Long-term Disability Benefits

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7^th Circuit Court of Appeals

Case Name: John Dragus v. Reliance Standard Life Insurance Company

Case No.: 17-1752

Officials: BAUER, ROVNER, and SYKES, Circuit Judges

Focus: Long-term Disability Benefits

Plaintiff-appellant, John Dragus, brought suit against defendant-appellee, Reliance Standard Life Insurance Company (“Reliance”), under the Employee Retirement Income Security Act for denial of long-term disability (“LTD”) benefits. After the district court denied Dragus’ request for discovery outside the claim file record, both parties moved for summary judgment. Before the court ruled, Dragus filed a motion to supplement the claim record with a fully favorable Social Security Disability Insurance (“SSDI”) decision. The district court denied the motion to supplement and granted summary judgment in favor of Reliance. Dragus now appeals.

First, we turn to whether Reliance’s failure to render a timely decision compels de novo review. 29 C.F.R. § 2560.503- 1(b) imposes a penalty of the loss of discretionary authority on plan administrators for failing to maintain reasonable claims procedures. Because we find de novo review inapplicable, we next turn to whether Reliance’s denial of Dragus’ claim for LTD benefits was arbitrary and capricious. Under the arbitrary and capricious standard, we will uphold the district court’s decision so “long as (1) it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, (2) the decision is based on a reasonable explanation of relevant plan documents, or (3) the administrator has based its decision on a consideration of the relevant factors that encompass the important aspects of the problem.”

With the conflict of interest appropriately eliminated by Reliance, no contention of bad faith or fraud, and a well-reasoned decision supported by the evidence, we find Reliance’s decision was not arbitrary and capricious. Because this case is subject to the deferential arbitrary and capricious standard and not de novo review, we find that the district court did not err in denying to supplement the record.

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.