On March 25, 2013, in a case called Judge v. Metropolitan Life Insurance Company, No. 12-1092, the Sixth Circuit Court of Appeals affirmed a Michigan district court's ruling that MetLife's denial of a claim for disability benefits under a MetLife-insured group insurance policy was not arbitrary or capricious. While there's nothing particularly remarkable about that holding, the Sixth Circuit panel divided sharply on the effect of the way MetLife explained and applied the plan definition of disability, with one of the three judges concluding that MetLife's application of the definition was arbitrary and capricious – even though the final denial letter quoted the definition verbatim.

Thomas Judge worked for Delta Airlines as a baggage handler. Through his employment, he participated in a MetLife administered and insured term life insurance policy that that provided for early payment of benefits in the event of "total and permanent disability," defined to mean "you are expected never again to be able to do ... your job, and ... any other job for which You are fit by education, training or experience."In 2010, Judge learned that he had a heart condition requiring the replacement of a heart valve, and underwent surgery in March 2010.Later that year, he filed a claim for a lump-sum disability benefit under the plan.

The medical documentation was not entirely clear as to what Judge could or could not do following his surgery, or what his ultimate prognosis was regarding his ability to work in some capacity.

In January 2011, MetLife denied Judge's claim, however, it admittedly misstated the definition of disability, requiring that Judge be "expected never again to be able to do any work at all for wage or profit."Judge administratively appealed, and on April 2011, MetLife upheld its denial, this time beginning its denial letter with the correct plan definition of disability. The April denial letter analyzed the medical documentation in the record, concluding that it did not establish the plan definition of disability.

The district court, and ultimately the Sixth Circuit, upheld MetLife's determination. That said, MetLife's explanation and application of the definition of disability stuck in the craw of one of the Sixth Circuit judges to the point she would have remanded. Why?

Even though the final denial letter included the right definition, the dissent said that MetLife's analysis showed that it still applied the wrong definition stated in the initial letter. While the majority concluded that the language used in MetLife's analysis was "shorthand jargon" consistent with the plan definition, the dissent felt that the language of the analysis sounded too much like the initial denial letter. The dissent even went back through MetLife's internal processing notes, and asserted that those contemporaneous notes showed that the wrong definition had effectively been applied, even though the right definition appeared in the final denial letter.

So what are some of the takeaways from this case?

  • If there's an initial mix-up, avoid recycling language in subsequent determinations. A significant amount of the dissent's concern focused on the fact that big chunks of language were lifted from the initial denial letter and pasted into the new letter. While this normally wouldn't be much of a concern, given the mix-up with the definition, a cleaner break from the initial letter – with minimal to no recycling of language – might have reduced the dissent's concern that the initial mix-up didn't impact the final denial letter.
  • Don't forget the other information in the record that reflects the plan administrator's analysis. The dissent also focused on MetLife's internal processing notes, which the dissent claimed showed that the wrong definition was being applied throughout, regardless of what ultimately showed up in the final denial letter. This case serves as a reminder that everything in the record is available on judicial review, so all documents reflecting how a claim was administered – even internal processing notes – need to reflect an understanding of the plan terms and definitions being applied.

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