Legal Summary: Smith v. Bayer Corporation Long Term Disability Plan

No. 3:04-CV-128, 2009 WL 676774 (E.D. Tenn. Mar. 11, 2009)
275 F. App’x 495 (6th Cir. 2008) (Unpublished)

Our client was employed in a demanding sales position before he became disabled and had to stop working. Smith v. Bayer Corp. Long Term Disability Plan, 275 F. App’x 495, 497 (6th Cir. 2008). After he received short-term disability benefits for a couple of months, our client’s employer notified him that its third-party plan administrator had denied his claim for long-term disability benefits. Id. at 498.

Not long after, our client appealed that decision but was denied once more. Id. We sued, and the court that heard our case ordered the plan administrator to reconsider its decision. Id. After that second review, our client’s employer issued a denial of our client’s claim for a third time, so we sued again. Id. This time, the court simply concluded that the employer’s decision was arbitrary and capricious and thus ordered our client’s employer to pay him benefits. Id. at 497.

Our client’s employer appealed the court’s decision. Id. But, the Sixth Circuit Court of Appeals rejected the employer’s arguments, concluding that the trial court was correct to award our client benefits for two of the relevant time periods at issue. Id. For the third relevant time period, the Sixth Circuit ordered the lower court to review our client’s case under a different standard. Id.

As indicated above, the Sixth Circuit broke its decision down into three relevant time periods based on the standards that the plan administrator should have been applying to our client’s claim. The first time period was the first six-month stretch during which our client could have received long-term disability benefits. Id. at 505. The appropriate standard during this time was whether our client could “perform the essential duties of [his] regular occupation.” Id.

The evidence, according to the Sixth Circuit, supported that our client met the relevant standard, despite the plan administrator’s conclusion otherwise. See id. at 509. To begin, the court highlighted how both of our client’s treating physicians said, “they did not believe that [our client] was able to perform such complex tasks [required by his job] adequately.” Id. at 505. Yet, problematically, the plan administrator chose to “rel[y] upon experts who never once met with [our client] in person” instead of crediting our client’s treating physicians. See id. at 506.

Further, the court was concerned because not only did the plan administrator’s experts never examine our client in person, but the experts also chose to mischaracterize the evidence they did possess regarding our client’s condition. Id. at 506-09. For example, one expert sought information about our client from one of his treating physicians but then “mischaracterized the treating physician’s comments.” See id. at 506. Then, another expert based her opinion upon a statement from our client which she did “not place[] in proper context” given when our client said it. Id. A third expert used evidence of tasks that our client completed before he left his sales position as evidence that he was not sufficiently disabled after he left his sales position. Id. at 507. Based on these examples and more, the Sixth Circuit concluded that our client’s employer was unreasonable to decide that our client was not sufficiently disabled during the first six-month period. Id. at 509.

As for the second relevant time period, the Sixth Circuit explained that it began when the first six-month period was over and extended until the time when our client started working at his retail job. See id. at 509, 512. The appropriate standard during this time was whether our client was “totally disabled,” which the plan defined as being “unable to work at any job for which [he or she is] or could become qualified by education, training, or experience.” Id. at 505.

The Sixth Circuit found that the lower court “did not expressly explain how [our client] met the post-six-month definition of total disability,” so it decided to return that portion of the case to the lower court to review again. Id. at 511.

Lastly, the third time period consisted of the time after which our client began working at a retail job and extended until the time of the trial. See id. at 512. Our client’s employer attempted to argue that language in the summary plan description ensured automatic stoppage of benefits if a claimant, like our client, began working again in any capacity. See id. The Sixth Circuit however rejected that argument, explaining that an automatic stoppage provision could have no effect here, since our client never began receiving long-term disability benefits in the first place. Id.

Furthermore, our client’s employer was not permitted, according to the court, to deny our client partial-disability benefits, and thus penalize our client for seeking retail employment, when the whole reason our client had to get the retail job was because the employer arbitrarily refused to pay him long-term disability benefits. See id. at 513. Thus, the Sixth Circuit concluded, in line with the lower court, that the decision to deny our client partial-disability benefits during the third relevant time period was arbitrary and capricious. Id. at 513-14.

After our success on appeal, we requested payment of our attorney’s fees from our client’s employer. The magistrate who heard our case agreed with us and recommended that we be awarded our full request of $13,520.00. Smith v. Bayer Corp. Long Term Disability Plan, No. 3:04-CV-128, 2009 WL 676774, at *1 (E.D. Tenn March 11, 2009). The reviewing court later accepted that recommendation and awarded the full amount. Id.

To make its decision, the magistrate analyzed our request under various factors that courts in the Sixth Circuit use to decide requests for attorney’s fees. Id. at *2. Most of the factors weighed in our favor, so it made sense to grant our request. First, the factor that assesses the “opposing party’s ability to satisfy an award of attorney’s fees” weighed in our favor, because the defendant was “a large, multi-national pharmaceutical company with a nationwide presence,” and so its “capacity to pay an award of attorneys’ fees [was] not subject to dispute.” Id. at *2-3.

The next factor assessed the “deterrent effect of an award on other persons under similar circumstances,” and it likewise weighed in our favor, because “there [was] no fear of establishing inappropriate deterrents” and “an award of attorneys fees would properly deter plan administrators from repeating similar mistakes and from appealing such cases in the absence of some other basis for the appeal.” Id. at *3.

Finally, the factor that assessed the “relative merits of the parties’ positions” weighed in our favor as well, because “the merits of [our] position greatly outweigh[ed] those of [our client’s employer].” Id. Indeed, the court noted that “[t]he Sixth Circuit found strongly for [our client] on the majority of the issues before it.” Id. In sum, “the balance of the factors [fell] heavily in favor of [our client],” and, according to the court, “an award of fees and costs against [our client’s employer was] appropriate.” Id.

After determining that we were eligible to receive attorney’s fees, the court then addressed the appropriate amount. Id. at *4. It found that the time we spent preparing our case and the amount of money we requested for that time were both reasonable. Id. Thus, the district court awarded us $13,520.00, the full amount of our request. Id. at *1.

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