By, Jim Goodfellow and Sam Schwartz-Fenwick

Seyfarth Synopsis: In a win for ERISA plan and claims administrators, the Third Circuit has affirmed the broad enforcement of a long-term disability plan’s mental or nervous limitation period.

In Krash v. Reliance Standard Life Insurance Group, No. 17-1814, the Third Circuit affirmed the judgment of the Middle District of Pennsylvania, which had concluded that the plaintiff’s disability was limited to the plan’s 24 month period for mental/nervous conditions.

The plan at issue limited benefits “caused by or contributed to by mental or nervous disorders” to 24 months. The plaintiff stopped working in May 2010 due to physical complaints (back pain and tremors). Reliance Standard, the plan’s insurer and claims administrator, paid benefits for four years, and then requested that the plaintiff submit to an in-person independent medical examination. The examining physician concluded that the plaintiff’s tremors were psychological, not physical, in nature. The plaintiff’s medical records also showed that she suffered from depression and anxiety. Accordingly, Reliance Standard terminated the claim, asserting that it was subject to the 24 month limitation for mental/nervous disorders.

The Middle District of Pennsylvania sided with Reliance Standard, and the Third Circuit affirmed. The Third Circuit stated that the plan’s language made clear that to remain eligible for benefits beyond 24 months, it was the plaintiff’s burden to “prove she was totally disabled from any occupation solely due to a physical condition.” The Third Circuit further explained that the terms of the mental nervous limitation in the plan (“’caused or contributed to by’ in a mental disorders limitations clause”) means “that benefits may be terminated when physical disability alone is insufficient to render a claimant totally disabled.” Accordingly, because the record reflected that the plaintiff was capable of performing sedentary work even with her physical condition, the Court found that Reliance Standard did not abuse its discretion in concluding that the mental/nervous limitation applied.

While this is a good win for ERISA plans in the Third Circuit (New Jersey, Delaware, and Pennsylvania), plan and claims administrators should continue to tread carefully, as courts in other circuits take a more plaintiff-friendly view of this type of limitation. Also, this decision turned on the language in the at-issue plan. It is important to review plan documents with counsel to see if their mental and nervous limitations are similarly broad.