Fourth Circuit Reverses Win for Hartford in Dispute Over Long-Term Disability Benefits

The Fourth Circuit Court of Appeals issued a claimant-friendly decision in Shupe v. Hartford Life & Accident Ins. Co., No. 19-1854, __F.4th__, 2021 WL 5774728 (4th Cir. Dec. 7, 2021), a case involving a termination of ERISA-governed long-term disability (“LTD”) benefits.

Plaintiff-Appellant Robert Shupe was only 37 years old when he became disabled from working as an Executive Sous Chef for the Hyatt Corporation due to chronic osteomyelitis, degenerative disc disease, and spinal stenosis. Defendant-Appellee Hartford Life & Accident Insurance Company insured Hyatt’s LTD plan and approved and paid Shupe’s LTD claim starting in October 2004. Over the next five years, Shupe’s condition did not improve despite spinal surgeries. His pain limited his sitting tolerances to around 30 minutes maximum at a time and he required strong pain medications such as oxycontin, oxycodone, morphine and Percocet, and a fentanyl patch. In 2009, Hartford offered Shupe a lump sum settlement of his claim, to which Shupe did not respond. Then in 2013, Hartford requested that Shupe undergo a Functional Capacity Evaluation (“FCE”). This FCE reaffirmed that Shupe did not have the capacity to tolerate a full-time work schedule at any physical demand level. Shupe’s doctors noted that his restrictions were permanent.

Despite the evidence that Shupe was unable to return to work, Hartford referred his claim to its Special Investigation Unit for surveillance on a few occasions. Surveillance in 2015 showed Shupe driving to a medical facility, opening his trunk to pull out his wheelchair, bending at the waist, unfolding and securing the wheelchair, and pushing the wheelchair to the passenger side of the vehicle and into the facility. Hartford closed its investigation since there were no material inconsistencies observed on surveillance and Shupe’s reported level of functionality. Later that year, Hartford asked Shupe’s doctor for comment on his employability. Shupe had just started treating with a new doctor, Dr. Whittenberg, who said she would need to review an updated FCE before she could comment. At this point, Hartford obtains a new FCE from Alyssa Wolf, who for the first time ever in Shupe’s disability claimed that he was capable of sitting for up to six hours per day and could engage in full-time work. Harford forwarded the Wolf FCE to Dr. Whittenberg and she checked the box for “I agree with the FCE conclusions” without comment. Hartford then obtained an Employability Analysis Report (“EAR”) to determine other occupations Shupe could perform and identified Assignment Clerk, Jacket Preparer, and Batch-Records Clerk as a representative sample of occupations. After paying Shupe’s claim for more than 11 years, Hartford terminated his benefits, claiming that he was no longer disabled.

Shupe appealed Hartford’s termination decision and submitted a Vocational Evaluation by Tanja Hubacker (Hubacker VE) and an FCE by Daniel Lentscher and Carlos Martinez (CAM FCE), and an Independent Medical Evaluation by Dr. Emily Woolcock (Woolcock IME). All these supported that Shupe was incapable of full-time sedentary employment. On review of Shupe’s appeal, Hartford obtained a medical opinion from Dr. Jamie Lewis who reviewed Shupe’s file and concluded that he would have the ability to sustain gainful employment with restrictions. Those included sitting 30 minutes continually up to 6 hours per day with the ability to alter standing and walking as needed. Dr. Lewis also opined that there were no restrictions caused by adverse medication side effects. Hartford then upheld its denial of Shupe’s LTD claim. After Hartford made its final decision, Shupe submitted additional CT scans and an EMG report as well as a letter from Dr. Whittenberg who explained that she reviewed the CAM FCE and Hubacker VE and believes that Shupe is unable to work. Hartford declined to review the new evidence because Shupe exhausted his administrative remedies.

Shupe filed suit and on cross-motions for summary judgment, the district court denied Shupe’s motion and granted Hartford’s motion in reliance on the EAR which identified occupations that Shupe could perform such that he did not meet the Plan’s definition of disability. The district court also granted Hartford’s motion to strike the extra-record documents Shupe sent to Hartford after it denied his appeal which Shupe submitted with his motion for summary judgment.

On appeal, the Fourth Circuit affirmed in part, reversed in part, and remanded to the district court with instructions to enter final judgment in Shupe’s favor.

The court found that the district court did not err by granting Hartford’s motion to strike the extra-record evidence. The court was persuaded that exclusion of Dr. Whittenberg’s letter was proper because Shupe failed to demonstrate a persuasive reason why he did not present the letter during the administrative appeal. Shupe did not meet any of the Quesinberry factors for the admission of new evidence on de novo review and he could have approached Dr. Whittenberg for clarification at any time during the appeals process.

On the merits of the LTD claim, the court noted the parties’ stipulation that de novo review applies since Illinois bans the discretionary clause in Hartford’s policy. In conducting a de novo review of the record, the court determined that Shupe was incapable of full-time employment when Hartford terminated his benefits. Leading up to the Wolf FCE, Shupe’s consistent medical history reflected his inability to maintain full-time sedentary employment. The Wolf FCE set in motion Hartford’s decision to terminate Shupe’s benefits, but this FCE is internally inconsistent and represents an outlier. If Shupe took a 5-minute break every 10 minutes, he would need a 9-hour workday to accomplish enough 10-minute sitting periods to achieve 6 hours of sitting. With Shupe’s around-the-clock need to rotate between sitting, standing, walking, and lying down, it would be “nearly impossible to sustain any acceptable level of productivity to maintain employment.” The court also found that Shupe’s prescribed medications inhibit his ability to work full-time. The shortcomings of the Wolf FCE undercut Hartford’s subsequent evidence based on that report, including the EAR and Dr. Whittenberg’s agreement with the Wolf FCE. The court also found that Dr. Lewis’ assessment is of limited efficacy and cannot stand against the weight of Shupe’s medical history and contemporaneous evaluations. The court reversed the grant of summary judgment to Hartford and directed the district court to order Shupe’s reinstatement to the Plan.