Legal Summary: Hudgins v. BellSouth Long Term Disability Plan for Management Employees 

Hudgins v. BellSouth Long Term Disability Plan for Management Employees
No. 1:05-CV-546-BBM, 2006 WL 8431915 (N.D. Georgia 2006)

Our client was a customer service representative for a telecommunications company before becoming disabled due to fibromyalgia and chronic fatigue syndrome. She was covered under the company’s 1997 plan, with Kemper National Services, later known as Broadspire, acting as a claims administrator. Kemper had “complete discretionary authority to determine benefits under the [long term disability plan] and to interpret the terms and provisions of the Plan regarding long-term disability benefit matters,” meaning that it controls the final decision when awarding benefits to claimants and that in court, its decision would be reviewed under an arbitrary and capricious standard of review.

Under the 1997 plan, the definition of ‘disability” was as follows: “for the first 36 months is defined as to the employee’s own occupation: for the Waiting Period and for the first 36 months after the end of the Qualifying Period, if, as a direct result of an Injury or Sickness, the Participant is unable to perform the material duties of his normal occupation for any employer. Normal occupation is the occupation, job or work the Participant performed at the time he stopped working just prior to a claim being made under the Plan.

After 36 months, the “any occupation” definition details that “after Monthly Benefits are payable for 36 months, only if the Participant is unable to perform the material duties of any occupation for which he is or may become suited based on his education, training or experience.”

Based on our client’s application and her treating physician’s Attending Physician’s Statement (“APS”), Kemper awarded her long term disability benefits under the “own occupation” definition of disability. She later applied for Social Security benefits and her initial claim was denied. One year later, the SSA reversed its decision and awarded benefits after a social security administrative law judge (“ALJ”) ruled that our client’s “assertions concerning her ability to work are credible” and were sufficiently supported by her medical records.  The ALJ also found that our client was so limited due to her disability that she “lacks the residual functional capacity to perform any work activity on a continuous and regular basis.”

As the end date of our client receiving benefits based on meeting the definition for “own occupation” disability approached, Kemper began gathering information to determine her further eligibility under the “any occupation” definition. Upon reviewing the information provided by multiple physicians, Kemper sent our client a letter stating, “it is our opinion that you currently meet the definition of ‘disabled from any occupation’ and will, therefore, continue to be eligible for [long term disability] benefits as long as you meet the requirements of the plan.”

However, Kemper later consulted multiple physicians who countered our client’s physicians’ opinions, arguing that she was capable of working. Kemper ruled that our client was no longer disabled. Our client submitted an appeal to be considered for reinstatement, including more documentation from multiple physicians. Kemper denied this appeal.

Following the denial, we filed claim in court on behalf of our client for recovery of long-term disability benefits pursuant to 29 U.S.C. § 1132(a)(1)(B) which provides that a civil action “may be brought by a participant or beneficiary to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B)

We moved for summary judgment, which is appropriate when “the pleadings, depositions, and affidavits submitted by the parties show that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A fact is considered material if it “might affect the outcome of the suit under the governing law.” Should the record present factual issues, the court must deny the motion and proceed to trial. Club Car, Inc. v. Club Car (Quebec) Imp., Inc., 362 F.3d 775, 783 (11th Cir. 2004) (quoting Clemons v. Dougherty County, 684 F.2d 1365, 1369 (11th Cir. 1982)).

The court began reviewing the case under the de novo standard, which it applies before determining if a decision was arbitrary and capricious. If the case is de novo wrong, the court proceeds to a second step, evaluating the case under the arbitrary and capricious standard of review whether reasonable grounds supported the decision. The decision is reversed if the court finds that it was not supported by reasonable grounds.

The court believes that Broadspire based its denial on the same evidence used to approve her initial claim, which was available eight months before the reversal of our client’s benefits. Broadspire was not entitled to reverse its decision based on the same evidence that it used for an initial approval. The court ruled that the decision to deny our client’s claims was de novo wrong and moved to review the case under the arbitrary and capricious standard.

Under the arbitrary and capricious standard applied in the Eleventh Circuit, the court must determine “whether there was a reasonable basis for the decision, based upon the facts as known to the administrator at the time the decision was made.’” Dyce v. Salaried Employees’ Pension Plan of Allied Corp., 15 F.3d 163, 166 (11th Cir. 1994) (quoting Jett, 890 F.2d 1137, 1139 (11th Cir. 1989)); Cagle v. Bruner, 112 F.3d 1510, 1518 (11th Cir. 1997.)

The court ruled that Broadspire revoking our client’s benefits based on the same underlying evidence initially used to establish her eligibility was not only de novo wrong, but it was so unreasonable as to be arbitrary and capricious. The court further found the decision to deny benefits was neither made rationally nor in good faith, therefore its Motion for Summary Judgment seeking a finding their denial of benefits should be upheld, was denied.

The Court ordered that Broadspire and her previous employer pay our client past disability benefits due plus interest.