A common justification for denying a claim for long-term disability insurance benefits or short-term disability insurance benefits is that the claimant is capable of returning to work in another job.  However, insurers / ERISA administrators are not allowed to deny a claim just because an insured might be capable of returning to any job, rather the identified job must be based on the insured’s education, training and experience.  Further, the occupation must be “gainful,” which usually means that it pays the insured at least 50%-60% of his or her pre-disability income.  In Kennard v. Means Industries, Inc., 2014 U.S. App. LEXIS 2846 (6th Cir. Feb. 13, 2014), the Sixth Circuit imposed another important requirement — the insurer must prove that the theoretical job actually exists.

During an accident, Kyle Kennard inhaled fumes from a chemical spill, which severely injured his lungs and rendered him ultra-sensitive to noxious fumes.  Following the accident, Kennard’s treating physician found that for the rest of his life, Kennard would be limited to working in a “clean-air environment.”  Kennard was awarded disability benefits by the Social Security Administration, and then applied for disability insurance benefits under his employer’s ERISA-governed employee welfare benefit plan.

Pursuant to the terms of the Plan, Kennard was required to submit to an examination by a physician chosen by the Claim Administrator.  Following an examination, the physician found that Kennard was employable “as long as he could be guaranteed that he would be placed in an absolute clean air environment with absolutely no noxious fumes or inhalants, as he is extremely sensitive to this.”  Given this finding, the ERISA administrator denied Kennard’s claim for disability insurance benefits on the grounds that he was capable of sedentary work in a clean-air environment.  The district court ruled that this decision was not arbitrary and capricious, but the Sixth Circuit reversed that ruling.

In finding that the denial of Kennard’s claim for long-term disability insurance benefits was improper, the court noted that “a valid denial of benefits premised on Dr. Levinson’s opinion would need to include evidence of the existence of absolute-clean-air jobs available to Kennard,” and noted that the SSA found that there are no jobs in the national economy that Kennard could perform.  To support the denial decision, the administrator was required to identify a job he could perform “in terms of a real American workplace,” and present evidence of jobs available to the claimant.  Because the ERISA administrator offered no evidence of the existence of the job used as the basis for the denial, the court found that the denial decision was improper.

In other words, if an insurer denies a claim for benefits after finding that the claimant can perform a particular job, there must be evidence that the job exists.  It is improper to deny a claim based on a job that only hypothetically exists.