Physical Disability “Contributed To” By Mental Illness

What is Required to trigger the “Mental Illness” Limitation in an ERISA Disability Policy?

Many, if not most disability insurance policies contain what is commonly referred to as a “M & N” (Mental and Nervous) limitation. Typically, that limitation provides that only 24 months of benefits, will be paid for mental and nervous impairments. However, those same policies usually provide benefits for physical disabilities until age 65 or normal retirement age. however, it is not unusual for a claimant to suffer both mental and physical impairments.  How should the insurer or plan administrator treat a claimant who is physically disabled but also suffers from some form of mental or emotional impairment?

The usual verbiage of the M&N limitation is something like “Monthly Benefits for Total Disability caused by or contributed to by mental or nervous disorders will not be payable beyond an aggregate lifetime maximum duration of twenty-four (24) months.” But, to what degree must a mental or nervous disorder “contribute to” a physical disability to trigger that limitation?

The recent Fifth Circuit (US) decision in George v. Reliance Standard Life Ins. Co., 776 F.3d 349 (5th Cir. 1/15/2015) is illustrative of just how far an insurance company will seek to expand that limitation.

Mr. George was a US Army helicopter pilot who lost his leg in a helicopter crash. He retired from the army in 1987, and shortly thereafter began flying helicopters for Petroleum Helicopters, Inc. (“PHI”) He did that for more than twenty years with the use of a prosthesis. But in 2008 he began experiencing severe pain at the site of his amputation, which prevented him from safely wearing his prosthetic limb. As a result, he was no longer able to operate the foot controls of a helicopter, and he was forced to retire from flying. He filed a claim for long-term disability benefits with RSL.

Reliance determined that Mr. George had psychiatric conditions of depression and post traumatic stress disorder (“PTSD”) and that those conditions “contributed to his overall impairment status.” Thus, benefits were terminated after twenty-four months. After exhausting the administrative remedies, Mr. George filed suit in Federal District Court. After that court ruled against him, he appealed to the Fifth Circuit.

The Fifth Circuit reversed, but not before giving guidance to lower courts on two significant issues that often arise in ERISA benefits litigation.

First, it was not disputed that Mr. George was no longer physically able to perform the duties of a helicopter pilot, although the record contained no evidence that he was precluded from performing a sedentary job. But, there was evidence that his PTSD and depression did impair his ability to hold down a job.

The Fifth Circuit, after reviewing jurisprudence from other circuits, found that “Each of those courts has interpreted the ‘caused by or contributed to by’ language to exclude coverage only when the claimant’s physical disability was insufficient to render him totally disabled. Each of those courts has interpreted the “caused by or contributed to by” language to exclude coverage only when the claimant’s physical disability, standing alone, was insufficient to render him totally disabled. In other words, those courts have asked whether the mental disability is a but-for cause of the total disability. Black’s Law Dictionary 265 (10th ed. 2014) defines “but-for cause” as a “cause without which the event could not have occurred”. The Court agreed with its sister courts’ interpretation of the relevant language. Although there was evidence in the record that Mr. George was capable of working in some sedentary occupations, there was no evidence that he could earn a salary that was substantially similar to his earnings as a helicopter pilot. Thus, he was totally disabled and the court reversed and remanded to the district court for a determination of the amounts due.

The second relevant ruling by the Court might prove to be even more important. In court, the insurer sought to buttress its termination of benefits on the grounds that the Plaintiff had failed to carry his burden of proving that he was disabled. The court ruled:

… [W]e hold that we are limited to considering whether the record supports the reasons that RSL provided to George during the claims proceeding. See Spradley v. Owens–Ill. Hourly Emps. Welfare Benefit Plan, 686 F.3d 1135, 1140 (10th Cir.2012) (holding same); cf. Truitt, 729 F.3d at 510 (holding that our review of an administrator’s decision to deny benefits “focus[es] on whether the record adequately supports the administrator’s decision ” (emphasis added) (quoting Vega, 188 F.3d at 298)). Allowing plan administrators to offer new justifications for a denial after the claims process has ended would undermine the claims system that Congress envisioned when it drafted ERISA’s administrative review provisions. See 29 U.S.C. § 1133 (requiring administrator to give clear notice and providing for administrative review); 29 C.F.R. § 2560.503–1(g) (same); Spradley, 686 F.3d at 1140 (noting that Congress’s purposes, as expressed in these provisions, would be undermined if administrators could add new rationales to support decision after claims process ends). “A plan administrator may not treat the administrative process as a trial run and offer a post hoc rationale in district [or circuit] court.” Spradley, 686 F.3d at 1140–41 (internal quotation marks omitted).

 George v. Reliance Standard Life Ins. Co., 776 F.3d 349, 353 (5th Cir. 2015)

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