McDonough v. Aetna Life Insurance Company, 783 F.3d 374

Joseph McDonough worked as a Senior Analyst III (systems administration) for Biogen, a high-pressure, on-call IT position requiring frequent right-hand use and significant cognitive demands.
In late 2008 he developed neurological symptoms (numbness, dizziness, blurred vision) and later anxiety/panic attacks; he stopped working and began receiving Long-Term Disability (LTD) benefits under Biogen’s plan, with Aetna as claims administrator.
The plan defines “disabled” under an “own occupation” test measured by how the claimant’s occupation is "normally performed in the national economy."
Aetna terminated McDonough’s benefits in October 2009, relying on his PCP’s opinion of sedentary capability and four internal Aetna medical reviewers who concluded he was not functionally impaired; Aetna’s reviewers did not meaningfully compare his limitations to the national-economy duties of his occupation.
McDonough sued under ERISA. During litigation Aetna belatedly produced a policy agreement granting Aetna discretionary authority (affecting the standard of review); the district court affirmed denial of benefits and imposed a $5,000 penalty for late disclosure.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Aetna’s termination of LTD benefits was arbitrary under the plan’s “own occupation” standard	McDonough: Aetna failed to apply the plan’s own-occupation benchmark (national-economy duties) and misweighed medical/vocational evidence; decision was not reasoned	Aetna: reviewers concluded claimant not disabled; relied on medical reviews and job materials (implicitly applied own-occupation)	Vacated benefit-termination judgment; remanded. Court held Aetna’s decision arbitrary and capricious because reviewers never compared claimant’s impairments to the material duties of his occupation as normally performed in the national economy and failed to give a reasoned explanation.
Whether the district court abused discretion by imposing a $5,000 penalty for Aetna’s late disclosure of the policy agreement under 29 U.S.C. § 1132(c)(1)(B)	McDonough: $5,000 is too low given 1,157 days’ delay; deterrence requires a larger penalty	Aetna: does not dispute the violation but contests penalty severity	Affirmed. Appellate court found $5,000 within district court’s broad discretion given no showing of bad faith or prejudice and deference to the district court’s case management.

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (standard of review for ERISA benefit denials)
Colby v. Union Sec. Ins. Co., 705 F.3d 58 (1st Cir.) (abuse-of-discretion review and conflict-of-interest factor)
Conkright v. Frommert, 559 U.S. 506 (eligibility/discretion principles under ERISA)
Elliott v. Metro. Life Ins. Co., 473 F.3d 613 (6th Cir.) (requirement to apply own-occupation benchmark to occupational duties)
Miller v. Am. Airlines, Inc., 632 F.3d 837 (3d Cir.) (benefit-termination must consider specific job requirements)
Maher v. Mass. Gen. Hosp. LTD Plan, 665 F.3d 289 (1st Cir.) (remand to administrator for further proceedings)
Buffonge v. Prudential Ins. Co. of Am., 426 F.3d 20 (1st Cir.) (when to remand vs. award benefits)
Sullivan v. Raytheon Co., 262 F.3d 41 (1st Cir.) (standards for ERISA document-disclosure penalties)
Tsoulas v. Liberty Life Assur. Co. of Bos., 454 F.3d 69 (1st Cir.) (using DOT/classifications when assessing occupation comparability)
Kwan v. Andalex Grp. LLC, 737 F.3d 834 (2d Cir.) (factors for fixing ERISA disclosure penalties)