Appellate Judges Support Disability Finding

October 24, 2005 ( - The administrator of a long-term disability plan for a Chicago commodities-trading firm acted properly in refusing to grant benefits to a commodities trader who complained of disabling headaches, a federal appeals court ruled.

The US 7 th Circuit Court of Appeals handed down the decision regarding commodities trader Shatkin, Arbor, Karlov & Co., upholding a lower court ruling by US District Judge Joan Gottschall of the US District Court for the Northern District of Illinois.

In an appellate decision penned by Circuit Judge Frank Easterbrook, the appellate judges said that the fact that plaintiff Ira Shyman’s monthly income fell below 80% of its normal level did not necessarily support his claim that he was totally disabled. According to Easterbrook, the administrator did not act arbitrarily and capriciously in concluding that the trader was “more likely suffering from the burnout so common to floor traders than from a deteriorating medical condition.”

The appeals court rejected the trader’s contention that the plan at issue was not governed by the Employee Retirement Income Security Act (ERISA) because he paid his own plan premiums. The court found that, although the trader paid his own premiums, the plan sponsor paid the premiums of others who participated in the plan, thus drawing the plan within ERISA.

Shyman filed an application for benefits under a long-term disability benefit plan administered by UNUM Life Insurance Co. Shyman, who allegedly suffered from headaches much of his life, argued that he had become totally disabled from working as a commodities trader. According to the court, the plan provided benefits when trading income fell below 80% of a three-month rolling average.

Shyman filed a federal lawsuit leading to Gottschall finding that his claims were preempted by ERISA. In addition, she found that UNUM’s decision was neither arbitrary nor capricious.

Gottschall went on to find that UNUM’s decision denying benefits was reasonable and thus should be upheld because the evidence indicated that Shyman was not totally disabled.

The opinion in Shyman v. UNUM Life Insurance Co., 7th Cir., No. 04-2741, 10/21/05 can be found  here.