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Insurance Administrators Must Rely on More than a Scintilla of Evidence when Revoking Long-Term Disability Benefits
Williams v. Metropolitan Life Insurance Company
Plaintiff Gloria Williams was employed as a customer service representative with Cingular Wireless (“Cingular”). Her primary job responsibilities consisted of speaking with customers on the telephone and typing data into a computer. Ms. Williams was a member of Cingular’s insurance plan, issued by the Defendant, Metropolitan Life Insurance Company (“MetLife”).
Beginning in the 1990’s, Ms. Williams began suffering from medical issues with her hands and wrists, including tendonitis and carpel tunnel syndrome. She underwent nine medical procedures to treat these conditions. In April 2003, she was forced to leave work due to ongoing wrist and hand pain. Her doctor advised her to avoid repetitive computer work and hand use, which left her unable to perform the primary functions of her job. After maxing out MetLife’s short-term disability benefits, she pursued long-term disability benefits. For the next eighteen months she was on long-term disability, until suddenly, MetLife revoked her benefits.
MetLife claimed that Ms. Williams’ medical documents did not substantiate her inability to perform her customary occupation as a customer service representative with Cingular. MetLife had Ms. Williams’ medical records reviewed by two independent physicians. Both physicians focused on Ms. Williams’ ancillary neck and shoulder problems, rather than her hand and wrist problems, to conclude that her medical file did not substantiate her asserted inability to function at work.
As a result, Ms. Williams filed a lawsuit in the District Court of the Eastern District of North Carolina. Both Ms. Williams and MetLife filed Motions for Summary Judgment. Judge Dever granted Ms. Williams’ Motion for Summary Judgment, and entered final judgment in her favor. The trial court ordered MetLife to reinstate Ms. Williams’ long-term disability benefits.
On appeal, the primary issue was whether the trial court erred in holding that MetLife, the administrator of an employee benefit plan governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., abused its discretion by terminating Ms. Williams’ long-term disability benefits. MetLife argued that the trial court did not follow the correct legal analysis, as mandated by the United States Supreme Court in Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105 (2008).
The appellate court began by examining the legal standard used by the trial court. The trial court had found that MetLife had a conflict of interest because MetLife both evaluated claims for benefits and also paid those claims. This is referred to as a “structural” conflict of interest. Prior to Glenn, the Fourth Circuit reviewed discretionary decisions made by ERISA administrators (like MetLife), operating with a structural conflict of interest, under a modified abuse of discretion standard. Under the modified abuse of discretion standard, courts need not give deference to the administrator’s decision.
Yet in Glenn, the Supreme Court held that discretionary decisions made by ERISA administrators like MetLife, operating with a structural conflict of interest, were entitled to deference by courts. The Supreme Court made clear that the proper standard of review by a court was abuse of discretion, not modified abuse of discretion. Under the abuse of discretion standard, the discretionary decisions of ERISA administrators operating under a structural conflict of interest must be reasonable and supported by substantial evidence. To be considered reasonable, the administrator’s decision must result from a “deliberate, principled reasoning process.” Williams at *9.
The Fourth Circuit Court of Appeals applied the abuse of discretion standard and affirmed the trial court’s decision. The author of the opinion, Judge Keenan, concluded that MetLife’s rationale in terminating Ms. Williams’ benefits was not supported by substantial evidence. It was also not reasoned and principled. In the face of “overwhelming evidence” concerning Ms. Williams’ continued pain and difficulty in using her hands and wrists, MetLife instead relied on a “scintilla of evidence” by the two independent physicians who reviewed Ms. Williams’ file. Williams at *17. MetLife disregarded, without justification, Ms. Williams’ physician’s conclusions regarding her hand and wrist pain and its effect on her ability to type. Therefore, even though the trial court applied the wrong legal standard—the modified abuse of discretion standard—under the correct legal standard—abuse of discretion—MetLife’s decision to revoke Ms. Williams’ long-term disability benefits was still not reasonable and was not supported by substantial evidence. Consequently, the appellate court upheld the trial court’s decision directing MetLife to reinstate Ms. Williams’ long-term disability benefits.
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