Decision Based on Administrator’s Honest Mistake Entitled to Deference

May 31, 2010 | Insurance Coverage

The plaintiffs in this case were employees of Xerox Corporation who left the company in the 1980s, received lump sum distributions of retirement benefits they had earned up to that point, and later were rehired. To account for the plaintiffs’ past distributions when calculating the present benefits to which they were entitled (i.e., to avoid paying them the same benefits twice), the plan administrator interpreted the plan to call for an approach known as the “phantom account” method. Essentially, that method calculated the hypothetical growth that the plaintiffs’ past distributions would have experienced if the money had remained in Xerox’s investment funds, and reduced their benefits accordingly. After the plan administrator denied the plaintiffs’ administrative challenges to that method, they filed suit in federal court under ERISA. The district court granted summary judgment for the plan, applying a deferential standard of review to the plan administrator’s interpretation. The U.S. Court of Appeals for the Second Circuit vacated the district court’s decision and remanded the case to the district court, holding that the plan administrator’s interpretation was unreasonable and that the plaintiffs had not been adequately notified that the phantom account method would be used to calculate their benefits.

On remand, the district court considered other approaches for adjusting the plaintiffs’ present benefits in light of their past distributions. The plan administrator submitted an affidavit proposing an approach that, like the phantom account method, accounted for the time value of the money that the plaintiffs had previously received. But unlike the phantom account method, the plan administrator’s new approach did not calculate the present value of a past distribution based on events that had occurred after the distribution was made. Instead, the new approach used an interest rate that was fixed at the time of the distribution, thereby calculating the current value of the distribution based on information that was known at the time of the distribution. The plan administrator argued that the district court should apply a deferential standard of review to this approach, and accept it as a reasonable interpretation of the plan.

The district court, however, did not apply a deferential standard of review, and it did not accept the plan administrator’s interpretation. Instead, after finding the plan to be ambiguous, the district court adopted an approach proposed by the plaintiffs that did not account for the time value of money. Under that approach, the plaintiffs’ present benefits were reduced only by the nominal amount of their past distributions – thereby treating a dollar distributed to the plaintiffs in the 1980s as equal in value to a dollar distributed today. The Second Circuit upheld the district court, ruling that it did not have to apply a deferential standard of review because the plan administrator had previously construed the same plan terms and the Second Circuit had ruled that the plan administrator’s construction had violated ERISA. The dispute reached the U.S. Supreme Court.

On April 21, the Supreme Court reversed the Second Circuit’s decision. The Supreme Court decided that the district court owed deference to the plan administrator’s interpretation of the plan on remand and rejected the Second Circuit’s reasoning that the district court was entitled to reject “a reasonable interpretation” of the plan offered by the plan administrator solely because the court of appeals had overturned a previous interpretation by the plan administrator.

The Supreme Court noted that it had addressed the standard for reviewing the decisions of ERISA plan administrators in Firestone Tire & Rubber Co. v. Bruch, where it held that “a denial of benefits challenged under §1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” The Court expanded Firestone‘s approach in Metropolitan Life Ins. Co. v. Glenn, where it held that, when the terms of a plan grant discretionary authority to the plan administrator, a deferential standard of review remains appropriate even in the face of a conflict.

The Court added that it was “undisputed” that, under Firestone and the terms of the plan, the plan administrator in this case would normally be entitled to deference when interpreting the plan. It then rejected the exception to Firestone deference created by the Second Circuit, which it characterized as a “one-strike-and-you’re-out” approach.

As an initial matter, the Court found that the circuit court’s rationale had no basis under Firestone, which set out a “broad standard of deference” without any suggestion that the standard was susceptible to ad hoc exceptions like the one adopted by the circuit court. Indeed, the Supreme Court added, it had refused to create such an exception to Firestone deference in Glenn, recognizing that ERISA law was already complicated enough without adding “special procedural or evidentiary rules” to the mix. The Court declared that if, as it held in Glenn, a systemic conflict of interest did not strip a plan administrator of deference, it was “difficult to see why a single honest mistake would require a different result.”

The Court concluded by noting that the lower courts had made no finding that the plan administrator had acted in bad faith or would not fairly exercise its discretion to interpret the terms of the plan. [Conkright v. Frommert, No. 08-810 (U.S. Sup. Ct. Apr. 21, 2010).]

Employee May Satisfy Burden Of Proving Three Days Of Incapacitation For FMLA Purposes Through Combination Of Expert Medical And Lay Testimony

The plaintiff in this case worked as a medical receptionist for Lehigh Valley Physicians Business Services, Inc., from December 2002 until she was fired on October 3, 2005. On September 21, 2005, she was diagnosed by her physician at the Lehigh Valley office with a urinary tract infection and treated for low back pain, fever, nausea, and vomiting. At the end of the visit, the physician wrote a note advising the plaintiff’s supervisor that the plaintiff’s illness prevented her from working on Wednesday, September 21, and on Thursday, September 22. The plaintiff then taped the note to her supervisor’s door and went home.

The plaintiff took paid sick leave on September 21 and 22 and was in bed with pain, fever, and vomiting. As chance would have it, the plaintiff previously had scheduled vacation days on Friday, September 23, and on Monday, September 26. The plaintiff claimed she spent Friday, September 23, and Saturday, September 24, in bed. By Sunday, the plaintiff claimed she felt well enough to get out of bed, but she was still ill. On Monday, she said she was well enough to do some housework, and she returned to Lehigh Valley the following day, Tuesday, September 27, 2005.

Upon returning to work, the plaintiff told her supervisor that she had been sick all weekend. The plaintiff neither requested leave under the Family and Medical Leave Act (FMLA) nor asked Lehigh Valley to convert her two paid vacation days into paid sick days. About a week later, the plaintiff was terminated. In a written explanation, her supervisor stated: “[o]n 9/21/05 [the plaintiff] brought a note from her doctor for a 2 day excuse from work. She taped the note to manager’s door and left, never calling off from work.” The supervisor also listed several mistakes and performance issues relating to essential aspects of the plaintiff’s job, including improperly listing co-payments on bank deposit slips.

The plaintiff sued Lehigh Valley, claiming interference and discrimination in violation of the FMLA. Lehigh Valley moved for summary judgment, arguing that the plaintiff did not qualify for FMLA leave because she failed to establish she was incapacitated for three days. The three day period was significant because: (i) the FMLA defines a serious health condition as “an  illness, injury, impairment, or physical or mental condition that involves . . . continuing treatment by a health care provider” and (ii) a Department of Labor regulation defines continuing treatment by a health care provider as a “period of incapacity . . . of more than three consecutive calendar days . . . that also involves . . . [t]reatment by a health care provider on at least one occasion which results in a regimen of continuing treatment under the supervision of the health care provider.”

The district court granted Lehigh Valley’s motion for summary judgment, holding that the plaintiff had not established a serious health condition because she failed to present medical evidence that she was incapacitated for more than three days.  The district court held that the plaintiff had to establish more than three days of incapacitation solely through medical evidence.  Because the plaintiff presented a doctor’s note that established incapacitation for only two days and relied on her own testimony about the remaining days, the district court granted Lehigh Valley’s motion for summary judgment. The plaintiff appealed to the U.S. Court of Appeals for the Third Circuit.

In its decision, the circuit court explained that the only issue in dispute was whether the plaintiff had presented evidence that she was incapacitated for more than three days. It pointed out that courts have adopted three approaches when examining this question: (1) the evidence of incapacitation must come exclusively from a medical professional; (2) lay testimony, on its own, was sufficient; or (3) lay testimony could supplement medical professional testimony or other medical evidence.

The Third Circuit noted that many district courts have held that a health care provider’s professional medical opinion was the only evidence that could establish incapacity. These decisions reasoned that a medical expert was required to establish that the employee was incapacitated because of the injury or illness.

The Third Circuit then pointed out that, contrary to these district courts, all of the circuit courts of appeals that have addressed the question have held that lay testimony could create a genuine issue of material fact regarding incapacitation. In particular, some circuits have held that lay testimony alone was sufficient to establish incapacitation, while others have held that lay testimony could be used to supplement medical evidence.

In this case, the Third Circuit turned to the Department of Labor regulations that provide that the statutory language “continuing treatment by a health care provider” could be satisfied by showing at least three days of incapacitation. This regulation did not speak to whether medical testimony was required, the circuit court observed. In the very next regulation, however, the Department of Labor requires a “health care provider” to determine that an employee is “unable to perform the functions of the position.” Because the incapacitation regulation does not require, or even mention, a health care provider determination, the Third Circuit declared that it found “no support” in the regulations to exclude categorically all lay testimony regarding the length of an employee’s incapacitation.

Contrary to certain other circuits, however, the Third Circuit stated that it did not find lay testimony, by itself, sufficient to create a genuine issue of material fact. Some medical evidence was “still necessary” to show that the incapacitation was “due to” the serious health condition. In the circuit court’s opinion, this did not place an undue burden on employees because they had to present some medical evidence anyway to establish the inability to perform the functions of the position. In contrast, it reasoned, allowing unsupported lay testimony would place too heavy a burden on employers to inquire into an employee’s eligibility for FMLA leave based solely on the employee’s self-diagnosed illness. For these reasons, the Third Circuit held that an employee may satisfy his or her burden of proving three days of incapacitation through a combination of expert medical and lay testimony.

The plaintiff’s physician’s statement that the plaintiff was incapacitated for two days because of her illness, together with the plaintiff’s testimony that she was incapacitated for two additional days, led the Third Circuit to conclude that a material issue of fact existed as to whether the plaintiff suffered from a “serious health condition.”  [Schaar v. Lehigh Valley Health Services, Inc., 2010 U.S. App. Lexis 5172 (3rd Cir. March 11, 2010).]

Comment: It should be noted that this does not necessarily mean that the plaintiff will be successful in her lawsuit; the circuit court remanded the case to the district court, stating that it expressed no opinion as to whether the plaintiff’s testimony regarding her incapacitation was credible.

Third Party Administrator Breached Fiduciary Duty By Making Overpayments On Infertility And Mental Health Claims, Court Rules

The plaintiff in this case, Hartsfield, Titus & Donnelly LLC, a municipal securities brokerage firm, brought suit against its third party employee benefits plan administrator, the Loomis Company, alleging breach of fiduciary duty stemming from overpayments allegedly made by Loomis on Hartsfield employees’ infertility and mental health claims.

According to Hartsfield, under the parties’ Benefit Services Management Agreement and Administrative Services Agreement, Loomis was required to review the qualification of claims submitted under Hartfield’s employee health benefit plan. In addition, Loomis was vested with authority to make payment on those claims directly from the plan’s account. Hartsfield contended, and Loomis acknowledged, that Loomis made payments in excess of the maximum amount allowable under the plan to three Hartsfield employees. Specifically, Loomis made payments to two employees in excess of the $10,000 cap on infertility claims and to one employee in excess of the $35,000 lifetime maximum for substance abuse treatment claims.

Hartsfield asserted in its suit against Loomis that Loomis had breached its fiduciary duty under ERISA by failing to exercise due care and failing to administer the plan in accordance with plan documents. After the close of pre-trial discovery, Hartsfield moved for summary judgment. In a recent decision, the court granted Hartsfield’s motion.

The court first found that Loomis was an ERISA fiduciary, rejecting its argument that it should not be deemed a fiduciary because it had expressly disclaimed fiduciary status in its contracts with Hartsfield. The court reasoned that an entity’s status as a fiduciary hinged not solely on whether it was named as such in a benefit plan, but also on whether it exercised “discretionary control over the plan’s management, administration, or assets.” Here, the court continued, it was “undisputed” that Loomis was contractually obligated to weigh the qualification of claims submitted and make payment of those qualifying claims from plan assets. As such, Loomis qualified as a fiduciary. Significantly, the court also made it clear that an ERISA fiduciary “cannot disclaim this status,” and that disclaimers exonerating fiduciaries from their responsibilities are legally void.

Next, the court considered Hartsfield’s assertions that Loomis had acted negligently in making the overpayments, and that these negligent acts constituted a breach of fiduciary duty. In response, Loomis contended that Hartsfield had failed to show the “bad faith” required for a breach of fiduciary duty claim. The court found this argument unavailing.

According to the court, bad faith was not a prerequisite to a breach of fiduciary duty claim. The court added that by both failing to properly process claims and making payment on unqualified claims, Loomis “breached its duty under its agreements and did not act with the care and prudence expected under the circumstances.”

Finding that Loomis’ breach caused a loss to the plan, the court ruled that Hartsfield was entitled to recover $85,114.67 in damages (plus interest), stemming from the overpayments. [Hartsfield, Titus & Donnelly LLC v. Loomis Co., 2010 U.S. Dist. Lexis 13410 (D.N.J. Feb. 17, 2010).]

Circuit Court Upholds Administrator’s Interpretation Of “Actively At Work” To Mean At Work Or On FMLA Leave But Excluding Employees On Administrative Leave

The plaintiff in this case began working for Croda, Inc., as a research scientist in March 1992. By 2004, she worked as a research and development manager. On May 4, 2004, Croda placed the plaintiff on administrative leave for “alleged insubordination and disregard of company policy.” On May 17, 2004, the plaintiff visited a psychiatrist who completed an FMLA application for the plaintiff, asserting that she had a “major depressive disorder” that required weekly treatment. Croda accepted the application, and the plaintiff’s FMLA leave began thereafter.

The plaintiff’s 12 weeks of FMLA leave expired on September 1, 2004. During her leave, her treatment was limited to a few follow-up conversations with her psychiatrist (mostly by phone), as well as prescriptions for related medication. On October 20, 2004, she began more extensive treatment with a different psychiatrist. The plaintiff’s employment was terminated by December 31, 2004, and she then filed a claim for long term disability benefits under the policy. ReliaStar Insurance denied her claim, concluding that the plaintiff was “actively at work,” but not receiving “regular and appropriate care” during her FMLA leave (prior to September 1, 2004); neither “actively at work” nor receiving “regular and appropriate care” between September 1, 2004 and October 20, 2004; and receiving “regular and appropriate care,” but not “actively at work,” after October 20, 2004. As a result, ReliaStar concluded that the plaintiff had never become eligible for long term disability benefits under the policy. After the plaintiff’s appeal was denied, she brought suit against ReliaStar.  The district court granted ReliaStar’s motion for summary judgment, and the plaintiff appealed to the U.S. Court of Appeals for the Third Circuit.

In its decision affirming the district court’s decision, the circuit court first considered the plaintiff’s argument that she remained “actively at work” until she was terminated in December 2004 – in other words, while she was on administrative leave. She reasoned that, even while on administrative leave, she received both salary and related benefits. Furthermore, she had not yet been formally terminated by Croda. Given this status, she argued that she should have qualified as “actively at work” under the policy during this period, and therefore been eligible for long term disability benefits.

The circuit court disagreed, finding that ReliaStar’s interpretation of “actively at work” to mean that plaintiff had to be actually present at work or on FMLA leave – therefore, excluding employees on administrative leave (such as the plaintiff) – was consistent with the policy’s terms, and therefore not an abuse of discretion. Given ReliaStar’s interpretation, the plaintiff could not qualify as “actively at work” once her FMLA leave ended – from September 1, 2004, onward – because she remained on administrative leave until she was terminated.

The circuit court also rejected the plaintiff’s argument that even if she were not “actively at work” after September 1, 2004, there was a triable issue of fact whether she began receiving “regular and appropriate care” before September 1, 2004. The circuit court noted that, when making its eligibility determination, ReliaStar undertook an independent review of the plaintiff’s medical records, with the aid of an outside, board-certified psychiatrist. This psychiatrist explained that “regular and appropriate care” for someone with the plaintiff’s condition “would include intensive psychotherapy . . . on, at least, a weekly basis by a doctoral level therapist,” and (in a severe case) “a consideration of participation in a partial hospitalization program, intensive outpatient treatment, [and] cognitive/behavioral treatment, as well as medication.”

In the end, the circuit court noted, ReliaStar concluded that the plaintiff had offered little evidence that she had received such care between May 17, 2004 and October 20, 2004, as she even conceded that after her initial consultation with her doctor in May 2004, she only received “occasional counseling on a few occasions, kept in contact via phone[,] and [was] prescribed anti-anxiety and anti-depressive medications” during this period. The circuit court then concluded that ReliaStar had not abused its discretion in concluding that the plaintiff failed to receive “regular and appropriate care” prior to October 20, 2004. [Barinova v. ING, 2010 U.S. App. Lexis 2368 (3rd Cir. Feb. 4, 2010).]

Coverage Lapse Dooms Former Employee’s Claim For Long Term Disability Benefits, Circuit Court Finds

The plaintiff in this case was hospitalized in January 2004 for major depression and stopped working as a legal secretary for a law firm. She filed a claim for disability benefits under the firm’s group long term disability insurance policy issued by Fortis Benefits Insurance Company. Fortis found the plaintiff disabled and began paying long term disability benefits after a three month qualifying period. Her treating psychiatrist cleared the plaintiff to return to work after June 7, 2004. The plaintiff notified Fortis but advised that she disagreed with that decision and was seeking a different psychiatrist. Fortis suspended benefit payments on June 8, advising the plaintiff that it would review her eligibility and requesting additional medical information. Her psychiatrist released the plaintiff to work part time on June 28 and full time on July 26.

The plaintiff returned to work part time on June 28. She scheduled initial appointments with two other psychiatrists, who refused to support her claim of continuing long term disability without further investigation and she did not pursue follow-up appointments.  She stopped working on July 15, and a new psychiatrist supported her claim of continuing disability. The plaintiff sent Fortis records from her visits to her new psychiatrist and the other psychiatrists. On August 26, Fortis notified the plaintiff that it was denying her long term disability claim for benefits after June 7, based on her failure to satisfy the test of disability in the Fortis policy. The plaintiff did not appeal this decision but returned to work part time on September 20, 2004, and full time on October 4. Effective January 1, 2005, the law firm the plaintiff worked for changed group disability insurance providers from Fortis to Unum Provident Corporation.

In February 2005, the plaintiff stopped working, complaining of an infected dog scratch. The law firm terminated her employment in mid-March. Later that month, the plaintiff filed a long term disability claim with Unum, based upon a recurrence of her major depression and other ailments. Unum denied the claim based upon the pre-existing condition clause in the Unum policy, which stated that to receive a payment, “you must satisfy the pre-existing condition provision under: 1. the Unum plan; or 2. the prior carrier’s plan, if benefits would have been paid had that policy remained in force.”

Unum first determined that the plaintiff did not satisfy the Unum policy’s pre-existing condition clause because she received psychiatric treatment within the three months prior to the effective date of the Unum policy, January 1, 2005, and her disability began during the first 12 months after the effective date of the policy. The plaintiff did not challenge that decision. Rather, she objected to Unum’s application of the pre-existing condition limitation in the Fortis policy.

Like the Unum policy, the Fortis policy defined a pre-existing condition as one that was diagnosed or treated during the three months before the claimant became insured; it denied coverage “for any disability caused by a pre-existing condition” during the first 12 consecutive months of being insured under the policy. Unum initially determined that the plaintiff’s coverage under the Fortis policy had lapsed on August 26, 2004, the date of Fortis’s final decision that she was “no longer considered disabled.” Because coverage did not resume until she returned to full time work in October 2004, and because the plaintiff received psychiatric treatment within three months prior to that date, Unum concluded that benefits would not have been paid under the pre-existing condition clause of the Fortis policy had it remained in force.

The plaintiff appealed that decision under the appeal provisions of the policy. Before resolving the plaintiff’s appeal, Unum contacted Fortis, which opined that the plaintiff fell out of an eligible class when her disability ended and she failed to return to full time work. Unum then denied the plaintiff’s appeal, determining that the plaintiff’s coverage under the Fortis policy had lapsed on June 8, 2004, the retroactive effective date of Fortis’s August 26 decision that the plaintiff was no longer disabled, and did not resume until she returned to work full time in October.

The district court granted Unum’s motion for summary judgment, finding that Unum had not abused its discretion in determining that the plaintiff’s coverage under the Fortis policy had lapsed, and the plaintiff appealed. The circuit court affirmed. It decided that coverage continued when the plaintiff returned to work part time on June 28, 2004, consistent with her psychiatrist’s limited release-for-work and with long term benefits suspended but not yet denied. However, it continued, the plaintiff quit work entirely on July 15, and Fortis found her not disabled on August 26, retroactive for benefits purposes to June 7, 2004. In these circumstances, the circuit court ruled, both Unum and the district court reasonably looked to the coverage provisions in the Fortis policy and concluded that her coverage had lapsed. As of no later than August 26, the appellate court ruled, the plaintiff had stopped active work and was no longer in the eligible class of active full time employees, defined as those who work at least 30 hours per week. Moreover, the billing records reflected that Fortis stopped charging premiums for the plaintiff until she was “added” as an employee after returning to full time work in October, consistent with coverage having lapsed.

The circuit court rejected the plaintiff’s argument that the fact that Fortis had terminated disability benefits had “no relevance” to continued insurance coverage. As the circuit court observed, unlike individual disability insurance plans, employer-provided group plans conditioned coverage on the insured employer’s relationship with an employee. Some policies provide that insurance does not end until an employee was formally terminated, but others – such as the Fortis policy – provide narrower coverage. The appellate court explained that the Fortis policy provided that insurance ended when a person was no longer an active, full time employee or stopped active work, defined as working full time. “Full time” was defined as “working at least 30 hours per week.” An employee such as the plaintiff who quit work for several months could “hardly be called” an active, full time employee, the circuit court concluded. [Jones v. Unum Provident Corp., 596 F.3d 433 (8th Cir. 2010).]

Plaintiff’s Statements On Social Security And State Disability Forms That He Was Disabled Did Not Bar His Claim That He Was Able To Perform Essential Elements Of His Job

The plaintiff in this case became an employee of National Envelope Corporation in 1988, working as a customer service representative. His duties included quoting prices to customers and processing orders. Around 2002, the plaintiff suffered a traumatic injury to his right leg. As a result of this injury, the plaintiff suffered from venous insufficiency, a condition that could result in swelling, ulcers, and infections. The plaintiff’s physician instructed him to “limit the dependency of his right leg; . . . avoid sitting or standing for prolonged periods of time; and . . . elevate his leg above his heart at regular intervals.” The plaintiff’s physician also instructed him to, if possible, work from home. National Envelope agreed to this accommodation and arranged for him to work from home by providing him with remote technology including a telephone, computer, and fax machine. During the period from 2002 to 2004, however, the plaintiff’s medical condition did not abate, and his physician directed him to continue the prescribed treatment, including working from home, to slow the progression of his condition and to minimize discomfort.

In October 2004, a new chief executive officer of National Envelope decided to rescind the accommodation. He instructed the plaintiff that he could no longer work at home, and that he would either have to return to work at the corporation’s facilities or be terminated. The plaintiff, understanding that his medical condition would not permit this change, informed his supervisor that he could not return to on-site work. National Envelope then terminated the plaintiff’s employment.

After his termination, the plaintiff applied for Social Security Disability Insurance (SSDI) benefits. The plaintiff’s application included the sentences, “I became unable to work because of my disabling condition on October 13, 2004” and “I am still disabled.” In a subsequent portion of his application, the plaintiff answered the question, “[h]ow do your illnesses injuries or conditions limit your ability to work?” He replied “[c]an’t write, type, sit, stand, walk & lift, reach, grab, bend.” The plaintiff also explained that his disability caused a change in his job duties in that he “could no longer commute, had to work from home.” A different form, issued by the New York State Office of Temporary and Disability Assistance (NYSOTDA), and signed by the plaintiff included the topic “Social Activities” and within that topic asked “Do you spend time with others? (In person, on the phone, on the computer, etc.) [] YES []NO If ‘YES’, describe the kinds of things you do with others.” The plaintiff checked “yes” in answer to the question, and elaborated by writing “family and social gathering. Spoke on the phone and worked with computer.” Within the same topical group of questions, the form included the question, “Describe any changes to your social activities since your illnesses, injuries, or conditions began.” The plaintiff answered that he was “no longer able to speak on phone or work with computer [due] to pain.”

The plaintiff sued National Envelope, alleging that his termination violated the ADA. Following discovery, National Envelope moved for summary judgment. The district court concluded that the plaintiff’s statements about phone and computer usage on the SSDI and NYSOTDA forms estopped him from claiming that he was able to perform the essential functions of a customer service representative and that, as a result, he could not establish an essential element of his ADA claim. The district court granted summary judgment, and the plaintiff appealed.

In its decision vacating the district court’s decision, the appellate court noted that because the plaintiff had a disability that was known to his employer and had been accommodated in the past, the only disputed element of his ADA claim was whether he could show that he could perform the essential functions of his job with reasonable accommodation. The appellate court noted that the district court had focused on the plaintiff’s answer to the NYSOTDA form’s question about social activities – that he did not speak on the phone or use the computer due to pain – and that it had reasoned that the circumstances the statement described would, if generally true, render him unable to perform the essential functions of his job. The appellate court added that the district court reasoned that because the statement was made in a sworn application, the plaintiff was estopped from arguing that he could, in fact, perform the essential functions of his job.

The appellate court explained that “the context” in which a statement was made was important. Here, the plaintiff stated that the work effect of his disabilities was that he “could no longer commute” to work, but “had to work from home.” Indeed, the appellate court added, the plaintiff did so for two years until his employer withdrew the home-work option. It was only in response to a question about his social activities that the plaintiff made the statements relied on to support estoppels, the circuit court continued. However, the circuit court found, those statements related to his social interactions, not his capability to perform the essential functions of his job if permitted to work from home. With the context of the statements thus understood, the apparent contradiction between the plaintiff’s statements that he was limited in social circumstances, but still able to perform the conditions of his employment with a no-longer-available accommodation, was reconcilable. The circuit court stated that the plaintiff “may well have experienced significant pain when he used the computer and phone while he worked for National Envelope from home, but he may have been able to endure that much pain, particularly as it was necessary to maintaining his job” with the accommodation of working from home. The court went on to state that the plaintiff’s response to the social question “may have indicated only that the work experience left him with no ability to tolerate further pain from social, optional activities.” The circuit court added that this was not necessarily “the only possible construction” of the plaintiff’s statements, but found that judicial estoppel did not apply.

Finally, the circuit court found that the plaintiff’s statements on the SSDI form that he was unable to commute to work, was unable to grab, reach, and bend, and that he was “still disabled,” also were insufficient to doom his claims. In the circuit court’s view, the plaintiff was disabled and it was “hardly surprising” that he said on the disability application forms that he was disabled or unable to grab, reach, or commute. Accordingly, the appellate court vacated the district court’s decision. [DeRosa v. National Envelope Corp., 595 F.3d 99 (2d Cir. 2010).]

 Reprinted with permission from the June 2010 issue of the Employee Benefit Plan Review – From the Courts.  All rights reserved.


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