputed in this case. However, it also stated that discovery in a benefits case is only permitted under exceptional circumstances and that “it is thus not the existence of a conflict of interest—which is a given in almost all ERISA cases—but the gravity of the conflict, as inferred from the circumstances, that is critical.” It further noted that conflicts must be viewed considering the steps the insurer takes to minimize the potential bias and based on the district court’s finding that Aetna’s procedures were reasonable and sufficiently safeguarded against a detrimental conflict of interest and that that court has inherent broad discretion to control discovery, it determined that the district court did not abuse its discretion in denying Geiger’s request for discovery.

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