Cathleen Kennedy v. Lilly Extended Disability Plan
2017 U.S. App. LEXIS 8738
| 7th Cir. | 2017Background
- Cathleen Kennedy, a former Lilly HR executive, stopped working in 2008 due to disabling fibromyalgia and was approved for long-term disability benefits beginning May 1, 2009.
- Lilly’s self-funded Extended Disability Plan terminated her benefits about 3½ years later, concluding her fibromyalgia was not disabling under the plan’s "any occupation" standard.
- The plan grants the administrator discretionary authority; therefore judicial review is for reasonableness (arbitrary and capricious standard).
- Treating physicians (Drs. Condit and Neucks) opined Kennedy was disabled or severely limited; company-paid reviewers offered contrary opinions or limited functional restrictions. Company evidence relied on record reviewers and physicians who questioned functional limitations.
- The district court granted summary judgment to Kennedy, awarded past benefits and interest, and ordered reinstatement of benefits; the Seventh Circuit majority (Posner) affirmed. Judge Manion dissented, arguing the administrator’s decision was reasonable and should be upheld.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether termination of benefits was arbitrary and capricious under ERISA discretionary review | Kennedy: administrator unreasonably rejected credible treating physicians and failed to identify suitable occupations; benefits termination was unsupported and inconsistent with medical evidence | Lilly: record reviewers and other evidence supported finding Kennedy could perform some occupations; standard is deferential and administrator acted reasonably | Majority: termination was unreasonable; district court judgment reinstating benefits affirmed |
| Whether fibromyalgia symptoms (pain/fatigue) require objective lab confirmation to establish disability | Kennedy: fibromyalgia’s core symptoms do not show on labs; demanding lab proof is improper | Lilly: functional limitations can be objectively assessed and reviewers reasonably found insufficient objective support for disabling limitations | Majority: requiring labs is erroneous; fibromyalgia symptoms are legitimately disabling even without lab abnormalities |
| Weight to give plan administrator’s conflict of interest (self-funded plan) | Kennedy: conflict is meaningful and undermines credibility of termination decision; can act as tiebreaker | Lilly: conflict does not overcome competent contrary evidence; deferential review still applies | Majority: conflict noted and relevant; it factors against Lilly and supports finding unreasonableness |
| Whether administrator adequately identified alternative jobs Kennedy could perform under the "any occupation" standard | Kennedy: administrator failed to specify suitable occupations consistent with medical restrictions and flares; vague references insufficient | Lilly: administrator said she could perform lower-stress, non-executive HR positions; that is a reasonable interpretation of evidence | Majority: administrator did not show which jobs or how Kennedy could meet work requirements given flares and restrictions; omission supports finding benefits termination unreasonable |
Key Cases Cited
- Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (conflict of interest in ERISA review may be a tiebreaker)
- Edwards v. Briggs & Stratton Retirement Plan, 639 F.3d 355 (7th Cir.) (administrator decision overturned if unreasonable)
- Hawkins v. First Union Corp. Long-Term Disability Plan, 326 F.3d 914 (7th Cir.) (objective tests not required to establish fibromyalgia symptoms)
- Black v. Long Term Disability Ins., 582 F.3d 738 (7th Cir.) (deferential review; conflict of interest may be considered)
- Mote v. Aetna Life Ins. Co., 502 F.3d 601 (7th Cir.) (standard for review of discretionary administrator decisions)
- Williams v. Aetna Life Ins. Co., 509 F.3d 317 (7th Cir.) (functional limits from subjective pain can be objectively assessed)
- Boardman v. Prudential Ins. Co. of Am., 337 F.3d 9 (1st Cir.) (limitations from conditions like fibromyalgia may be subject to objective analysis)