Sixth Circuit Affirms Sedgwick’s Termination of Long-Term Disability Benefits for Chrysler Employee with Complex Regional Pain Syndrome

In Avery v. Sedgwick Claims Management Services, Inc., et al., No. 22-1960, 2023 WL 4703865 (6th Cir. July 24, 2023), Plaintiff-Appellant Jacqueline Avery filed suit under ERISA § 502(a)(1)(B) against Defendants Sedgwick Claims Management Services, Inc. and the FCA US LLC Long Term Disability Benefit Plan, seeking reinstatement of long-term disability benefits. The district court granted judgment on the administrative record to Sedgwick and the Plan. Avery appealed. The Sixth Circuit Court of Appeals affirmed the judgment of the district court.

Avery was working for Chrysler Group LLC as a finance specialist, when during a camping trip she fell and fractured her right ankle. She mostly recovered but after several years she was diagnosed with advance peripheral deyelinatibe and axonal polyneuropathy of the lower legs and stopped working due to the persistent pain. Avery received short-term disability benefits under Chrysler’s Disability Absence Plan and then applied for LTD benefits, which Sedgwick approved after two favorable independent medical examinations with neurologists Dr. Hermann Banks and Dr. David Gaston. Dr. Banks stated Avery could not work due to right lower extremity pain with paresthesia and dysesthesia. Dr. Gaston diagnosed Avery with Complex Regional Pain Syndrome Type II. Sedgwick required Avery apply for Social Security Disability Insurance (“SSDI”) benefits, which she was awarded. After a couple years of receiving LTD benefits, Chrysler’s Special Investigations Unit surveilled Avery and allegedly observed her driving (which she was restricted from doing). Chrysler also suspected that she was running a business out of her home. This prompted Sedgwick to request a medical exam with Dr. Joel Shavell, D.O., who is board certified in internal medicine and rheumatology. Dr. Shavell noted that he saw no evidence of a regional complex pain issue and opined that she could return to work.

In a letter dated July 21, 2014, Sedgwick requested that Avery report to her plant medical department for further evaluation and advised that her benefits would be suspended pending the outcome of the ability to work examination. The plant medical doctor deemed Avery able to return to work. Sedgwick provided a copy of Dr. Shavell’s report to Avery and Avery appealed the work decision to Sedgwick on July 28, 2014. On August 20, 2014, Sedgwick issued its formal denial of Avery’s claim for benefits but reviewed her claim per Avery’s earlier request for review. In doing so, Sedgwick retained Dr. David Hoenig, a specialist in neurology and pain medicine, to review Avery’s file. Dr. Hoenig opined that from a neurological perspective only, Avery is not disabled. By letter dated September 12, 2014, Sedgwick denied Avery’s appeal and advised that it was the final decision. Eight months later, Avery’s attorney sent Sedgwick a letter demanding reinstatement and enclosing additional evidence. Sedgwick conducted another review of Avery’s claim, including obtaining a paper review by Dr. Mark N. Friedman, D.O., board-certified in neurology and internal medicine. Dr. Friedman concluded that Avery is not disabled from performing any work. Sedgwick upheld its decision in a letter dated September 30, 2015. This letter also gave Avery appeal rights. Avery did not appeal, and instead, filed the instant lawsuit.

In affirming the district court’s judgment in favor of Defendants, the court determined that Sedgwick satisfied ERISA’s procedural requirements. The court found that Sedgwick’s collective communications with Avery substantially complied with ERISA’s procedural requirements, even if its initial July 21, 2014 letter did include the information required of an adverse benefit determination. Sedgwick did give Avery an opportunity to appeal and voluntarily re-reviewed her claim. She was also given an opportunity to appeal the September 30, 2015 decision but chose not to. Based on this, the court found that Avery was provided with a meaningful review. Avery also argued that Dr. Shavell did not have appropriate training and experience in the field of neurology, in violation of 29 C.F.R. § 2560.503–1(h)(3)(iii). The court found that this ERISA regulation applies to reviews of appeals of adverse benefit determinations. Because Dr. Shavell was not consulted in deciding an appeal, his training and experience is procedurally irrelevant.

The court also determined that Sedgwick’s decision was not arbitrary or capricious. Sedgwick’s decision was based on a “fulsome review of the record.” The court explained: “Here, Sedgwick rejected the opinions of Avery’s treating physicians based on the opinions of Dr. Hoenig and Dr. Friedman, who concluded that the objective medical evidence in Avery’s file did not support her claimed disability. And we can discern no selective review by the physicians who reviewed Avery’s files. Indeed, their differences from earlier opinions can be explained by the ‘extensive treatment’ that Avery underwent in the interim—treatment that drastically reduced her pain levels. Accordingly, we find that Sedgwick engaged in a deliberate, principled reasoning process when it decided to terminate Avery’s long-term disability benefits.” The court also explained that Avery’s receipt of SSDI benefits does not mean she should qualify for Plan benefits due to the different criteria for disability. Further, SSA made its decision two years before Sedgwick terminated Avery’s LTD benefits. The court concluded that substantial evidence supported Sedgwick’s decision that Avery was no longer disabled.