Disability Benefits

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7^th Circuit Court of Appeals

Case Name: Cathleen Kennedy v. The Lilly Extended Disability Plan

Case No.: 16-2314

Officials: POSNER, MANION, and HAMILTON, Circuit Judges.

Focus: Disability Benefits

Cathleen Kennedy, the plaintiff, was hired by Lilly in 1982 and rose rapidly, eventually becoming an executive director in the company’s human resources division, with a monthly salary of $25,011. But at the beginning of 2008 she was forced to quit work because of disabling symptoms of fibromyalgia. As a participant in the company’s Extended Disability Benefits plan, she requested benefits upon ceasing to work, and effective May 1, 2009, was approved for monthly benefits of $18,972.44. Three and a half years later, however, her benefits were terminated, precipitating this suit by her against Lilly’s self-funded Extended Disability Plan based on the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., which so far as pertains to this case sets minimum standards for voluntarily established health and pension plans in private industry. See Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105, 115 (2008). Lilly’s disability plan has discretion to deny claims that it deems not to meet its standard, but a reviewing court will overturn a denial of benefits if the plan’s decision is unreasonable. Edwards v. Briggs & Stratton Retirement Plan, 639 F.3d 355, 360 (7th Cir. 2011).

Cathleen Kennedy, the plaintiff, was hired by Lilly in 1982 and rose rapidly, eventually becoming an executive director in the company’s human resources division, with a monthly salary of $25,011. But at the beginning of 2008 she was forced to quit work because of disabling symptoms of fibromyalgia. As a participant in the company’s Extended Disability Benefits plan, she requested benefits upon ceasing to work, and effective May 1, 2009, was approved for monthly benefits of $18,972.44. Three and a half years later, however, her benefits were terminated, precipitating this suit by her against Lilly’s self-funded Extended Disability Plan based on the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., which so far as pertains to this case sets minimum standards for voluntarily established health and pension plans in private industry. See Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105, 115 (2008). Lilly’s disability plan has discretion to deny claims that it deems not to meet its standard, but a reviewing court will overturn a denial of benefits if the plan’s decision is unreasonable. Edwards v. Briggs & Stratton Retirement Plan, 639 F.3d 355, 360 (7th Cir. 2011).

and experience.” Kennedy’s benefits were revoked by Lilly’s Employee Benefits Committee (the administrator of the plan), on the ground that her fibromyalgia was not disabling. The district judge granted summary judgment in favor of Ms. Kennedy and awarded her $537,843.81 in past benefits (benefits she should have received but did not) and prejudgment interest, and in addition the judge ordered Lilly to reinstate Kennedy’s disability benefits retroactive to December 2012 and resume the payment of her monthly benefits. Lilly based its unsuccessful case in the district court on evidence presented by a number of doctors (oddly not including Dr. Clauw), but the evidence turned out to be a hodgepodge. For example, Lilly sent Kennedy to be examined by a Dr. Schriber in Dayton, Ohio, more than 100 miles from Kennedy’s home in Indianapolis. The doctor conducted a physical exam of her that lasted all of five minutes. He testified that the “American College of Rheumatology does not consider fibromyalgia to be disabling on a long-term basis.” That, as we know from our earlier quotation from the ACR is false; and Lilly itself appears not to have relied on Dr. Schriber’s opinion in its decision to terminate Kennedy’s benefits.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.