Black & Decker Disability Plan v. Nord, Kenneth (05/27/2003)

Questions presented: Whether the 9th Circuit erred in holding that an ERISA disability plan administrator's determination of disability is subject to the "treating physician rule" and, therefore, that the plan administrator is required to accept a treating physician's opinion of disability as controlling unless the plan administrator rebuts that opinion in writing based upon substantial evidence on the record.

BY: ANNA JOHNSON, MEDILL NEWS SERVICE

In July 1997, Kenneth Nord, 52, ceased working for Kwikset Corp. in Los Angeles.

Intensified lower back pain was making his job as a material planner, which included sitting for six hours and standing or walking for two hours a day, increasingly difficult.

With the recommendation from his personal doctor, who had been examining Nord for several months for back and leg pain and a degenerative disk disease, the 25-year Kwikset employee left his job and filed a claim with the companys owner, Black & Decker Corp., for up to 30 months of long-term disability benefits.

More than five years later, Nord has neither returned to work nor received benefits, a total of $35,000, from his former employers disability plan.

"It came to a point where he could not longer complete his work as a material planner," Nords attorney, Lawrence Rohlfing of Santa Fe Springs, Calif., said. "After a period of time, his doctor said he could not return to work. Men tend to have an ego and a self-identity tied up in their professions. For him to come to the realization that he couldnt retain his productivity status and provide for his family was devastating."

About seven months after Nord decided to stop working, he received notice that the Black & Decker Disability Plan and its third-party claims administrator, Metropolitan Life Insurance Co., denied his claim for long-term disability benefits.

Nord sought review of the denial. As part of the review, he saw a doctor referred by the disability plan for an independent evaluation.

Although both his regular doctor and his orthopedic physician concluded Nord could not perform his job duties, the independent doctor disagreed. Instead, this doctor determined Nord could work as a material planner with sufficient medication.

In addition, during the review process Nord also received a work capacity evaluation by a Black & Decker human resource representative, who stated the Kwikset employee lacked the capacity to work as a material planner.

Under the terms of Black & Decker's voluntary disability plan, the plan manager has absolute discretion to decide whether or not to approve a disability claim. And in Nords case following his review, the plan manager once again denied his claim.

In March 2000, Nord filed suit against the Black & Decker Disability Plan in federal court in California seeking a review of Black & Deckers decision. Nord claimed that Black & Decker violated the Employee Retirement Income Security Act (ERISA) of 1974 in that it arbitrarily rejected two doctors and a human resource representatives conclusions regarding Nords health and opted instead for the one doctors more preferred determination.

The district court rejected Nord's complaint, saying Nord failed to prove that the Black & Decker Disability Plan had abused its discretion when it denied Nord benefits.

Furthermore, the court emphasized that unlike Social Security disability benefit rules, ERISA does not provide that a persons treating physicians opinion should receive more weight than any other medical opinion. Thus, Nord's physicians conclusion was not more significant than the disability plans referred doctors determination.

In October 2001, a unanimous 9th Circuit Court of Appeals panel reversed, finding that Nord was entitled to benefits for the first 30 months of his disability.

Not only did the appeals court determine Black & Decker's rejection of its own human resource representatives determination was evidence of a conflict of interest, it determined that Nord's treating physicians opinions should be considered more heavily than determinations made by doctors referred by insurance companies.

This apparent conflict over whether or not ERISA requires application of the "treating physician rule," which forces disability plans and insurance companies to place more weight on an employees treating physicians opinion when determining benefits, is not only evident in federal courts in California, but throughout the country.

In addition to the 9th Circuit's opinion in favor of Nord, it also ruled in favor of the treating physician rule in 2001 in Regula v. Delta Family Care Disability Survivorship Plan, stating, "the treating physician rule can assist courts to enforce the accuracy of disability determinations under ERISA."

But the 2nd, 4th, 7th and 11th circuits have rejected the notion of a treating physician rule for ERISA cases. The 5th Circuit has expressed doubt over such as rule, the 8th Circuit at one time decided in favor of the rule but has since rejected it, and the 6th Circuit has also rejected the rule but did not publish its decision. The 1st and 10th circuits have not ruled on the issue.

Black & Decker Disability Plan's attorney Lee Patterson believes the treating physicians rule should not be applied under ERISA because it creates stereotypes that all treating physicians provide sound medical advice and all doctors referred by insurance companies provide shoddy advice.

"It's based on fallacious grounds," Patterson said. "You can't make the assumption that all treating physicians are credible and the most knowledgeable."

Nord's attorney Rohlfing disagrees. Instead, he believes without a treating physician rule, companies have the opportunity to discredit an employees own physician if another, outside doctor provides a more favorable opinion.

"It puts people in a difficult position in terms of their choice," Rohlfing said. "What is someone like Ken Nord supposed to do?"

With a split in the circuits and intense interest in the insurance industry and among disability law professionals, the U.S. Supreme Court accepted this case for review on Jan. 10, 2003.

On May 27, 2003, the Court vacated the 9th Circuit's opinion, holding unanimously that ERISA does not require plan administrators to accordspecial deference to the opinions of treating physicians.

The opinion in favor of the Black & Decker Disability Plan and written by Justice Ruth Bader Ginsburg reasoned that there is nothing in ERISA or in the Secretary of Labor's ERISA regulations that suggests that plan administrators must accord special deference to the opinions of treating physicians, or imposes a heightened burden of explanation on administrators when they reject a treating physician's opinion.