Doctor's ERISA disability benefits reinstated

Lois Kramer practiced as an O.B. Gyn specialist in the Henry Ford Health System before developing severe and chronic neck pain.  She underwent physical therapy and surgery and was prescribed narcotic pain medications and sleep aids in the course of several years of treatment.  Eventually, she and her peers at Henry Ford concluded that she was no longer able to practice her occupation safely, and she applied for disability benefits under policies purchased from the predecessors of the UNUM Life Insurance Company.  Unum paid the benefits for several years before determining that her entitlement to benefits should be revoked.  Kramer filed suit and the Federal District Court of the Eastern District of Michigan held that she was entitled to benefits under one of her two policies, but not under the other:  the Sixth Circuit heard her appeal and granted benefits under both policies.

The Sixth Circuit noted that under prior decisions of the U.S. Supreme Court, UNUM was an administrator of an ERISA plan purchased by Kramer's employer.  Therefore, UNUM's decision to pay or decline benefits was entitled to a certain level of deference and would be reversed only if the decision was arbitrary and capricious, or if the conflict of interest inherent in UNUM's status as the payor of benefits rendered its decision-making sufficiently suspect that the decision should be made by the court de novo [that is, afresh and independently].

The Court did not get to the latter issue because it concluded that UNUM's decision was, in fact, arbitrary and capricious.  It noted that Kramer provided UNUM with substantial evidence of her inability to safely perform the "material and substantial duties of her occupation" and that there was no foundation for UNUM to cease paying benefits five years after benefits were initiated.  The Court noted that if anything, the evidence showed that Kramer's disability had increased during the latter period.