When an ERISA Claims Administrator Decides an Appeal Two Days Late: Ohio Federal Court Applies De Novo Review and Awards Long-Term Disability Benefits

In Klusmann v. AT&T Umbrella Benefit Plan No. 1, No. 5:24-CV-1295, 2026 WL 2905335 (N.D. Ohio Sept. 28, 2026), the United States District Court for the Northern District of Ohio granted Plaintiff’s motion for judgment on the administrative record, held that the claims administrator forfeited deferential review by issuing its appeal decision two days late, and awarded ERISA long-term disability (LTD) benefits retroactive to November 15, 2023.

What were the injuries behind the claim?

Plaintiff worked for AT&T as a Customer Service Specialist, a position the record rates at the heavy level of physical demand. Following an August 2020 bicycle accident, he sustained a left temporal lobe injury later identified on MRI as a cavernous malformation (cavernoma) with a hemosiderin rim consistent with prior hemorrhage, and he fractured his elbow, ultimately undergoing eight surgeries. He began experiencing seizures after the accident. His treating neurologist, Dr. Azzam, diagnosed partial symptomatic epilepsy with complex partial seizures and, after later review, identified paroxysmal non-epileptic seizures (PNES). Sedgwick, the claims administrator, approved short-term disability benefits and then denied LTD benefits, relying on Dr. Azzam’s return-to-work forms and a transferable skills analysis identifying three sedentary occupations.

Why did the court apply de novo review instead of arbitrary-and-capricious review?

The Plan granted discretionary authority, which ordinarily triggers deferential arbitrary-and-capricious review. The court held that the administrator lost that deference by deciding the appeal late. Reviewing the shift in Sixth Circuit law, the court found that Daniel v. Eaton Corp. no longer binds after the 2017 amendments to 29 C.F.R. § 2560.503-1(l)(2)(i), which added the phrase “without the exercise of discretion by an appropriate fiduciary.” Following Dougharty v. Metropolitan Life Insurance Co. of America and consistent with decisions from the Fourth and Seventh Circuits, the court treated a plan’s failure to strictly adhere to the claims-procedure regulation as grounds for de novo review. Plaintiff filed his appeal on April 30, 2024, the administrator took a timely 45-day extension setting a July 29, 2024 deadline, and it issued its decision on July 31, 2024.

The court rejected both defenses to the late decision. Tolling under § 2560.503-1(i)(4) did not apply, because that provision tolls the deadline only when a claimant fails to submit necessary information, and here the delay came from the administrator waiting a month to schedule the independent medical examination (IME). The court found the two-day delay de minimis but held that defendants failed to show good cause or matters beyond their control: they had everything needed to decide the claim by July 10, 2024, when they received the IME report and transferable skills analysis, and the scheduling delay was their own.

Did the FCE and the neuropsychological report count as objective medical evidence?

The Plan required Objective Medical Evidence and provided that a diagnosis based largely or entirely on self-reported symptoms would not suffice. The court found that both the functional capacity evaluation (FCE) and Dr. Frye’s neuropsychological report qualified. Citing Huffaker v. Metropolitan Life Insurance Co. and Caesar v. Hartford Life & Accident Insurance Co., the court treated the FCE as a reliable and objective method of gauging work capacity, emphasizing that no physician in the record called it invalid and that Dr. Crombie signed his agreement with its results. On the neuropsychological report, the court found that Dr. Frye listed the tests she administered, including the Test of Memory Malingering and the Wechsler Adult Intelligence Scale, explained the results, and found Plaintiff’s performance a valid reflection of his current abilities. The court rejected defendants’ challenges to Dr. Frye’s methodology, her note of limited response bias on a single memory measure, and her diagnosis of mild neurocognitive disorder, observing that defense counsel’s arguments were not themselves medical evidence.

How did the court weigh the evidence under de novo review?

Taking a fresh look at the administrative record, the court found Plaintiff disabled by a preponderance of the evidence as of November 15, 2023. It gave limited weight to the IME by Dr. Plona, who performed minimal neurological testing, did not list the FCE, Dr. Frye’s report, or Dr. Azzam’s November 15, 2023 progress notes in his record review, and did not explain why the FCE and Dr. Frye’s conclusions were incorrect. The court noted that Dr. Azzam declined to provide Social Security disability paperwork but stated that any such paperwork should come from a psychologist or psychiatrist because Plaintiff’s intractable problem was then PNES. Dr. Frye, a neuropsychologist, opined that Plaintiff should remain restricted from any form of work, and the FCE provided further support. No physician in the record refuted either report.

Did the court remand or award benefits outright?

The court awarded benefits rather than remanding. It found the factual record complete and no further fact-finding necessary, and it declined to give defendants a second opportunity to respond to evidence they had held since the start of the appeal. The court observed that both the FCE and Dr. Frye’s report accompanied Plaintiff’s April 30, 2024 appeal, that Sedgwick never asked Dr. Plona to address them, and that Sedgwick could have requested an addendum before the deadline. The court therefore awarded LTD benefits under the Plan, retroactive to November 15, 2023.