The HR Legal News Blog

Tenth Circuit Upholds Plan’s Decision to Deny Disability Benefits for Employment-Related Stress

Fite v. Bayer Corporation, No. 13-7027 (10th Cir. 2014).
Read the case.

Bayer Corporation maintained a short-term disability plan. The plan capped benefits at 26 weeks and explicitly excluded coverage for “disabilities resulting from … [e]mployment-related mental or emotional disabilities.” The plan’s third-party administrator was responsible for performing the initial benefits determination and the first-level review of denials of benefits. Bayer’s benefits committee retained responsibility for deciding final appeals.

Margie Fite took a leave of absence from her position as a pharmaceutical representative with Bayer Corporation. In June 2009 she applied for and was granted short-term disability benefits on the basis of a psychologist’s diagnosis of major depressive disorder and generalized anxiety disorder.

The TPA initially authorized the payment of short-term disability benefits through October 9, 2009. Following its review of a report prepared by Dr. Goldman, an independent psychiatrist, the TPA denied payment of benefits after that date. Although Ms. Fite provided additional evidence to the TPA to support her claim, Dr. Goldman did not change his conclusion and the TPA closed the claim in November 2009.

In May 2010, Ms. Fite requested that the TPA review the initial benefit denial. The TPA engaged a second independent psychiatrist who concluded that there was no “objective evidence of [a] functional psychiatric impairment that would prevent [Ms. Fite] from performing full duty work.” Based on this report, the TPA upheld the initial denial of benefits.

Ms. Fite then filed an appeal with Bayer’s benefits committee. The committee retained a third psychiatrist, Dr. Burstein, to review Ms. Fite’s records. Dr. Burstein recommended that Ms. Fite undergo a psychiatric evaluation.

A fourth psychiatrist, Dr. Kelley, evaluated Ms. Fite in person and reviewed her records. Concluding that Ms. Fite was indeed disabled, he found that Ms. Fite’s “’main stressor is work.” Dr. Kelley informed the committee that Ms. Fite’s position at Bayer was “76-100%” responsible for causing her disability.

Based on this finding, the committee determined that her disability was excluded from coverage under the plan and denied her request for benefits for the period following October 9. The committee stated, “’Based on the diagnosis of Dr. Kell[e]y, no benefits should have been paid under the Plan.’”

The Tenth Circuit ruled in Bayer’s favor. Noting Bayer’s admission of its inherent conflict of interest in the administration of a self-funded plan, the court reviewed the committee’s decision under the arbitrary and capricious standard. The court approved of Bayer’s efforts “to reduce any potential bias and to promote accuracy” by engaging different psychiatrists to conduct independent evaluations at each level of the appeals process. The committee retained the right to interpret the plan and, in any event, the court felt that the plan’s exclusion of employment-related disabilities was unambiguous.