Miller v. American Airlines, Inc.
632 F.3d 837
| 3rd Cir. | 2011Background
- Miller, an American Airlines pilot, was awarded long-term disability benefits under the Plan after a psychotic episode and FAA-medical-certification issues.
- The Plan provides own-occupation LTD benefits with discretion vested in PBAC; Charlotte Teklitz acted as PBAC delegate for appeals.
- American terminated Miller’s LTD benefits in May 2003 due to alleged lack of verifiable disability, later reinstating based on asymptomatic status.
- From 2003–2006, Miller’s treating psychiatrist Dr. Gonzalez repeatedly documented ongoing anxiety and brief reactive psychosis; Miller remained under care.
- In 2006 American terminated benefits again, citing Miller’s purported inability to verify disability and the unrelated requirement of FAA recertification, which the Plan did not mandate.
- The district court granted summary judgment for American; on appeal, the Third Circuit reversed, deeming the termination arbitrary and capricious and ordering retroactive reinstatement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether termination of benefits was arbitrary and capricious | Miller argues irregularities and failures taint the decision | American contends sufficient evidence and proper process supported termination | Yes; termination was arbitrary and capricious. |
| Role of structural conflict of interest | Conflict weighs in Miller’s favor due to employer funding and claims evaluation | Conflict exists but is a factor, not controlling | Slight weight in Miller’s favor; conflict acknowledged but not dispositive. |
| Compliance with ERISA §503 notice and procedures | Letters lacked specific reasons and failed to guide appeal | Termination letter provided some explanation and proceeding followed | Noncompliance; letter deficient under §503 weighs in favor of arbitrary and capricious. |
| Remedy for improper termination | Remand to plan administrator appropriate for full review | Remand as remedy; some courts favor remand, but retroactive reinstatement may be proper | Retroactive reinstatement ordered; remand not required. |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (Sup. Ct. 1989) (establishes arbitrary and capricious standard for discretionary plans)
- Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (Sup. Ct. 2008) (conflict of interest is a factor in review under ERISA)
- Schwing v. The Lilly Health Plan, 562 F.3d 522 (3d Cir. 2009) (procedural irregularities considered in abuse of discretion)
- Post v. Hartford Ins. Co., 501 F.3d 154 (3d Cir. 2007) (idiosyncratic factors weighed in arbitrary-and-capricious review)
- Kosiba v. Merck & Co., 384 F.3d 58 (3d Cir. 2004) (failure to address all diagnoses undermines reasoned decision-making)
- Kalish v. Liberty Mutual/Liberty Life Assurance Co. of Boston, 419 F.3d 501 (6th Cir. 2005) (examines adequate consideration of multiple diagnoses)
- Grossmuller v. Int'l Union, United Auto., Aerospace & Agr. Implement Workers of Am., 715 F.2d 853 (3d Cir. 1983) (denial letters must provide specific reasons and evidence basis)
- Syed v. Hercules Inc., 214 F.3d 155 (3d Cir. 2000) (adequate explanation for denial under §503 if based on specific evaluation)
- Hobson v. Metropolitan Life Insurance Co., 574 F.3d 75 (2d Cir. 2009) (compliance with §503 when letter details missing information)
- Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d 40 (3d Cir. 1993) (deference in review; cannot substitute own judgment without basis)