With very few exceptions, ERISA does not dictate the substance or quality of the welfare benefits an employer offers its employees. Employers can offer generous or lousy benefits; ERISA doesn’t care. When dealing with non-pension benefits such as disability, health and life insurance, its protections require 1) full disclosure of the scope of benefits, 2) fiduciaries to meet rigorous standards with regard to loyalty, prudence and adhere to the terms of the plan documents, and 3) a full and fair review of all claims and denials of denied claims. It’s the last requirement, the obligation of fiduciaries to meet ERISA’s claims procedure requirements, that the U.S. Court of Appeals for the Sixth Circuit dealt with recently in Elliott v. Metropolitan Life Ins. Co., ___ F.3d ____ (6th Cir. 2006). When it was issued in November, Elliott was designated as an unpublished opinion. However, last week the Sixth Circuit recommended the case for publication. As a result it gains some precedential weight. Elliott is remarkable because it focuses on the failure of the insurer to engage in a “deliberative, principled reasoning process” in evaluating Elliott’s claim for disability benefits. As a consequence of the insurer’s failure to provide a full and fair review of Elliott’s claim as ERISA requires, the Sixth Circuit reversed Met Life’s denial of benefits. Patricia Elliott worked as a Business Quality Analyst for Great American Financial Resources. A serious car accident caused fractured spinal vertebrae and accompanying pain into her shoulders and neck. She ended up being unable to work and applied for disability benefits. She supported her claim with several reports from her treating physician. He outlined her medical conditions, the treatment he was providing her, her response to it, her restrictions and limitations and the nature of her job requirements to conclude that Elliott was not able to work. Importantly, the insurance policy provided benefits to Elliott if she demonstrated that she was not able to carry out her own occupation. Thus, the question was not whether Elliott could work but whether she could carry out the specific job she’d been trained for and had actually been working at before the disability. Met Life denied the claim and Elliott appealed that denial, submitting an additional medical report from one of her treating physicians. In response, Met Life had the file reviewed by a physician, Dr. Menotti, that Met Life turned to regularly for file reviews. After recounting Elliott’s medical history and treatment, the decision states Dr. Menotti “. . . presented no reasons for his conclusion that Elliott’s condition would not preclude her from working. He never discussed Elliott’s job duties, which implies that he did not conduct a reasoned evaluation of her condition to determine whether she could perform those duties.” The failure of the reviewing physician to come to grips with the critical question of whether Elliott’s medical condition kept her from performing her own occupation caused the court to reject that doctor’s conclusions. Dr. Menotti made two comments the court swatted away as insufficient to support his conclusion that Elliott was not disabled. First, he stated that Elliott’s condition was improving. But the court rejected this stating, “‘[g]etting better,’ without more, does not equal ‘able to work.’” Second, Dr. Menotti stated that he felt Elliott was able to perform sedentary work. As with his comment about Elliott improving, the court made clear this was insufficient: “[t]he term ‘sedentary work’ appears nowhere in the plan’s terms. As we have noted, the proper inquiry is whether Elliott could perform her own occupation. Dr. Menotti never undertook such an inquiry.” There is more in Elliott that makes it worth reading. It is encouraging that the court takes the time and pays attention to the details of the case to thoroughly evaluate the decision-making process of the insurer. Too often the federal judiciary treats the arbitrary and capricious standard of review as more or less of a rubber stamp, refusing to invest the energy to carefully examine whether the insurer has really engaged in a reasoned application of the facts to the terms of the plan while fairly and objectively reviewing an individual’s claim. But if the court must defer to the insurer’s reasonable conclusions, paying attention to whether the process by which the insurer comes to those conclusions is fair and complies with ERISA’s requirements becomes all the more critical.