Denial of ERISA long-term disability benefits was arbitrary and capricious

In DeLisle v. Sun Life Assurance Co. of Canada, the Sixth Circuit agreed with the Eastern District of Michigan trial judge in assessing the propriety of Sun Life's denial of long-term disability (LTD) payments to the Plaintiff.  The court concluded that her denial was not the result of a "deliberate and principled reasoning process".

Ms. DeLisle worked for a jeweler as director of operations for six years.  In 1998 she suffered head, neck and back injuries in a motor vehicle collision.  She underwent an anterior spinal fusion but returned to work full-time.  In 2000, she was involved in another car accident and suffered exacerbation of her spinal and head injuries, but continued to work.  By April of 2002, however, she was let go because she "was not doing her job".  She filed for unemployment, sought and lost another job, and eventually applied for LTD benefits under the jeweler's policy.

The Court noted that Sun Life had sent DeLisle or her records to six physicians, five of whom were "regular contractors" with Sun Life, during the process of reviewing her claim.  It also noted that these reviewers were misled and prejudiced by Sun Life's attorney who informed them, without basis, that DeLisle had been terminated by the jeweler "for cause".

While the standards for Social Security Disability are different than the standard of disability under the LTD policy, the court nevertheless found that the SSD finding that DeLisle was disabled was "far from meaningless" and warranted some consideration by the reviewers and the court. Finally, the court noted that while Sun Life was not required to give "special deference" to DeLisle's treating physicians, it also may not arbitrarily ignore their findings and conclusions.

The Court concluded that between the conflict of interest inherent in Sun Life's role, the improper communications from its attorney to its reviewers, the failure to acknowledge the SSD determination and "substantial medical evidence indicating the progressive nature of DeLisle's disability" there was more than adequate evidence that Sun Life did not engage in a principled, deliberative reasoning process, making its denial of LTD benefits "arbitrary and capricious".