PHILADELPHIA — It wasn't a surprise, but it was a victory for benefits plan administrators, a Seyfarth Shaw attorney says of a recent appeals court decision in a lawsuit that started in Harrisburg federal court.

On Feb. 12, judges Thomas Hardiman, Thomas Vanaskie and Patty Shwartz of the U.S. Court of Appeals for the Third Circuit affirmed a district court’s decision to deny Serilyn Krash’s claim for long-term disability benefits.

James Goodfellow, an attorney at Seyfarth Shaw LLP, told the Pennsylvania Record that, in some ways, it was an open-and-shut case.

“The record was clear,” he said. “The court took a look at the record and then found that the ‘mental [or] nervous [disorders] limitation’ applied. It wasn't surprising.”

Krash had applied for disability benefits from Reliance Standard Life Insurance Company due to alleged back problems. The insurance company initially paid out benefits for four years before asking Krash to undergo an independent medical exam.

The physician concluded that her lumbar spine was normal and that her tremors were “psychogenic in nature.” Additionally, the physician determined that she could perform “sedentary work activity,” according to the circuit court's decision.

After the evaluation, the insurance company told Krash that it was stopping her disability benefits because she was suffering from a mental condition and was not physically disabled.

Krash filed suit in the U.S. District Court for the Middle District of Pennsylvania, arguing that Reliance Standard Life Insurance Company had violated the Employee Retirement Income Security Act of 1974 (ERISA). 

She and the insurance company filed motions for summary judgment, and the court sided with Reliance Standard Life Insurance Company, finding that its “benefits determination was not arbitrary or capricious.”

Krash appealed the decision, arguing that the policy’s “mental or nervous disorders” limitation was not applicable because her medical condition started out as a physical disability. She further contended that she had the right to long-term disability benefits because of her medical condition, spondylolisthesis.

However, the panel of circuit judges agreed with the district court.

“As the district court noted... ‘it was [Krash’s] burden to prove that she was totally disabled from any occupation solely due to a physical condition.’” Hardiman wrote in the decision.

"(T)he record contains substantial evidence that Krash is not totally disabled under the policy. The district court therefore did not err when it held that Reliance’s decision to discontinue Krash’s benefits was not arbitrary or capricious.”

Goodfellow said claims administrators should look out for “a more plaintiff-friendly view of this type of limitation” in the Third Circuit.

Goodfellow said other courts have handled these issues differently.

“It is contrary to decisions in the Ninth Circuit,” Goodfellow said. “(Ninth Circuit courts) are more likely to issue plaintiff-friendly decisions.”

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