Employee Retirement Income Security Act – ERISA
On November 4, 2016, the Ninth Circuit Court of Appeals issued an opinion in Avery Armani v. Northwestern Mutual Life Insurance Company. The Ninth Circuit vacated in part the district court's judgment in favor of the defendant in part in plaintiff's action under the Employee Retirement Income Security Act or ERISA, challenging a denial of benefits under a long term disability insurance policy.
Avery Armani was a full-time controller for the Renaissance Insurance Agency from November 3, 2008 to May 18, 2011. In January 2011, Armani injured his back while lifting a heavy backup power supply. He was diagnosed with a lumbar sprain, muscle spasms, and sciatica. His treating chiropractor instructed him not to sit continuously without the ability to change positions.
As a Renaissance employee, Armani was insured under a group long-term disability policy issued by Northwestern Mutual. Under the plan, participants were entitled to disability benefits for the first 24 months if they were unable to perform “with reasonable continuity the material duties of [their] own occupation.” After benefits had been paid for 24 months, participants needed to establish that they were “unable to perform with reasonable continuity the material duties of any gainful occupation for which [they were] reasonably fitted by education, training, and experience.”
According to an attending physician's statement, Armani was limited to sitting for four hours, standing for two hours, and walking for two hours during an eight-hour workday. Northwestern Mutual's vocational case manager confirmed that Armani's occupation was classified as sedentary. Based on a review of medical records obtained from Armani's healthcare providers, Northwestern Mutual's reviewing physician, Armani was capable of working in a sedentary position. Relying on the reviewing physician's opinion, Northwestern Mutual identified three positions in addition to Armani's own position that he could perform at a sedentary level. The company based its assessment on the U.S. Department of Labor's Dictionary of Occupational Titles (DOT), which states that “[s]edentary work involves sitting most of the time, but may involve walking or standing for brief periods of time.”
Northwestern Mutual informed Armani that his claim was being closed because the records did not support a finding that he was entitled to disability benefits under either the “own occupation” or “any occupation” standards required by the plan. Armani appealed the decision.
District Court Decision
Northwestern Mutual upheld its claim decision and the district court took up Armani's case. The district court concluded that Armani was disabled under the “own occupation” standard and awarded nine days of benefits at the end of the initial 24-month period. The district court also held that Armani failed to show by a preponderance of the evidence that he was disabled from “all occupations,” concluding that the administrative record contained “scant information regarding [Armani's] condition during this period.”
Armani argued that he was unable to perform any occupation classified as sedentary because, by definition, sedentary work required an ability to sit for six hours. The district court rejected this argument, holding that Northwestern Mutual was not bound by this definition, as it was drawn from the Social Security context, and ERISA and Social Security are vastly different. It also held that Armani had failed to demonstrate how his disability prevented him from performing any of the sedentary occupations identified by Northwestern.
The Ninth Circuit's Opinion
The Ninth Circuit first recognized that “the claimant has the burden of proving by a preponderance of the evidence that he was disabled under the terms of the plan.” The court also found that the evidence before the district court “plainly showed that . . . every physician and chiropractor who treated Armani determined that he could not sit for more than four hours a day.”
The Ninth Circuit then concluded that the district court had erred in rejecting Armani's definition of “sedentary” work that was drawn from the Social Security context. The court based this conclusion in part on the fact that “other courts evaluating ERISA claims and interpreting the DOT have consistently held that an employee who cannot sit for more than four hours in an eight-hour workday cannot perform work classified as ‘sedentary.'” The court also found that “[s]ome of these courts have further noted that ‘sedentary work' generally requires the ability to sit for at least six hours.”
Ultimately, the court concluded that the district court erred in finding that Armani had not established that he could not perform the sedentary occupations identified by Northwestern Mutual because the undisputed evidence established that Armani was unable to sit for more than four hours a day. The court also vacated the part of the district court's judgment denying the plaintiff his long term disability benefits and remanded for further proceedings.
California Employment Lawyers
With increased scrutiny and penalties in effect for ERISA violations, California employers should take the time to conduct audits to ensure compliance with the various employment laws enforced by the DOL. Should you have questions about ERISA or disability insurance policies, don't hesitate to contact leading California employment lawyers at Kingsley & Kingsley. To discuss your situation call us toll-free at (888) 500-8469 regarding your case.