Paul McKay v. Reliance Standard Life Insuran, 428 F. App'x 537

McKay suffers severe cervical and lumbar disc disease and was terminated from U.S. Xpress on January 19, 2004.
U.S. Xpress provided LTD coverage via Unum until January 1, 2004, after which Reliance assumed coverage; an Exchange/Transfer of Insurance provision applied to eligible employees.
Unum denied McKay’s LTD claim in October 2005, concluding no 20%+ decline in indexed monthly earnings because McKay received full salary through January 16, 2004.
Reliance denied McKay’s LTD claim under the basic policy, concluding he had not paid premiums or elected coverage, and later, on remand, evaluated under the transfer provisions and Actively at Work.
The district court found no arbitrariness in Unum’s denial, but remanded Reliance’s claim for further investigation of coverage provisions; after remand, Reliance again denied benefits citing non-Active-at-Work status and pre-policy disability.
McKay sought and obtained an attorney-fee award under ERISA § 1132(g)(1); Reliance cross-appealed the fee award, which the district court affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did Unum’s denial of McKay’s LTD benefits survive arbitrary/capricious review?	McKay argues coverage should apply due to disability during Unum policy	Unum reasonably denied because no 20% earnings loss	No; Unum denial affirmed
Did Reliance’s denial of McKay’s LTD benefits survive arbitrary/capricious review?	McKay argues Reliance misapplied policy terms and failed to investigate	Reliance reasonably found no Actively at Work or proper transfer	No; Reliance denial affirmed
Was Reliance’s transfer/Actively at Work determination reasonable under the policy terms?	McKay contends he met transfer/coverage through continued salary and work-from-home and thus qualified	Reliance reasonably held he was not Actively at Work and his disability predates the policy	Yes; Reliance determination upheld
Did the district court abuse its discretion in awarding attorney fees to McKay?	McKay achieved success on remand and benefits were pursued to correct errors	Reliane contends fees were improper or excessive	No; fee award affirmed

Wilkins v. Baptist Health Care System, Inc., 150 F.3d 609 (6th Cir. 1998) (ERISA review is on administrative record; de novo absent discretionary authority)
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (U.S. 1989) (arbitrary/capacious review when plan administrator has discretion)
Hansen v. Metro. Life Ins. Co., 192 F. App’x 319 (6th Cir. 2006) (earnings vs. non-earnings under plan language; plan interpretation matters)
Kovach v. Zurich Am. Ins. Co., 587 F.3d 323 (6th Cir. 2010) (ERISA plan language interpreted by plain meaning; substantial evidence standard)
Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376 (6th Cir. 1996) (confirms deferential review when administrator has discretion)
Calvert v. Firstar Fin., Inc., 409 F.3d 286 (6th Cir. 2005) (conflict of interest considerations in ERISA review)
Morgan v. SKF USA, Inc., 385 F.3d 989 (6th Cir. 2004) (interpretation of plan terms under ERISA; reasonableness standard)
Hardt v. Reliance Standard Life Ins. Co., 130 S. Ct. 2149 (2010) (requirement of some degree of success on the merits for fee awards)
Conkright v. Frommert, 130 S. Ct. 1640 (2010) (plan interpretation not disturbed if reasonable; no abuse of discretion)