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August 2010

Holmstrom v. Metropolitan Life Insurance Co.? Objective Medical Evidence Supports ERISA Plaintiff's Disability Claim

ERISA Plan Administrator's Claim Denial Was Arbitrary and Capricious Where Plaintiff Provided Objective Evidence of Impairment

____F.3d____; __ C.D.O.S. ___ (7th Cir., Aug. 4, 2010)

Plaintiff Lanette Holmstrom ("Plaintiff") received long term disability ("LTD") benefits under an ERISA group disability plan (the "Plan") insured and administered by Metropolitan Life Insurance Company ("MetLife").  Plaintiff stopped working in January 2000 due to a nerve condition in her right arm and was paid disability benefits under the Plan's "own –occupation" standard.  After three failed surgeries she was diagnosed with complex regional pain syndrome ("CRPS").  After Plaintiff's "own occupation" benefits expired, MetLife paid her benefits under the Plan's stricter "any-occupation" definition of disability.  In 2005, MetLife determined Plaintiff was no longer disabled and terminated her benefits. 

Plaintiff appealed and provided MetLife with an August 2005 Functional Capacity Evaluation ("FCE"), bone scan and EMG nerve conduction test results, a Social Security Administration ("SSA") award, and other records.

MetLife denied her appeal, indicating a "lack of objective findings to support ongoing total disability" precluded MetLife from determining if her disability was real.  MetLife indicated it could have reached a different decision if Plaintiff had provided another FCE to better quantify restrictions and limitations and a battery to assess her neurocognitive status.

Plaintiff filed a wrongful denial of disability benefits lawsuit against MetLife under ERISA, but dismissed it when MetLife offered another administrative appeal.  Plaintiff submitted a 2007 FCE and cognitive test results from the Schubert General Ability Battery ("Battery").  MetLife again denied her claim.   

Plaintiff sued MetLife again and MetLife counterclaimed to obtain a setoff for Plaintiff's Social Security disability benefits ("SSDB"). The United States District Court for the Northern District of Illinois granted summary judgment for MetLife on Plaintiff's claim for benefits and MetLife's counterclaim.

Without providing any deference to the district court's decision, the Seventh Circuit Court of Appeals applied the arbitrary and capricious standard to the Plaintiff's underlying claim.  The Seventh Circuit reviewed the district court's decision to grant summary judgment de novo.  However, when evaluating the underlying claim directly, the Seventh Circuit applied the arbitrary and capricious standard. 

MetLife had relied on Plaintiff's normal nuclear bone scan and EMG test results in rejecting her claim.  The Seventh Circuit held these tests do not always show indicia of CRPS.  Plaintiff's treating physician explained why these tests were insignificant, but there was no acknowledgement of this in MetLife's disability determinations.  Further, with the exception of temperature difference, MetLife did not acknowledge the clinically observable indicia of CRPS in the treating physician's examination notes and letters, including hyperhidrosis, spasm, sweating, and temperature differences.

The Seventh Circuit rejected as arbitrary an administrator's requirement that a claimant prove her "condition" with objective data where no definitive objective test exists for the "condition or its severity."  The Seventh Circuit had "allowed a plan administrator to require a certain degree of 'objectivity' in terms of measurement of physical limitations as observed in a [FCE]."  The Seventh Circuit acknowledged that the degree of pain or fatigue that limits an individual's functional capabilities can be objectively measured.

The Seventh Circuit held the Plaintiff's 2007 FCE provided objective support of her functional limitations.  She did not meet the requirements of sedentary work in the majority of the tests.  The tests were repeated the next day and resulted in a reduction of about 20%, suggesting consistency in effort and poor endurance.  MetLife had rejected the 2007 FCE, finding it unclear whether the test results were due to physical incapacity or poor effort.  However, the Seventh Circuit found the 2007 FCE did not call Plaintiff's effort into doubt.

Plaintiff was required to apply for SSDB under Plan, applied for it at MetLife's insistence, and was awarded SSDB.  The Seventh Circuit held a plan administrator is not bound by a SSA benefit determination, but that MetLife's failure to consider the SSA's determination indicated arbitrary decision making. 

Plaintiff underwent three surgeries and had a heavy regiment of pain medication.  The Seventh Circuit held MetLife's claims the surgeries resolved her condition and its speculation her medication existed only to feed a drug addiction were unsupported and ignored MetLife's own reviewing physician's opinion her pain was genuine and she did not suffer from an addiction.

The Seventh Circuit held MetLife arbitrarily discounted Plaintiff's Battery test results, which were performed by an experienced Ph.D., who expressed extreme doubt that Plaintiff could return to the workforce.  The Seventh Circuit rejected MetLife's arguments the Battery did not have appropriate measures of "symptom validity."  The Seventh Circuit held MetLife's request for 'neuropsychological testing' was broad and MetLife provided no guidance as to what testing should be provided, or by whom.

The Seventh Circuit held MetLife could disagree with Plaintiff's treating physician's opinion if there was evidence in the record that provided a reasoned basis for doing so, but held that no substantial evidence existed to that effect.  One of MetLife's own reviewing physicians retracted his prior conclusion that disability had not been established and recommended an independent clinical examination.  However, MetLife ignored this recommendation and relied on the doctor's original conclusion, which he retracted.  

The Seventh Circuit held MetLife "moved the target" by making general requests for testing but denying the information when Plaintiff complied for failure to meet new requirements that had not been revealed beforehand.  The Seventh Circuit concluded MetLife's selective consideration of evidence, its conduct regarding the SSA award, and repeated moving of the target, were each factors suggesting arbitrary administration and a conflict of interest.

The Seventh Circuit reversed and remanded the district court's decision and ordered retroactive reinstatement of benefits, subject to the offset for SSDB payments.

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This opinion may be cited as precedent now.  The result in this case could change, however, if the decision is modified by the issuing court, or granted review by the United States Supreme Court. 

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