In Cruz-Baca v. Edison International Long Term Disability Plan, an ERISA plan, Plaintiff was employed by Southern California Edison Company (“SCE”) as a Customer Specialist 2, and, as an employee, was eligible to participate in the Plan. On October 15, 2010, Plaintiff left work due to her chronic pain and rheumatoid arthritis, and applied for benefits through SCE’s Comprehensive Disability Program (“CDP”). Plaintiff was found to be disabled, and her short term disability benefits were approved, effective October 15, 2010. Plaintiff was approved for Long Term Disability (“LTD”) benefits under the Plan, effective April 14, 2011, after satisfying the six month qualifying period. The Plan terminated Plaintiff’s benefits on May 19, 2014 because it was determined that she no longer satisfied the Plan’s definition of disabled. Plaintiff appealed the termination of her benefits, and the Plan denied Plaintiff’s appeal.
Benefit Provisions
Under the terms of the Plan, “disabled” means that, due to illness or injury, you are unable to perform your regular and customary job for the first two years of your disability and “any reasonable job” for the company after two years. The Plan requires that a disability must be substantiated by medical evidence from a qualified physician specializing in the area of your disability. The Plan defines “reasonable job” as “any gainful activity in any job classification for which you are or may reasonably become fitted by education, training, or experience.” And the Plan defines “medical evidence” as evidence supported by a meaningful clinical evaluation and, where applicable, reasonable and appropriate diagnostic testing. The physician’s report must state the reasons and factual basis for her or his conclusion that you are disabled. A physician’s opinion that you are disabled is insufficient if it is not supported by such medical evidence.
District Court’s Decision
After review of the administrative record, the District Court concluded that the Plan did not abuse its discretion in terminating Plaintiff’s LTD benefits. Rather, it found that the evidence demonstrated that the Plan reasonably concluded that Plaintiff no longer fell under the Plan’s definition of “disabled.” In accordance with the Plan’s language, Sedgwick used its delegated discretion to review and evaluate the medical evidence pertaining to Plaintiff and to make a factual determination regarding her continued eligibility for benefits. In addition, Sedgwick used its delegated authority to make a determination on Plaintiff’s appeal. Sedgwick did so in accordance with Plan provisions, and there is no evidence that there were any irregularities in the process. The termination of benefits was based on the medical judgment of a panel of board certified physicians in the field of rheumatology. The District Court also found that the Plaintiff no longer qualified as disabled under the Plan according to four different and highly qualified medical professionals in the relevant filed of rheumatology. Therefore, the Plan developed sufficient facts necessary to make its determination that Plaintiff no longer qualified as disabled under the Plan and rendered its decision with a detailed explanation of the reason for the denial of benefits. The decision to terminate benefits was based on its review of Plaintiff’s medical condition and was consistent with the opinions of four doctors and an evaluation of her work restrictions by her work location. Following the District Court’s opinion, Plaintiff appealed.
9th Circuit’s Decision
The appeals panel reversed and remanded the District Court’s ruling on the basis that Plan’s decision to terminate Plaintiff’s benefits “was not the product of a principled and deliberative reasoning process.” The Court addressed three areas of reliable evidence it found Sedgwick failed to consider. First, the 9th Circuit explained that while Sedgwick is not bound by disability benefits determinations made by the Social Security Administration (SSA), it should review the SSA’s determination. Here, the Court concluded Sedgwick “did not meaningfully review Cruz-Baca’s SSDI award…[and] [n]o principled reason was offered for [Sedgwick’s] failure to review Cruz-Baca’s SSDI award, which is reliable evidence of her disability.”
Next, the Court concluded that it was arbitrary and capricious for Sedgwick’s Independent Medical Examiner (IME) to fail to discuss and consider Plaintiff’s subjective complaints of pain as evidence of her chronic pain syndrome. The Court noted that “pain is an inherently subjective condition, and it is unclear what objective evidence [Sedgwick] was looking for in order to establish that Cruz-Baca’s pain prevented her from working. Neither the Plan nor [the IME] offered any explanation as to why Cruz-Baca’s history of pain and pain-related treatment were insufficient to support a finding of disability.”
Finally, the Court determined that Sedgwick failed to address an earlier 2012 IME which concluded that Cruz-Baca had degenerative disc disease requiring sit and stand restrictions that precluded her from performing sedentary work. The court noted that during the administrative appeal, although the three reviewing doctors indicated that they were aware of the 2012 IME, they relied on Sedgwick’s IME in concluding that Cruz-Baca could perform sedentary work, despite the conclusions by two of these doctors that she had degenerative disc disease. The 2012 IME was reliable medical evidence that Cruz-Baca could not perform a sedentary job.”
Based on its review of these three areas of reliable evidence, the 9th Circuit held that Sedgwick’s failure to credit or meaningfully distinguish this evidence indicates that its decision to terminate Cruz-Baca’s benefits “was not the product of a principled and deliberative reasoning process.”