In Laake v. Benefits Committee, Western & Southern Financial Group Company Flexible Benefits Plan, et al., No. 21-4178, __F.4th__, 2023 WL 3559602 (6th Cir. May 19, 2023), a long-term disability dispute that has extended several years, the Sixth Circuit affirmed the district court’s 2019 remand decision and 2022 judgment in favor of Plaintiff Sherry Laake and against Defendants Western & Southern Financial Group Flexible Benefits Plan (the “Plan”) and the Benefits Committee of the Plan (collectively referred to as “W&S”). The district court determined that Laake was entitled to benefits beyond 24 months pursuant to the terms of the Plan and her disability was not subject to the Plan’s Mental Illness exclusion. The district court also found that W&S did not timely provide Laake with Plan documents and awarded Laake statutory penalties under ERISA § 502(c)(1), as well as attorneys’ fees and costs.
In 2019, the district court remanded Laake’s claim to the Plan after concluding that the Plan abused its discretion by denying Laake’s claim for benefits beyond 24 months based on the Plan’s Mental Illness limitation. The Sixth Circuit agreed with the district court that W&S misapplied the limitation based on the medical evidence presented before it. When W&S first denied Laake’s claim for extended LTD benefits, it stated that the Plan limits benefits to 24 months if the disabling condition is due to any mental, nervous, psychiatric condition or chronic pain.” Then in the appeal denial letter, W&S cited Section 7.6(j) of the Plan and indicated that payment is limited if the disability is due to chronic pain syndrome and that her disability condition was chronic pain. Only in court did W&S argue that Laake’s disabling condition fell under a list of exclusions under the plan, specifically “Chronic Pain Syndrome.” The Plan listed “Chronic Pain Syndrome” along other conditions it stated were Mental Illnesses though W&S argued that Chronic Pain Syndrome is not a mental illness. No doctor had diagnosed Laake with Chronic Pain Syndrome and W&S did not ask her doctors or its doctors whether Laake suffered from a psychologically based disorder. Because W&S determined that Laake suffered from Chronic Pain Syndrome without any explanation or evidence, it abused its discretion. The court also found that W&S did not comply with ERISA’s notice requirements under § 1133 because its initial decision implied one basis for denial but the final decision letter included an entirely new basis for denial, that is, uncertainty as to whether Laake could engage in any form of employment. Remand was proper in these circumstances so that the Plan could determine “in the first instance and via proper procedures, whether Laake satisfied the Plan’s definition for extended LTD benefits.”
On remand, W&S found that Laake was not entitled to extended LTD benefits and Laake renewed her challenge to the benefits denial before the district court. This time around the district court decided that de novo review applied because the Benefits Department, rather than the Benefits Committee, decided Laake’s claim. The Plan gives only the Benefits Committee the discretionary authority to determine eligibility for benefits. The Department and the Committee are two distinct entities, and the Benefits Department did not have discretionary authority. As such, the Sixth Circuit agreed that de novo review was appropriate. W&S faulted the district court for considering subjective evidence of disability. The Sixth Court found that there was nothing inappropriate about considering both subjective and objective evidence because the Plan does not require only objective evidence, nor does it foreclose the consideration of subjective evidence. The court found that “the outcome boils down to the findings of Laake’s physicians on one side and those of W&S’s referring physicians on the other.” Under de novo review, the court agreed with the district court that Laake qualified for extended LTD benefits because she could not perform the physical requirements of sedentary work.
Lastly, the district court awarded Laake statutory penalties due to W&S’s failure to supply the relevant plan documents within 30 days of her request. The court found that this was not an abuse of the district court’s discretion. The court also found that the award of attorneys’ fees was appropriate based on the district court’s application of the relevant factors.
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