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Home > Blog > Blog > Short Term Disability > Seventh Circuit Affirms AT&T’s Denial of Short-Term Disability Benefits and Denies Defense’s Pro Hac Vice Fees as Non-Taxable Cost

Seventh Circuit Affirms AT&T’s Denial of Short-Term Disability Benefits and Denies Defense’s Pro Hac Vice Fees as Non-Taxable Cost

The Seventh Circuit Court of Appeals recently decided Canter v. AT&T Umbrella Benefit Plan No. 3, No. 21-1514, 2022 WL 1485191 (7th Cir. May 11, 2022). In this case, Plaintiff-Appellant Craig Canter worked as a premises technician for Illinois Bell Telephone Company before his complaints of severe migraines, lightheadedness, and dizziness took him out of work. He applied for short-term disability (STD) benefits under the Defendant AT&T Umbrella Benefit Plan No. 3 (“the Plan”), an employee benefit plan governed by the Employee Retirement Income Security Act (ERISA). The Plan approved and paid STD benefits after receiving Canter’s doctors’ medical notes documenting his subjective complaints. After his CT scan and head MRI and MRV came back normal and his treatment notes reflected a reported improvement of his symptoms following treatment, the Plan had his claim reviewed by Dr. Katherine Duvall, an alleged independent reviewer board certified in occupational medicine. Dr. Duvall concluded that Canter was not disabled due to the absence of any abnormalities in his test results or other objective findings of impairment. After about five months of payments, the Plan terminated Canter’s STD benefits in reliance on Dr. Duvall’s report. Canter then obtained fasting blood tests, a stress echocardiogram, and a chest x-ray. The results were mostly normal. Canter also saw a pulmonologist who ordered another stress echocardiogram, a pulmonary function test, and a sleep apnea test. The results showed the possibility of a mild case of asthma.

Canter appealed the denial of his STD benefits to the Plan and submitted his test results. The Plan retained two additional independent reviewers to review the new results. Both found that he did not provide evidence supporting his disability claim. The Plan denied Canter’s STD appeal and AT&T told Canter he had to report to work or lose his job. Canter returned to work, but his supervisor would not allow him to work without a doctor’s note releasing him for work. AT&T, through its vendor, Sedgwick, that administers the STD benefits, approved Canter’s unpaid time off as an accommodation. AT&T could not find a position to accommodate Canter, so it removed him from payroll. Because his STD claim was not approved for the entire 52 weeks of benefits, he could not qualify for long-term disability benefits. After unsuccessfully appealing to the Plan, Canter filed suit for his benefits under ERISA. The Plan counterclaimed for unjust enrichment due to a lump-sum payment it allegedly mistakenly paid to Canter. The district court granted summary judgment to the Plan and awarded the Plan costs, including deposition fees and pro hac vice admission fees. The district court declined to exercise supplemental jurisdiction over the state law claim and counterclaim and dismissed both without prejudice.

On appeal, the Seventh Circuit evaluated de novo whether the Plan abused its discretion in terminating Canter’s benefits because the Plan granted Sedgwick the discretion to determine eligibility for benefits. The Court was satisfied that Sedgwick’s determination was grounded in sufficient evidence and was adequately explained to Canter. The medical treatment notes did not document any significant abnormal findings. While an administrator cannot disregard a claimant’s self-report of symptoms, “extensive medical testing consistently yielded normal results, even though the medical providers and reviewers thought that a significant problem would have shown up in one or more concrete, physiological ways.” Canter also reported he was experiencing improvement. The Court rejected Canter’s argument that the district court was wrong to reject evidence outside the administrative record concerning the reviewers’ efforts to contact his doctors and the leave-of-absence accommodation that AT&T granted him. Courts should look beyond the record if it appears incomplete, internally contradictory, or suggestive of bad faith. The court found none of these exceptions to apply here. The Court also found that the job accommodation evidence, should it have been considered, did not undermine Sedgwick’s disability decision. The standards for accommodations and disability benefits are different. Plus, the Court would not want to discourage plans and employers from providing accommodations and other support after a denial of benefits.

With respect to the district court’s award of costs under 28 U.S.C. § 1920 that included $181 for AT&T’s counsel’s pro hac vice admission fees, the Court found that these fees do not fall within the six kinds of costs enumerated in § 1920. Following the Ninth Circuit, the court held that pro hac vice fees are not taxable “costs” and reversed the district court’s decision to award $181 to the defendants.

 

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