The LHD/ERISA Advisor: Fifth Circuit Defines Meaning of "Regular Occupation" Under LTD Policy

Hinshaw & Culbertson LLP

Hinshaw & Culbertson LLP

In Nichols v. Reliance Standard Life Ins. Co., 924 F.3d 80 (5th Cir. 2019), the U.S. Court of Appeals for the Fifth Circuit held that when an LTD policy funding an ERISA plan defines "regular occupation" as the way the claimant's job is performed in the national economy, that language is to be honored in assessing entitlement to disability benefits.

In Nichols, the claimant ("Nichols") worked at a chicken processing plant as a "Hazard Analysis Critical Control Point Coordinator," where she was routinely exposed to temperatures around 40 degrees. She stopped working, claiming that she had developed Raynaud's phenomenon, a circulatory disorder that could cause gangrene if she continued working in the cold. She sought LTD benefits under a policy issued to her employer by Reliance Life Insurance Company ("Reliance") and governed by ERISA.

The policy defined "total disability" as meaning that the claimant could not perform the duties of her "regular occupation." In turn, "regular occupation" was defined as the way the claimant's job "is normally performed in the national economy" and not the way it is "performed for a specific employer or in a specific locale." The policy provided Reliance with discretion in making claims decisions.

Nichols made a claim for LTD benefits. Reliance denied Nichols' claim, finding through consultation with the Department of Labor's Dictionary of Occupational Titles (DOT) that her occupation was best described as that of a "sanitarian," the duties of which did not involve routine exposure to the cold. It further found that Nichols' need to be exposed to the cold was "job site specific." Reliance upheld its decision after Nichols appealed, and Nichols then filed suit. Reliance moved for summary judgment. The district court found that Reliance abused its discretion, denied Reliance's motion for summary judgment, and reversed the company's decision to deny benefits. Reliance appealed.

The Fifth Circuit reversed, finding both that a claims administrator need not consider each of a claimant's job duties to determine her regular occupation, and that in any event, Reliance's classification was "easily based" on substantial evidence, to wit, a DOT classification, so there was no abuse of discretion. Based on Fifth Circuit precedent, the Nichols court noted that DOT entries may serve as evidence of material duties of a claimant's regular occupation if they are in the administrative record, even though the duties identified by the DOT do not match each duty the claimant actually performs. The court also found that Nichols' and the district court's argument "missed the mark" in asserting that "common sense says that an occupation involving inspection and packaging of meat products would require exposure to refrigeration and low temperatures." It found that "any requirement to work in the cold is specific to a subset of sanitarians who work in poultry processing plants."

As a caution to practitioners, the Nichols' court stated in a footnote that the "regular occupation" analysis in the Fifth Circuit may differ from that of the Second and Third Circuits.

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