“Own Occupation” Duties in a Long-Term Disability Policy Governed by ERISA: Does a Court Favor Those Listed in the Description of One’s Actual Job, or Those Performed in the National Economy?

Sometimes a legal dispute comes down to the simple interpretation of the meaning of two words.  The case of Christopher Patterson v. Aetna Life Insurance Company, 2019 WL 479209 (3d Cir. February 7, 2019) is such a case.  There, the Third Circuit Court of Appeals upheld summary judgment in favor of the plaintiff, ruling that, as used in plaintiff’s long-term disability policy underwritten by Aetna under ERISA, the plain meaning of “own occupation” is the job duties related to one’s actual job, as opposed to some generalized “national economy” definition of the job.

Plaintiff Christopher Patterson worked for First Consulting Group, Inc., a pharmaceutical consulting firm, as “Director, Business Services.”  It was through his employment that Patterson was covered by a long-term disability policy.  Patterson suffered a back injury, underwent surgery, and became unable to work.  Aetna began paying benefits to Patterson under the policy in 2007.  In 2014, Aetna terminated Patterson’s benefits because Aetna concluded Patterson was “no longer disabled[.]”

Patterson’s disability policy defined “disability” as follows:

You will be deemed to be disabled on any day if:

• You are not able to perform the material duties of your own occupation solely because of: disease or injury; and
• Your work earnings are 80% or less of your adjusted predisability earnings.

The policy did not specifically define “own occupation.”  Aetna determined Patterson was not disabled because he could fulfill the material duties of his “own occupation” as performed “in the national economy.”  Aetna found that Patterson’s “own occupation” was “sedentary,” when defining it in the scope of the “national economy.”  Per Aetna, a sedentary job would no problem for Patterson.

The Third Circuit had previously addressed the issue of the definition of a similar term to “own occupation” in a long-term disability policy.   In Lasser v. Reliance Standard Life Insurance Co., 344 F.3d 381 (3d Cir. 2003), the Court looked at the term “regular occupation”, and held that “regular occupation” must involve consideration of the claimant’s actual duties as performed before the onset of disability, unless the term has been specifically defined in the policy or otherwise anticipated by the parties.  Id. at 385-386.  The Court rejected the insurer’s interpretation of “regular occupation” as referring to a job “in the general economy.”  Id. at 385-387.

Aetna conceded that if Patterson’s definition of “own occupation” was correct, then Patterson was totally disabled.  However, Aetna argued that Lasser was not controlling law because “own occupation” was the terminology, not “regular occupation.”   The Court easily rejected this argument because it had previously held that the definition of “regular occupation” had to be based on the insured’s “own occupation.   See Lasser; McCann v. Unum Provident, 907 F.3d 130, 148 (3d Cir. 2018).

The Court of Appeals agreed with the District Court that Aetna’s decision to terminate Patterson’s benefits was arbitrary and capricious because Aetna did not consider whether Patterson could perform his actual job duties, and even if it had done so, he could not perform those duties, as part of his material duties were traveling and standing to give presentations.

The “arbitrary and capricious” standard of review was used in this case because under ERISA, where a “benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan[,]” courts “review a denial of benefits under an ‘arbitrary and capricious’ standard.”  Fleisher v. Std. Ins. Co., 679 F.3d 116, 120 (3d Circ. 2012).  “An administrators’ decision is arbitrary and capricious ‘if it is without reason, unsupported by substantial evidence or erroneous as a matter of law.’”  Id. at 121.

Although Aetna had discretionary authority to interpret Patterson’s policy, such interpretation may not conflict with the plain language of the plan.  Id.; Lasser, 344 F.3d at 385-386; Dewitt v. Penn-Del Directory Corp., 106 F.3d 514, 520 (3d Cir. 1997).  As Lasser indicates, “own occupation” is unambiguous in that in refers to a claimant’s actual job duties.  Accordingly, Aetna’s interpretation of “own occupation” relating to a job’s duties in the scope of the “national economy” was erroneous.  Ultimately, the Court agreed with its own prior rulings on this issue, as well as the sentiment expressed by the U.S. Court of Appeals, Sixth Circuit, that the distinction between “own occupation” and “regular occupation” is one without a legal difference.  See Osborne v. Hartford Life & Accident Ins. Co., 465 F.3d 296, 300 (6^th Cir. 2006).

While the plain language of “own occupation” and the precedent set by Lasser carried the day for Patterson, the Court was also troubled by the fact that Aetna, some 12 years earlier in a different matter, argued that “own occupation” and “regular occupation” meant the same thing.

This case is a good example that unless terms are specifically defined in a contract or ERISA plan, the plain language of those terms will control.  In this case, “own occupation” and “regular occupation” were merely seen as being different terminology without a legal difference.   Aetna’s aggressive position in this case shows the extent to which insurers will aggressively pursue claims denials.  Competent and aggressive legal representation can assist ERISA long-term disability claimants overcome claim denials in such circumstances.