Physical Disability Alone not Enough to Deny Benefits

October 23, 2006 ( - The 2nd US Circuit Court of Appeals ruled that an administrator of a multiemployer pension plan acted arbitrarily and capriciously when it denied disability benefits to a plan participant by only considering her physical abilities in determining whether she could engage in "any gainful employment."

According to the opinion, the court said that the Building Service 32B-J Pension Fund “failed to give a full and fair review” to disabled participant Nezmije Demirovic’s request for disability benefits by not considering her ability to find a new job. In his opinion, Judge Chester Straub wrote that the fund’s “determination that Demirovic is physically  capable of performing some form of sedentary work may be supposed by substantial evidence; but the fund appears to have given no consideration whatsoever,” to whether Demirovic, who had a total knee replacement, would be able to find such work.

The court pointed out that Demirovic was 55 years old when she filed her claim for disability benefits in 2003, and had worked as an unskilled laborer for nearly three decades as a night cleaner. T he phrase “any gainful employment” in the context of the pension fund’s summary plan description (SPD) did not only apply only to whether a participant is physically able to work, according to the court. Straub wrote that “a finding that a claimant is physically capable of sedentary work is meaningless without some consideration of whether she is vocationally qualified to obtain such employment, and to earn a reasonably substantial income from it, rising to the dignity of an income or livelihood, though not necessarily as much as she earned before the disability.”

On her application for benefits, Demirovic indicated “pain and swelling on right knee due to osteo-[arthritis].” She also submitted a form completed by her attending physician, which stated that Demirovic had had a “total knee replacement,” and was “totally disabled,” at which point the fund referred her to an outside specialist.

The specialist diagnosed Demirovic as not “totally disabled,” because she was able to sit for about 8 hours in a day, stand or walk for less than two hours, and was able to walk no more than one city block “without rest or severe pain.” The fund then denied her claim on the specialist’s finding that she could work in a sedentary capacity, at which point she appealed the ruling.

Demirovic, in October 2004, countered with new evidence from her own doctor and four other physicians who found that she would be “unable to perform [a] sedentary job on a prolonged sustained basis,” but the fund denied her appeal again in December 2004, based on the findings of their own doctors. She then filed a complaint in the US District Court for the Southern District of New York, alleging the fund’s denial violated the Employee Retirement Income Security Act (ERISA).

The appellate court reversed the decision of the US District Court for the Southern District of New York, which ruled that the pension fund had no obligation to pay Demirovic disability benefits, although it disagreed with Demirovic’s contention that the fund acted arbitrarily by only consulting the findings of its own doctors, ignoring Demirovic’s physician’s determinations. The court said, “a plan need not accord the insured’s treating physician greater deference than a plan’s retained physician.”

The opinion is here .