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August 06, 2010
ERISA Case: Did Administrator Abuse Its Discretion?
A North Carolina customer service rep's duties involved entering lots of data into a computer. But she had a history of hand and wrist problems, which worsened in her job. Finally, she sought disability benefits. When those were cut off, she tried to get them back, couldn't, and sued.

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What happened. “Wilson” developed carpal tunnel syndrome and two other hand problems in the mid-1990s and had nine medical procedures, none of which was effective. She worked for Cingular Wireless from September 2000 to mid-2003, when the pain in her hands and wrists made it impossible to use her computer. She won short-term disability benefits for two absences and a third period, and then applied for long-term disability under Cingular’s plan with MetLife. Benefits were approved and paid until August 2005, when the insurer decided she was no longer disabled.

She appealed that decision, but MetLife stood fast—as it continued to do so through Wilson’s four subsequent attempts to have additional evidence considered. Not only had her hand and wrist problems not improved, she now also had pain in her neck and shoulders. When all her attempts to regain her benefits failed, Wilson sued for violation of her rights under ERISA, the Employee Retirement Income Security Act.

A federal district court judge reviewed medical and MetLife reports, as well as ERISA case law. An important factor in the case was that MetLife served as both judge and payer for claims—a possible conflict of interest common among insurers. The judge ruled that MetLife had abused its discretion, that Wilson’s benefits should be restored retroactively, and that she deserved attorney’s fees and court costs. MetLife appealed to the 4th Circuit, which covers Maryland, North Carolina, South Carolina, Virginia, and West Virginia.

What the court said. Despite a U.S. Supreme Court ruling in 2008 stressing that such a structural conflict of interest should be seen as just one factor in administrators’ decisions, appellate judges agreed with the district judge. From early 2005 on, doctors seemed to have focused solely on Wilson’s neck and shoulder pain, ignoring her real job problem—her hand and wrist pain. So her benefits will be restored and she will be given fees and costs. Williams v. MetLife and Cingular Wireless, U.S. Court of Appeals for the 4th Circuit, Nos. 09-1025/1568 (6/30/10).

Point to remember: In their ruling, judges used eight factors, including the reasonableness of the insurer’s decision, its consistency with earlier decisions, plan language and goals, and adequacy of materials used to make the decision, as well as the insurer’s conflict of interest.

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