Smith v. Cox Enterprises: Fourth Circuit Finds ERISA Review Failed to Address SSA Evidence

Background of the Long-Term Disability Benefits

Jeremy Smith worked for Cox Enterprises, Inc. as a customer care technician. In 2012, after experiencing severe lower back pain caused by a herniated disk, he stopped working and underwent multiple spinal surgeries, including a lumbar discectomy, a spinal fusion, and later a laminectomy with a revision fusion. He was diagnosed with post-laminectomy syndrome. Aetna, the administrator of Cox’s long-term disability plan, approved his claim for benefits. The plan provided two stages of disability coverage. For the first twenty-four months, Smith needed to show that he could not perform his own occupation. After that period, he needed to show that he could not perform any reasonable occupation due to injury or disease.

Aetna continued recertifying his disability for several years. In 2016, the Social Security Administration determined that Smith was disabled, and he began receiving Social Security Disability benefits. A consultative examiner for the state disability agency later evaluated him and found that he could sit only about half an hour per hour during the workday. The Social Security Administration again found him disabled after that examination.

Events Leading to the Termination of Benefits

In late 2018, Aetna began a new review of Smith’s eligibility. Smith’s primary care physician reported that Smith was able to work only two hours per day for two days per week and that he could not remain in one position for more than ten to fifteen minutes at a time. An Aetna nurse reviewed the information and requested additional detail. Smith’s physician explained that Smith needed to alternate between sitting, standing, and lying down throughout the day.

Aetna then sent Smith for an independent medical evaluation in 2019. The examiner concluded that Smith could work a full eight-hour day with restrictions, including changing positions every thirty minutes and limiting standing and walking. After receiving this evaluation, Aetna conducted a transferable skills analysis. Based on that assessment, Aetna identified several sedentary jobs it believed Smith could perform. In July 2019, Aetna terminated his long-term disability benefits.

Smith appealed that decision on his own. As part of his appeal, he submitted the consultative examination report prepared for his Social Security recertification. Aetna hired two doctors to review the appeal, and both reviewed his medical records but did not examine him in person. Aetna denied his appeal in April 2020.

Proceedings in the District Court

Smith filed an action under the Employee Retirement Income Security Act. The district court granted summary judgment for the plan, finding that Aetna’s decision was supported by substantial evidence. The court determined that Aetna reasonably discounted the opinion of Smith’s treating physician and that the reviewing doctors had evaluated the record. The court also found that Aetna reasonably discounted the Social Security Administration’s disability determination because Aetna had not received the medical records supporting it.

Review by the Court of Appeals

The Court of Appeals reviewed the district court’s judgment and applied an abuse-of-discretion standard to Aetna’s decision. Under this standard, a plan administrator must engage in a deliberate and principled reasoning process and must support its decision with substantial evidence. Federal regulations required Aetna to provide an explanation of its basis for disagreeing with the disability determination of the Social Security Administration when the claimant submitted that determination.

The Court of Appeals examined Aetna’s termination letter and appeal denial letter. The letters contained general statements noting that Social Security determinations and private plan determinations may differ. The letters also stated that Aetna had not been provided with the basis for the Social Security determination. However, Aetna had been given the consultative examination report that supported the Social Security recertification. Neither the termination letter, the appeal denial letter, nor the independent medical evaluations addressed the findings in that report.

The Court of Appeals concluded that Aetna failed to address important conflicting evidence, including the consultative examination report that played a central role in the Social Security determination. Because Aetna did not engage with this evidence, it did not provide the full and fair review required under ERISA.

The Court’s Decision

The Court of Appeals held that Aetna abused its discretion by failing to discuss the conflicting evidence Smith provided. It reversed the district court’s judgment and remanded the case with instructions for the district court to remand the matter to Aetna for reconsideration. The appellate court determined that Aetna must reevaluate Smith’s claim after addressing all relevant medical evidence, including the consultative report used in his Social Security recertification.

Assistance With Social Security Disability Matters

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