Denial of disability benefits must be reasoned
In Lucas v. Liberty Life Assurance Company, Lucas was injured at his job and received 24 months of disability under the company’s long-term disability plan. The company’s policy required that the employees eligible to receive benefits for the first 24 months not be able to perform substantial and material duties of his own occupation. After the expiration of 24 months, Lucas applied for additional disability benefits. Liberty Life, the company’s plan administrator and insurer, denied Lucas’ application. To be considered disabled and eligible to receive benefits after the first 24 months, one must “... not be capable of performing substantial and material duties of any occupation comparable to his former position.” After losing an administrative appeal, Lucas filed suit against Liberty Life for violating the Employee Retirement Income Security Act of 1974 (ERISA). The district court entered judgment in favor of Liberty Life and Lucas appealed. The appellate court considered whether the determination to deny benefits was arbitrary and capricious. The court explained that a decision is arbitrary and capricious only if it lacks a reasoned basis. The Court found that Liberty Life had a reasoned basis for denying the claim based on the following: three separate reviews of the claim; extensive citation to medical records and investigative surveillance; and Lucas’ securing a full-time university teaching position.
