Appeals Court Says Aetna Acted Arbitrarily

July 14, 2006 ( - The US 6th Circuit Court of Appeals ruled that Aetna Life Insurance acted arbitrarily when it terminated a plan participant's benefits without considering whether he could get a job after his recovery that would pay 80% of the participant's pre-disability income.

The Aetna plan deemed an employee disabled if he cannot work at a “reasonable occupation” and pay more than 80% of his pre-disability income. The appeals court ruled that while there was enough evidence to prove the participant was physically able to go back to work, Aetna did not consider the 80% of pre-disability income requirement before it terminated the plan, according to the  opinion .

Prior to becoming disabled because of an eye disease in 1999, Thomas Biljan worked as a machine operator, earning an annual salary of $64,412.17. As required by the plan, Biljan participated in a vocational rehabilitation program, where it was determined that he would benefit from a college education that Aetna would pay for.

After graduating in June 2002 with a degree in business communication, the plan required that Biljan make reasonable  efforts to secure employment at a reasonable occupation. However, even with Aetna’s assistance, Biljan was unable to secure an occupation that would pay 80% of his pre-disability income.

Aetna terminated Biljan’s benefits in March 2003, writing in the termination letter that he completed the vocational rehabilitation program and he was physically able to go back to work at a “reasonable occupation.”

The appeals court found that Biljan was physically able to work, but “[i]f physical ability to work were the sole calculus of disability, we could terminate our inquiry at this point,” Judge Jennifer Coffman wrote in the opinion. She continued that “under the terms of this particular plan and as conceded by Aetna’s counsel, disability turns not only on a claimant’s ability to work, but also on his ability to work at a reasonable occupation, which is defined as one that pays more than 80% of his pre-disability income. To work at a reasonable occupation, one must be fitted by “training, education or experience.”

Because Aetna did not consider training, education or experience, the appeals court found that Aetna acted arbitrarily in terminating Biljan’s benefits, reversing in part an earlier ruling by the US District Court for the Eastern District of Michigan, which ruled in favor of Aetna.