On appeal from a decision of respondent, the Michigan Civil Service Commission (CSC), the circuit court ruled that the CSC’s decision upholding the denial of petitioner, Larry Wescott’s, request for long-term disability (LTD) insurance benefits was arbitrary and capricious. This Court granted the CSC’s application for leave to appeal, and we hold that the circuit court did not apply correct legal principles in finding that the CSC’s ruling was arbitrary and capricious. Accordingly, we reverse the circuit court’s ruling and reinstate the CSC’s decision.
Petitioner, a longtime state employee, began experiencing blurred vision in 2007 that allegedly compromised his ability to drive and read. Claiming an inability to work because of the impairment, petitioner applied for nonduty disability retirement benefits under MCL 38.24 and for social security disability benefits. Petitioner’s separate application for LTD benefits was denied by the third-party administrator (TPA) of the LTD plan, and a lengthy administrative appeals process began.
In Hanlon v Civil Serv Comm, 253 Mich App 710, 716; 660 NW2d 74 (2002), this Court stated that the scope of review applicable to a circuit court’s review of a decision by the CSC is governed by Const 1963, art 6, § 28, which provides:
All final decisions, findings, rulings and orders of any administrative officer or agency existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions, findings, rulings and orders are authorized by law; and, in cases in which a hearing is required, whether the same are supported by competent, material and substantial evidence on the whole record. Findings of fact in workmen’s compensation proceedings shall be conclusive in the absence of fraud unless otherwise provided by law.
With respect to our review of the circuit court’s ruling, we must determine whether the circuit court “ ‘applied correct legal principles and whether it misapprehended or grossly misapplied the substantial evidence test to the agency’s factual findings.’ ” Hanlon, 253 Mich App at 716 (citation omitted). However,
In this case, the circuit court found that the CSC’s decision was arbitrary and capricious because the CSC failed to take into consideration or give any weight to the SSA’s and the SERSB’s conclusions that petitioner was indeed disabled. The circuit court stated that, given its finding that the CSC’s decision was arbitrary and capricious, it was unnecessary to examine the sufficiency of the evidentiary foundation for the CSC’s decision.
We conclude that the CSC’s decision was neither arbitrary nor capricious and that the circuit court used incorrect legal principles in finding to the contrary. We have not been directed to any binding authorities that would require the CSC to consider and discuss the SSA’s or the SERSB’s disability findings. Even though
Under the LTD plan, a claimant is required to submit a medical statement describing “the nature and extent of any disability and explaining] why the disabling condition prevents the claimant from performing the duties of the claimant’s usual occupation or, after 24 months of total disability, any reasonable occupation.”
During the administrative appellate process, petitioner submitted to an independent medical evaluation by an ophthalmologist who opined
The circuit court had earlier found that due process would have required a hearing in petitioner’s case despite the absence of such a requirement in the written procedures relative to a denial of LTD
We note that the circuit court’s ruling, despite the court’s contention to the contrary, could be viewed as questioning the evidentiary support for the CSC’s decision or dictating what evidence the CSC must entertain in making its ruling, neither of which is allowed, because to do so would exceed the court’s scope of review. To the extent that the court’s ruling ventured into impermissible territory relative to evidentiary matters, it must be reversed. There would appear to be some tension between the arbitrary-and-capricious standard and the inapplicability of the substantial-evidence test in cases in which no hearing was required, when, for example, there might be an absolute dearth of evidence supporting an agency’s decision, which would seem to render the decision completely arbitrary and capricious, yet the rule against examining the evidentiary support for the decision would appear to mandate a holding affirming the decision. In this case, there was evidentiary support for the CSC’s decision, even if it was only the ophthalmologist’s evaluation. Moreover, it was petitioner that had to establish his right to LTD benefits, and he essentially attempted to do so by simply pointing to the findings of the SSA and the SERSB.
We find the federal cases relied on by the circuit court and petitioner to be distinguishable. A major emphasis in those opinions related to the conduct of plan administrators in encouraging, assisting, or requiring an applicant to pursue social security benefits, yet denying benefits to those same applicants under their own plans after social security benefits were awarded. DeLisle v Sun Life Assurance Co of Canada, 558 F3d 440, 446