District Court Grants Judgment to ERISA Claimant, Faulting Disability Insurer’s Arbitrary and Capricious Denial of Short-Term Disability Benefits

In Liggett v. Principal Financial Group, No. 22-CV-11183, 2025 WL 275119 (E.D. Mich. Jan. 23, 2025), Michigan Eastern District Judge Sean F. Cox conducted a nuanced exploration of the standards and processes required in disability claims adjudication, particularly focusing on the arbitrary and capricious standard of review, and ultimately granted judgment to Plaintiff on his claim for short-term disability (STD) benefits, but granted judgment for Principal on the long-term disability (LTD) benefits claim.

Plaintiff Anthony Liggett was employed as a paralegal at Collins Einhorn Farell P.C. for over fifteen years, during which time he was a participant in the firm’s ERISA-governed STD and LTD plans administered by Principal Life Insurance Company. Liggett stopped working in February 2022, and filed claims for STD and LTD benefits, as a result of a traumatic brain injury (TBI) and subsequent migraines exacerbated by a recent COVID-19 infection. Despite presenting medical evidence from his treating physician, Dr. Pamela Pirzada, which detailed his condition and limitations, Principal Life denied his STD claim, arguing that Liggett had not provided sufficient documentation to verify his disability status during the elimination period. Liggett pursued an administrative appeal regarding his STD claim, which was ultimately denied by Principal Life in July 2023. Meanwhile, Liggett did not pursue an administrative appeal for his LTD claim, which the court deemed abandoned, leading to a summary judgment in favor of Principal Life on this claim.

The court’s legal analysis centered on the arbitrary and capricious standard of review, applicable when plan administrators are vested with discretion to determine eligibility for benefits. Under this deferential standard, a court will uphold the plan administrator’s decision unless it is deemed to lack a deliberate, principled reasoning process or is unsupported by substantial evidence.

In examining the denial of Liggett’s STD claim, the court identified several shortcomings in Principal Life’s decision-making process. Primarily, the court found that Principal Life had arbitrarily dismissed the opinion of Liggett’s treating physician, Dr. Pirzada, without adequate explanation. Dr. Pirzada’s medical assessments, which included a diagnosis of TBI and exacerbated migraines, were supported by objective medical evidence such as MRI results and a history of persistent symptoms. The court reiterated that while plan administrators are not bound to defer to treating physicians, they must nonetheless provide a reasonable explanation when disregarding their findings. This requirement was not met by Principal Life, which failed to substantiate its preference for the conclusions of non-treating physicians who neither examined Liggett nor addressed key aspects of Dr. Pirzada’s findings.

The court criticized Principal Life’s reliance on the opinions of non-treating physicians, highlighting its failure to conduct a physical examination of Liggett despite having the right under the plan to do so. This omission, coupled with the lack of substantial engagement with the treating physician’s opinions, resulted in a flawed evaluation process. Additionally, the court noted the apparent conflict of interest inherent in Principal Life’s dual role as both the evaluator and payer of claims, which the court considered when assessing the integrity of the decision-making process.

The court concluded that Principal Life’s claims decision was arbitrary and capricious and granted summary judgment in favor of Liggett on his STD claim. The court ordered a remand to Principal Life for a full and fair reconsideration, emphasizing the necessity for a thorough and unbiased review process that adequately considers the treating physician’s opinion and addresses potential conflicts of interest.

This ruling underscores the requirement that disability insurers adhere to principled reasoning and substantial evidence in ERISA claims administration. It serves as a cautionary tale for plan administrators, highlighting the potential pitfalls in benefits adjudication when failing to properly evaluate and consider the medical evidence presented, particularly from treating healthcare providers.

If Principal Life or your insurer has denied or otherwise limited your disability insurance claim, contact us for assistance.