Your ERISA Watch – Eighth Circuit Warns Disability Administrators to Think Twice Before Terminating Disability Benefits

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Eighth Circuit reversed a denial of disability benefits to a long-term recipient of such benefits: Roehr v. Sun Life Assurance Co. of Canada, No. 21-1559, __ F.4th __, 2021 WL 6109959 (8th Cir. Dec. 27, 2021) (Before Circuit Judges Kelly, Erickson, and Grasz).

Insurers who are stuck with long-term expensive disability claims are often looking for ways to get rid of them. However, in this new decision from the Eighth Circuit, the court has warned insurers that they must be careful in how they deny those claims. While an insurer is not obligated to keep paying benefits just because it has done so in the past, it needs to have a good explanation for reversing itself, especially if it has been paying for almost a decade and the medical evidence has remained largely unchanged.

Here, Dr. Todd Roehr was a board-certified anesthesiologist in Davenport, Iowa. In 2004, Dr. Roehr began experiencing intermittent tremors in his hands and fingers. Dr. Roehr was concerned because his symptoms could lead to catastrophic results for his patients if they occurred at the wrong time, and also because he had a history of Parkinson’s disease in his family.

Dr. Roehr attempted to treat his condition with several doctors, but they were unable to agree on a specific diagnosis and his symptoms did not alleviate. Out of concern for his patients and his career, he stopped working and submitted a claim for long-term disability benefits to Sun Life, the insurer of his employer’s ERISA-governed disability benefit plan.

Sun Life approved his claim and paid benefits for nearly ten years. During this time, Dr. Roehr continued treatment, but he still experienced tremors, which were partly controlled by medication. In December of 2017, Sun Life suddenly terminated Dr. Roehr’s benefits, contending that he no longer met the plan definition of disability. In doing so, Sun Life pointed to several factors, including the lack of a concrete diagnosis, as well as medical records that suggested to Sun Life that Dr. Roehr’s condition might be “psychogenic,” had improved, or was not sufficiently impairing. Sun Life also demanded that Dr. Roehr return ten months of benefits, amounting to more than $100,000.

Dr. Roehr unsuccessfully appealed to Sun Life, and then filed suit against Sun Life. The district court concluded that Sun Life’s decision was entitled to deferential review, and that “substantial evidence” existed in the administrative record to support Sun Life’s decision. As a result, it granted judgment to Sun Life. Dr. Roehr appealed.

On appeal, the Eighth Circuit rejected Dr. Roehr’s argument that the district court used the wrong standard of review. It ruled that the mere presence of a conflict of interest – which existed here because Sun Life was both the adjudicator and payer of benefits – was insufficient to warrant less deferential review. The court further noted that Sun Life “actively sought to reduce any potential conflict of interest or bias” by retaining independent physicians and consulting with Dr. Roehr’s doctor before making its decision. As a result, the court agreed that Sun Life’s decision should be reviewed for “reasonableness” and whether it was supported by “substantial evidence.”

However, the court found that Sun Life erred even under this deferential standard of review. The court first noted some “unique factors” that complicated its review. The cause of Dr. Roehr’s tremors was “unexplained,” medical records showed that he had recently had “temporary improvement” in his condition, and Dr. Roehr had not undergone some suggested treatment, such as a neuropsychological examination. However, the court found that these were not serious concerns. Dr. Roehr’s improvement was “inherent” in an intermittent condition that waxed and waned. Furthermore, Sun Life’s own doctors were uncertain about the disabling nature of Dr. Roehr’s condition and had recommended further inquiry by Sun Life, in which it did not engage.

More important to the court’s analysis was the fact that Sun Life had paid Dr. Roehr benefits for almost ten years without complaining, and then, when denying his claim, relied on many of the same records it had previously accepted. “While Roehr bears the burden of proving entitlement to benefits, this Court has explained that a plan administrator’s reliance on the same evidence to both find a disability and later discredit that disability does not amount to a reliance on ‘substantial evidence.’” The court found that Sun Life’s decision was “nothing more than a sudden change of heart on essentially the same record after almost a decade—and with no notice to Roehr prior to his benefits’ termination.” As a result, Sun Life had left Dr. Roehr “without any meaningful opportunity to respond or seek other treatment.”

As a result, the court concluded that Sun Life’s “about-face” was unreasonable, and it remanded to the district court with instructions to order Dr. Roehr’s reinstatement of benefits.

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