882 F.3d 667
7th Cir.2018Background
- John Dragus, an Internet Sales Manager, claimed long-term disability (LTD) benefits from Reliance Standard under an ERISA-governed group policy after chronic neck pain and related treatments left him functionally impaired.
- Reliance's policy granted the administrator discretionary authority to determine eligibility and to interpret plan provisions; Reliance required Dragus to apply for SSDI as part of the LTD process.
- Reliance obtained multiple independent file-review opinions (psychiatry and occupational medicine) from two third-party vendors; all reviewers concluded Dragus could perform a full-time light-duty occupation and that medical records did not support the claimed level of impairment.
- Reliance denied the LTD claim and, after administrative appeal and additional reviews, affirmed the denial; a labor market survey showed several positions consistent with Dragus’s defined regular occupation could be performed within the reviewers’ restrictions.
- Dragus sued under 29 U.S.C. § 1132(a)(1)(B). The district court applied the arbitrary-and-capricious standard, denied Dragus’s request to supplement the record with a favorable SSDI decision, and granted summary judgment for Reliance. Dragus appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Reliance’s untimely claims decision forfeits discretionary-review and requires de novo review | Dragus: Reliance’s failure to decide within the regulatory time limits triggers loss of discretionary authority and de novo review | Reliance: Untimeliness remedies were waived when Dragus pursued administrative reconsideration rather than pressing the timeliness objection earlier | Court: Untimeliness occurred but Dragus waived the § 503 remedies by seeking reconsideration; arbitrary-and-capricious review remains |
| Whether Reliance’s denial was arbitrary and capricious | Dragus: Evidence (including treating opinions and later SSDI award) shows denial was unreasonable and conflicted with record | Reliance: Independent, specialty medical reviewers and a labor market survey provided a reasoned basis for denial; conflict of interest was mitigated by using independent reviewers | Court: Reliance’s decision was supported by reasoned explanations and adequate process; not arbitrary and capricious |
| Whether Reliance improperly relied on file reviews instead of in-person exams | Dragus: Reliance should have exercised policy authority to order a physical exam to resolve disputes | Reliance: File reviews by qualified specialists were appropriate and reviewers certified impartiality | Court: Use of qualified independent file reviewers was acceptable; no abuse of discretion shown |
| Whether the district court erred in refusing to supplement the administrative record with the favorable SSDI decision | Dragus: The SSDI decision is relevant new evidence that should be considered | Reliance: Under deferential review, extra-record evidence is improper; SSDI decision should not be admitted | Court: Because review was arbitrary-and-capricious, supplementation with new evidence is not permitted; denial affirmed |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (conflict of interest considered as factor in abuse-of-discretion review)
- Perlman v. Swiss Bank Corp. Comprehensive Disability Protection Plan, 195 F.3d 975 (new evidence/discovery not allowed under arbitrary-and-capricious review)
- Jenkins v. Price Waterhouse Long Term Disability Plan, 564 F.3d 856 (weighing conflict of interest in ERISA benefit denials)
- Exbom v. Cent. States, Se. & Sw. Areas Health & Welfare Fund, 900 F.2d 1138 (reasoned explanation standard for upholding administrator decisions)