Introduction

When disability insurers terminate benefits without sufficient evidence, federal courts can and do step in to protect claimants. A recent decision out of the U.S. District Court for the District of New Jersey, Vartanian v. First Reliance Standard Life Insurance Company, 2025 WL 2555712 (D.N.J. Sept. 5, 2025), illustrates how courts apply ERISA to ensure claimants receive fair treatment. The Court denied First Reliance’s motion for summary judgment, granted judgment in favor of plaintiff Louise Vartanian, and found the insurer’s termination of her long-term disability (“LTD”) benefits and life insurance waiver was arbitrary and capricious.

This case provides a roadmap for claimants and attorneys fighting wrongful denials of disability benefits, particularly where insurers rely on selective evidence, ignore treating physicians, and fail to justify abrupt reversals of prior benefit approvals.

Factual Background

Louise Vartanian, age 64, had a long career as Executive Director of Corporate/Procurement Services at Sumitomo Mitsui Banking Corporation. Her position required sophisticated cognitive and management skills: vendor governance, regulatory risk reduction, contract oversight, and frequent communication with senior leadership. It was a sedentary but highly demanding role.

In April 2021, Ms. Vartanian stopped working after experiencing fatigue, dizziness, headaches, numbness, and cognitive impairments. She sought treatment from multiple specialists. Cardiopulmonary exercise testing and neuropsychological evaluations confirmed she could not sustain even sedentary work without worsening her symptoms. Her physicians, including Dr. Susan Levine, diagnosed her with Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS) and dysautonomia. Neuropsychologist Dr. Wilfred Van Gorp documented significant cognitive impairments, finding she was “unable to work part-time or full-time” in her role.

First Reliance, the insurer and claim fiduciary, initially approved her LTD benefits in January 2022. It later acknowledged her eligibility for Social Security Disability Insurance (SSDI), which began in October 2021. For over a year, benefits continued. But in May 2023, First Reliance abruptly terminated her LTD claim and denied her waiver of life insurance premiums, citing “no objective findings to validate [her] report of symptoms” and claiming she could perform sedentary work.

The Appeal Process and Lawsuit

Ms. Vartanian appealed internally, providing updated medical records, neuropsychological testing, and additional reports from her treating physicians. First Reliance referred the matter to outside file reviewers, including an internist and a psychiatrist, who concluded she retained the capacity for normal exertional work and showed no psychiatric impairments. Predictably, the insurer upheld its denial in November 2023.

On April 16, 2024, she filed suit under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), challenging the wrongful termination of her LTD and life insurance waiver benefits.

The Standard of Review Debate

A threshold issue was whether the Court should review the denial de novo or under the deferential arbitrary and capricious standard. Although the policies conferred discretion to the insurer, Ms. Vartanian argued that First Reliance exceeded the regulatory deadlines for issuing its appeal decision, which should trigger de novo review.

Judge Georgette Castner held that while ERISA regulations require strict timelines, not every procedural violation is “severe” enough to alter the standard of review. Because Ms. Vartanian could not show prejudice from the insurer’s brief delay, the Court applied arbitrary and capricious review.

Key Legal Rulings

Despite applying a deferential standard, the Court ruled strongly in favor of the plaintiff. Several findings were critical:

1. Abrupt Reversal Without New Evidence
   The Court emphasized that “an administrator’s reversal of its decision to award a claimant benefits without receiving any new medical information to support this change in position is an irregularity that counsels towards finding an abuse of discretion.” Here, the insurer had long possessed the same medical evidence but suddenly deemed it insufficient. As the Court noted, “in the absence of any meaningful evidence to support a change in position, [the insurer’s] abrupt reversal is cause for concern”.
2. Cherry-Picking Evidence
   First Reliance selectively cited Ms. Vartanian’s Activities of Daily Living Questionnaire, noting that she could do light housework, drive locally, and watch television. But the insurer ignored her equally important reports of chronic fatigue, needing frequent naps, confusion while driving, and difficulty with basic tasks. The Court found this “self-serving selectivity” a hallmark of arbitrary and capricious review.
3. Failure to Address Cognitive Impairments
   The insurer’s termination letter discussed only physical limitations and ignored compelling neuropsychological evidence of cognitive decline. Courts have repeatedly held that “an administrator’s failure to address all relevant diagnoses in terminating a claimant’s benefits is cause for concern.” Here, the omission weighed heavily against First Reliance.
4. Reliance on Non-Treating Physicians
   While ERISA does not require special deference to treating physicians, the Court criticized First Reliance for rejecting the consistent opinions of Ms. Vartanian’s specialists in favor of paper reviews by non-examining consultants. The Court noted the insurer failed to provide a reasonable basis for disregarding the doctors who had observed and treated the claimant over time.
5. Disregard of Social Security Award
   Although not binding, Ms. Vartanian’s award of SSDI benefits was relevant. The Court noted the insurer failed to meaningfully reconcile its contrary decision with the SSA’s finding of disability, instead dismissing the award as based on “different guidelines.” Courts frequently consider such dismissals further evidence of bias and arbitrary decision-making.

The Court’s Holding

Judge Castner denied First Reliance’s motion for summary judgment and granted Ms. Vartanian’s motion for judgment. The Court ordered her LTD and life insurance waiver benefits reinstated, finding that First Reliance’s termination was unsupported by substantial evidence and therefore arbitrary and capricious.

This ruling reinforces the principle that ERISA insurers cannot terminate benefits without clear, new, and meaningful evidence showing a claimant’s condition has improved. As the Court explained, payment of benefits does not estop an insurer from later terminating them, but any reversal must be grounded in objective, material evidence—not selective readings or file reviews divorced from the treating record.

Broader Implications

This case has several important takeaways for disability claimants and practitioners:

• Consistency Matters: Insurers cannot rely on the same type of medical evidence to approve benefits for years, then later deem it insufficient to terminate benefits. Courts will view such reversals with skepticism.
• Cognitive Evidence is Critical: For professionals in cognitively demanding jobs, neuropsychological testing can be decisive. Failure to evaluate cognitive impairments can render a denial arbitrary.
• Social Security Awards Should Be Considered: While not binding, SSA findings of disability often strengthen a claimant’s case and highlight insurer bias when disregarded.
• Paper Reviews Have Limits: Courts scrutinize insurers that rely on non-treating consultants over consistent treating physician opinions, particularly where the file reviewers ignore objective testing or clinical findings.
• Procedural Violations Influence Outcomes: Even if not “severe” enough to alter the review standard, missed deadlines or inadequate explanations add weight to the arbitrary and capricious analysis.

Conclusion

Vartanian reaffirms courts’ willingness to intervene when insurers terminate disability benefits without adequate evidence. By granting judgment for the plaintiff, the Court sent a clear message: insurers must base their decisions on the totality of the medical record, including cognitive demands of the occupation and treating physician assessments. Selective reviews and abrupt reversals will not withstand judicial scrutiny.

At McKennon Law, we fight for employees and executives like Ms. Vartanian who have been unfairly denied the disability, life, accidental death insurance or health insurance benefits they rightfully earned. If your insurer has wrongfully terminated or denied your claim, our experienced ERISA attorneys can help you pursue the benefits you deserve.