Sixth Circuit Finds Insurance Company Cannot Start Clock on Disability Policy’s 24-Month Mental Illness Limitation Until Claimant’s Physical Disability is No Longer Totally Disabling

In McEachin v. Reliance Standard Life Ins. Co., No. 24-1071, _F.4th_, 2024 WL 4759527 (6th Cir. Nov. 13, 2024), a dispute over the termination of long-term disability benefits under an ERISA-governed benefit plan, the Sixth Circuit was presented with three questions:

• Did the district court correctly interpret Reliance Standard’s insurance policy as requiring benefits payable under the 24-month illness limitation to start in April 2021, the end of the period Plaintiff’s physical condition was no longer disabling?
• Did the district court correctly determine that Plaintiff’s physical disabilities in April 2021 did not qualify her as being totally disabled under the Reliance Standard insurance policy?
• Under Reliance Standard’s policy, does the presence of an independently disabling physical condition toll or stop the clock on the 24-month mental disability limitation?

Plaintiff was covered under her employer’s long-term disability plan that was insured and administered by Reliance Standard Life Insurance Company. She stopped working in February 2017 following a bad car accident. At the end of that same year, she was involved in another accident. Between 2018 and 2021, she underwent three major spinal surgeries, attended numerous physical therapy sessions, and received injections and took medication for pain. In 2019, Plaintiff’s son committed suicide, and Plaintiff was diagnosed with post-traumatic stress disorder (PTSD) and suffered from grief which added to her ongoing disability.

Reliance Standard ultimately determined that Plaintiff was no longer disabled after April 2021 based on documentation showing that her physical condition had improved significantly, and she could perform sedentary work. Even though Reliance Standard determined that Plaintiff’s psychiatric issues still rendered her unable to work full-time, it denied her benefits because it claimed that the insurance policy’s 24-month limitation on benefits for mental disorders that caused or contributed to her total disability started running in May, 2017 and no further benefits were payable.

The district court sided with Reliance Standard on the issue of Plaintiff’s physical disability after April 2021. However, the district court found that Plaintiff’s ongoing mental-health disabilities entitled her to receive up to 24 months of additional benefits, from April 2021 to April 2023. Reliance Standard appealed and Plaintiff cross-appealed. The Sixth Circuit vacated in part, affirmed in part, and remanded the case to the district court.

On the first question—whether Reliance Standard owes Plaintiff at least 24 months of benefits starting April 2021—the Sixth Circuit found that it does. The court relied heavily on its past decision in Okuno v. Reliance Standard Life Ins., 836 F.3d 600 (6th Cir. 2016), where it held that the mere presence of a mental health condition did not justify the application of the mental health limitation where physical limitations by themselves warranted benefits. In this case, the court must ask whether Plaintiff’s total disability exists without regard to her mental-health conditions. If it does, the 24-month clock does not start. The court cited decisions from its sister circuits which support this interpretation of the policy. In short, the 24-month limitation can only be applied if “but for” the mental health challenges, Plaintiff would not be totally disabled. The court rejected Reliance Standard’s arguments justifying the application of the 24-month limitation earlier. Reliance Standard argued that the Social Security Administration awarded Plaintiff benefits based, in part, on Plaintiff’s depression and anxiety. The court acknowledged this fact but noted that it does not answer the question of whether Plaintiff’s physical limitations alone created the “total” disability.

On the second question—whether Plaintiff was no longer totally disabled from her physical impairments after April 2021—the Sixth Circuit found that Plaintiff did not prove that her physical conditions prevented her from working in a sedentary job with restrictions as of this date. The court found that the medical records showed that she displayed significant improvement after her second surgery, that her migraines declined in frequency and severity, and that physical therapy helped her regain full strength. Even though she had an upcoming surgery in October 2021, the court found that the surgery was not emergent and that she could have worked until the surgery.

The third issue—whether Plaintiff’s physical disabilities after April 2021 should toll or stop the clock on the 24-month mental illness limitation—the court found that Plaintiff did not raise this issue below, but Reliance Standard also did not argue that Plaintiff forfeited the argument. Addressing this issue, the court found that the district court should review this point in the first instance. The court noted that the policy requires disability benefits for as long as the insured has a ”total disability.” Nothing in the policy prohibits claimants from showing physical disabilities create a total disability at any point where the total disability exists. This suggests that Plaintiff could use her post-April 2021 evidence to show that the mental health limitation clock should have been tolled at certain points such that her eligibility for benefits may go beyond April 2023. On remand, the district court should consider this argument and apply it to the existing evidence in the record.