On March 7, 2011, the Ninth Circuit Court of Appeals (in a 2-1 decision) reversed the decision of the U.S. District Court Central District (Judge Christina A. Snyder) which upheld the Honda Long Term Disability Plan's ("Honda Plan") termination of Samuel Salomaa's ("Salomaa") long term disability benefits.
Salomaa was a twenty-year employee of Honda Motor Company and insured under Honda's long-term disability plan. CIGNA Group Insurance was the plan administrator.
Salomaa was a graduate of Harvard and MIT. During Salomaa's twenty years with Honda, he was never out sick, and never left work early or came in late. At age 47, Salomaa was an exercise enthusiast who jogged two miles to and from work every day. In 2003, Salomaa became inexplicably ill. His complaint was grossly excessive fatigue, along with other symptoms, such as headache, insomnia, and excessive sensitivity to stimuli. His doctors at Kaiser went through a lengthy process of ruling out alternatives to chronic fatigue syndrome. A Kaiser psychiatrist initially diagnosed Salomaa with "atypical" depression. His condition continued to decline. In 2005, after extensive medical work-up and no improvement, a physician at Kaiser, Dr. Floyd Anderson, concluded Salomaa had chronic fatigue syndrome and was totally disabled because he could not work even 30 minutes per day on a daily basis. The psychiatrist who had tentatively diagnosed depression wrote to the Honda Plan administrator concurring with Dr. Anderson's diagnosis.
The administrator denied Salomaa's claim based on a lack of objective evidence regarding physical conditions. The administrator found Salomaa had normal thyroid, calcium, albumin, serum electrolytes, and complete blood count results. The administrator incorrectly found that Salomaa had no weight loss despite the medical records which showed he had significant weight loss. The administrator also misinterpreted the psychiatrist's conclusion regarding Salomaa's depression.
The administrator advised Salomaa he could submit additional information to support his claim for benefits, and provided a form for Salomaa's physician to fill out regarding Salomaa's physical abilities. Dr. Anderson checked "occasionally," the lowest level allowed on the form, for sitting, standing, walking, grasping, and carrying objects. He wrote a letter as well, stating that Salomaa had severe fatigue, and was "only able to do paperwork for a few minutes and then is very fatigued." Dr. Anderson opined in the letter (and during a phone call with the claim manager) that Salomaa had chronic fatigue syndrome, and the lack of positive laboratory findings was consistent with that diagnosis.
Salomaa appealed the claim decision. Salomaa, through his attorney, made a written request for the claim file, and asked what "positive lab findings" the administrator thought would be relevant to the chronic fatigue syndrome diagnosis. Salomaa's attorney offered to submit Salomaa for an examination by the administrator's selected physicians and laboratory testing. Salomaa's attorney submitted additional documentation, including a neuropsychological evaluation from New Jersey Medical School. Two neuropsychologists reported on a battery of intelligence and other testing, concluding there was no evidence of psychiatric illness, but finding cognitive symptoms of chronic fatigue syndrome. Salomaa provided the administrator with his Social Security Administration's favorable award determination.
The administrator denied the appeal and Salomaa sued. Applying an abuse of discretion standard of review, the district court upheld the claim denial. The court focused on the degree to which Salomaa's diagnosis depended on his own reports rather than objective evidence. Salomaa appealed to the Ninth Circuit.
The Ninth Circuit held the claim decision was incorrect, citing several reasons: (1) every doctor who personally examined Salomaa concluded that he was disabled; (2) the plan administrator demanded objective tests to establish the existence of a condition for which there are no objective tests; (3) the administrator failed to consider the Social Security disability award; (4) the reasons for denial shifted as they were refuted and were largely unsupported by the medical file; and, (5) the administrator failed to engage in the required "meaningful dialogue" with Salomaa.
The Ninth Circuit Court of Appeal rejected the Plan's emphasis on objective testing and noted that no objective test existed for chronic fatigue syndrome. The Court of Appeal, citing to dicta from Jordan v. Northrop Grumman Corp. Welfare Benefit Plan, 370 F.3d 869, 877 (9th Cir. 2004), overruled in part on other grounds by Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 969 (9th Cir. 2006) held that conditioning an award on the existence of evidence that cannot exist is arbitrary and capricious.
The Court of Appeal found the Plan's reasons for denial were shifting, inconsistent and illogical. The initial denial focused on the lack of physical symptoms, but the final denial omitted any mention of the doctors' observations. The only thing that appeared constant throughout was the administrator's emphasis on the absence of objective evidence such as blood tests. The Ninth Circuit held the continual shifting of the plan's grounds for denial suggest abuse of discretion. The administrator did not address the Social Security award in its denial letter, although Salomaa had provided it to the administrator. While Social Security disability awards do not bind plan administrators, they are evidence that must be considered.
The Ninth Circuit held the administrator failed to conform to the law entitling the claimant to "full and fair" review of a denial by not providing access to the two medical reports the administrator relied on in making its decision. In addition, the administrator denied the claim largely on the absence of objective medical evidence, yet failed to tell Salomaa what medical evidence was needed to prove the claim.
The Ninth Circuit reversed the district court's decision and held the administrator acted arbitrarily and capriciously, both procedurally and substantively, thereby abusing its discretion by denying Salomaa's claim for LTD benefits.
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