Kaelin v. Tenet Employee Benefit Plan, 2007 U.S.Dist.LEXIS 86063 (E.D.Pa. Nov. 21), has had a long and tortured history. Before this final ruling, the district court had issued two earlier rulings: Kaelin v. Tenet Employee Benefit Plan, 405 F. Supp. 2d 562 (E.D. Pa. 2005), and Kaelin v. Tenet Employee Benefit Plan, 2006 U.S.Dist.LEXIS 14858 (E.D.Pa. March 31, 2006), which determined that an insured who attempted to return to work could not be penalized for not maintaining sufficient hours, and that coverage therefore continued following a disabling injury.

The plaintiff was an orthopedic surgeon who was injured in a jet ski accident in 2001 and was unable to return to work in his specialty following the injury. Reliance Standard denied his claim for benefits; and after the first round of litigation resulted in a remand to the insurer, benefits were again denied based on the insurer's conclusion that Kaelin remained able to continue seeing patients; and that surgery was not his only material job duty. Thus, Reliance determined that because Kaelin was able to perform at least some of his occupational duties, he was not entitled to benefits.

Another round of litigation ensued, but this time the court entered judgment for Kaelin. The court examined Kaelin's occupational job duties prior to the onset of disability according to Lasser v. Reliance Standard Life Ins.Co., 344 F.3d 381 (3d Cir. 2003). In performing the analysis of Kaelin's job duties, the court remarked:

''None of Tenet's or UMC's statements suggested that Kaelin's employer considered seeing patients in the office to be one of his material duties; to the contrary, seeing patients was considered to be 'merely … incidental to the performance of surgery.' The fact that his employer never considered seeing patients in the office to be a material duty is highly persuasive evidence that seeing patients was not, in fact, one of Kaelin's material duties. Any contrary conclusion is without reason and unsupported by substantial evidence.''

Ironically, Lasser also involved an orthopedic surgeon, and the insurer was the same, so the court's task was relatively easy. The court rejected Reliance Standard's efforts to apply a generic job description to Kaelin's occupation. Moreover, the court rejected Reliance Standard's claim that in determining the occupation being performed at the ''onset of disability,'' the proper examination should be as to the job performed immediately prior to the date of claim. The court instead determined that it was more appropriate to consider the duties Kaelin performed prior to his jet ski injury even though he attempted to return to work for several months following the injury before he claimed disability. The court found that any other ruling would result in ''penalizing insureds for attempting to return to work after an injury.'' The court added:

''To hold otherwise now would penalize Kaelin for attempting to return to work to the greatest extent possible and lead to the illogical consequence of denying benefits to an insured who tried to work and granting benefits to one who stopped working at the earliest opportunity.''

The court next examined Kaelin's material duties prior to the date of his injury. While finding that not every duty is material, the court cited another ruling which held: ''A duty is 'material' when it is sufficiently significant in either a qualitative or quantitative sense that an inability to perform it means that one is no longer practicing the 'regular occupation.' '' Byrd v. Reliance Standard Life Ins. Co., 2004 WL 2823228, at *3 (E.D. Pa. Dec. 7, 2004) (quoting Lasser v. Reliance Standard Life Ins. Co., 146 F. Supp. 2d 619, 636 (D.N.J. 2001)).

Thus, in conducting both a quantitative and qualitative evaluation of the evidence, the court determined that prior to his injury Kaelin spent less than 10 hours per week seeing patients in the office; and that office visits constituted only 4 to 7 percent of Kaelin's billings in the three calendar quarters. The court therefore concluded that Reliance acted arbitrarily in placing such a heavy emphasis on office duties. The court further rejected the opinion of an orthopedic surgeon hired by Reliance to review Kaelin's records, pointing out:

''Askin suggested that '[a] physically impaired orthopedic surgeon is not without some usefulness' because he could perform 'office hours, and administrative activities.' Although this general statement is certainly true, a doctor credentialed as an orthopedic surgeon who conducts only office hours and administrative duties is obviously not performing the material duties of the usual work of an orthopedic surgeon; that is, conducting orthopedic surgery. Reliance took this opinion to mean that 'at least one orthopedic surgeon realizes that there are other important tasks performed by an orthopedic surgeon in the course of his practice.' Given that plaintiff's material duties must be determined by looking at 'the usual work that the insured is actually performing immediately before the onset of disability,' Lasser, 344 F.3d at 386, the relevance of Dr. Askin's statement is questionable. Indeed, there is no indication that the surgeon who made the statement knew anything about Kaelin's specific practice; the letter was written in response to Reliance's request that he review 'the medical information in the claim file.' ''

Moreover, the evidence showing the actual duties Kaelin performed corroborated a conclusion that surgery was his primary material duty and that Reliance Standard's contrary conclusion was arbitrary. The court therefore awarded benefits, finding a remand inappropriate because the record was thoroughly developed and favored an award of benefits:

'' '[A] remand of an ERISA action seeking benefits is inappropriate where the difficulty is not that the administrative record was incomplete but that a denial of benefits based on the record was unreasonable.' Zervos v. Verizon New York Inc., 277 F.3d 635, 648 (2d Cir. 2002) Indeed, 'a plan administrator will not get a second bite at the apple when its first decision was simply contrary to the facts.' Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1163 (9th Cir. 2001). Therefore, I will reverse Reliance's decision and hold that Kaelin is entitled to long-term disability benefits under the Reliance policy.''

Reliance Standard has been extremely aggressive in asserting that even though its disability policies are occupation specific, benefits are only due to those claimants who are unable to perform each and every material duty of their occupation. That conclusion is both contrary to this ruling as well as foreclosed by the leading ruling in the 7th U.S. Circuit Court of Appeals, McFarland v. General American Life Insur.Co., 149 F.3d 583 (7th Cir. 1998), which interprets occupational disability policies as providing benefits to claimants who suffer either a qualitative or quantitative impairment that prevents the insured from performing his or her occupation using the same means or in the same manner as prior to the injury or illness resulting in disability.

The somewhat unique point made by this ruling, though, is its finding that the occupation at issue is viewed from the perspective of what the insured was doing prior to the date of the disabling accident or illness and not necessarily the occupation being performed on the date of application for disability benefits. The 7th Circuit has also written on this point. In Winter v. Minnesota Life Insur.Co., 199 F.3d 399 (7th Cir. 1999), the court held that the insurer must consider the insured occupation as it was performed prior to the onset of a condition even though efforts were made to continue working. In Winter, the insured was a commodity trader who developed a vocal impairment that prevented him from working in an open outcry trading environment. Although he attempted to trade electronically, he was unsuccessful; and the court examined his disability from the perspective of whether Winter could work as an open outcry trader.

Likewise, a district court in New York ruled that if the insured is temporarily working at a light duty job, it is also improper to consider the temporary position as the insured's occupation according to Peterson v. Continental Casualty Corp., 77 F.Supp.2d 420 (S.D.N.Y. 1999); rev'd in part 282 F.3d 112 (2d Cir. 2002). However, in Blickenstaff v. R.R.Donnelley & Sons Co. Short Term Disability Plan, 378 F.3d 669 (7th Cir. 2004), the court ruled the plaintiff's ability to perform her regular job with accommodations under which she had been performing her occupation precluded an award of disability benefits.