Fourth Circuit Reverses Long-Term Disability Benefit Denial Due to Plan’s Failure to Adequately Consider Basis for Social Security Administration’s Award of Benefits

In Smith v. Cox Enterprises, Inc. Welfare Benefits Plan, No. 22-2173, __F.4th__, 2025 WL 379876 (4th Cir. Feb. 4, 2025), the Fourth Circuit Court of Appeals reversed the termination of long-term disability benefits where the Defendant Cox Enterprises, Inc. Welfare Benefits Plan failed to discuss conflicting evidence in the form of a consultative report obtained by the Social Security Administration (“SSA”) supporting disability, and thus did not engage in a principled and reasoned decision-making process as required by the federal regulations promulgated for the administration and enforcement of ERISA. The court remanded Plaintiff’s disability claim to the Plan to reconsider its decision after adequately weighing all the evidence.

Plaintiff-Appellant Jeremy Smith, a former customer care technician with Cox Enterprises, had received long-term disability benefits for several years due to severe back issues, including a herniated disk and post-laminectomy syndrome. Initially approved by Aetna, the plan administrator, Smith’s benefits were terminated in 2019 after a review concluded he was capable of working under the “any occupation” standard, which requires showing that the claimant is unable to work in any reasonable occupation due to injury or illness.

Smith challenged this termination, arguing that Aetna failed to properly consider critical medical evidence, including a consultative examination by Dr. Lisa Harris, which played a significant role in the SSA’s recertification of his disability benefits. Despite this, the district court granted summary judgment in favor of Cox Enterprises, leading to Smith’s appeal.

The Fourth Circuit’s analysis was grounded in examining whether Aetna, as the plan administrator, adhered to ERISA’s requirement for a “deliberate, principled reasoning process” in its decision-making. The court scrutinized two primary issues:

Failure to Consider SSA Evidence: The court found that Aetna did not adequately address the SSA’s disability determination, which had recertified Smith’s disability status. Federal regulations under ERISA mandate that plan administrators provide a clear explanation when deviating from SSA determinations. Aetna’s denial letters, however, were criticized for their boilerplate language, which failed to engage specifically with Dr. Harris’s consultative examination report. This report was pivotal in the SSA’s decision to continue Smith’s disability benefits, yet Aetna did not provide a substantive discussion or justification for disregarding this key piece of evidence.

Procedural Unreasonableness: The court emphasized that Aetna’s decision-making process lacked the necessary rigor and transparency. Despite Dr. Harris’s report being part of the administrative record, Aetna ignored this conflicting evidence in its evaluation process. The Fourth Circuit highlighted that ERISA’s procedural requirements necessitate a full and fair review, which includes a thorough examination and discussion of all relevant evidence, especially when it contradicts the plan administrator’s conclusion. By not addressing Dr. Harris’s findings, Aetna failed to meet the standard of a reasoned and principled decision-making process.

The Court’s decision to reverse the district court and remand the case was based on these procedural deficiencies. It directed Aetna to re-evaluate Smith’s claim with due consideration of the SSA’s findings and Dr. Harris’s report, ensuring compliance with ERISA’s mandates for a fair review process.

The ruling serves as a critical reminder of the legal obligations of plan administrators under ERISA, particularly the necessity for a transparent and comprehensive evaluation of disability claims. By requiring Aetna to re-assess Smith’s eligibility for benefits, the Fourth Circuit reinforced the importance of adhering to ERISA’s procedural safeguards, ultimately ensuring that claimants receive a fair assessment of their disability status.