Patti Okuno v. Reliance Standard Life Ins. Co.
836 F.3d 600
| 6th Cir. | 2016Background
- Patti Okuno, a Limited employee, stopped work due to symptoms later diagnosed as Crohn’s disease, narcolepsy, and Sjogren’s syndrome; she exhausted short-term benefits and applied for long-term disability under a Reliance-administered Plan.
- The Plan pays benefits for “Total Disability” but caps benefits at 12 months for disabilities "caused by or contributed to by" mental or nervous disorders; it also contains a pre-existing-conditions exclusion.
- Reliance initially denied benefits under the pre-existing condition clause (treating fibromyalgia as pre-existing); after appeals and independent file reviews, Reliance concluded Okuno had a psychiatric component (depression/anxiety) and paid benefits for 12 months only, denying longer coverage for her physical conditions.
- Reliance’s medical reviewers conducted only file reviews (no in-person examinations), and the reviewers were not specialists in Crohn’s or Sjogren’s; Reliance did not consult Okuno’s treating physicians or a mental-health specialist despite relying on a psychiatric component to limit benefits.
- Okuno sued under ERISA §502(a)(1)(B); the district court granted judgment to Reliance. The Sixth Circuit reviewed under the arbitrary-and-capricious standard (administrator discretionary authority) and reversed, remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper interpretation of the Plan’s Mental or Nervous Disorders Limitation | The mental-health cap applies only if the claimant would not be totally disabled from physical conditions alone (but-for test). | The Plan allows application of the 12-month cap whenever a psychiatric component is present or contributed to the disability. | Court adopts but-for interpretation: administrator must consider physical impairments separately; mere presence of a psychiatric component cannot automatically trigger the cap. |
| Burden of proof on exclusion | Reliance must prove the exclusion applies. | Reliance argued Okuno failed to show the exclusion was inapplicable. | Court: Reliance bears the burden to show the mental-health exclusion applies. |
| Adequacy of Reliance’s factfinding (medical review process) | Reliance’s file-only reviews by non-specialists, failure to consult treating physicians and lack of mental-health expert rendered decision arbitrary and capricious. | File reviews by retained physicians were sufficient; in-person exams not required. | Court: Reliance’s process was flawed—no exams, inadequate specialty expertise, failure to consult treating doctors and to use mental-health expertise—so denial was not supported by substantial evidence. |
| Remedy | Remand for further administrative proceedings to evaluate whether physical conditions alone disable Okuno for “any occupation.” | Argues prior determination was reasonable; no reinstatement requested. | Court reverses district court and remands for further proceedings rather than ordering immediate reinstatement. |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (supersession of standard of review for ERISA plan interpretations)
- Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008) (conflict of interest when administrator both evaluates claims and pays benefits is a factor in review)
- George v. Reliance Standard Life Ins. Co., 776 F.3d 349 (5th Cir. 2015) (but-for test for mental/nervous disorder exclusion)
- Javery v. Lucent Technologies, Inc. Long Term Disability Plan, 741 F.3d 686 (6th Cir. 2014) (importance of applying medical evidence to occupational standard)
- Elliott v. Metropolitan Life Ins. Co., 473 F.3d 613 (6th Cir. 2006) (standard for reviewing ERISA benefits decisions under administrative record)