Shirley Lacko v. United of Omaha Life Insurance Company

Summary

**Shirley Lacko v. United of Omaha Life Insurance, 926 F.3d 432 (7th Cir. 2019)** **Topics:** ERISA disability benefits; arbitrary and capricious review; conflict of interest; selective consideration of evidence; Social Security disability determination; occupational classification under the Dictionary of Occupational Titles (DOT); combination of impairments; mental limitations. **Holdings:** The Seventh Circuit reversed summary judgment for the plan administrator, holding that United's denial of short-term and long-term disability benefits was arbitrary and capricious. United selectively characterized the record by misrepresenting the SSA's mental residual functional capacity findings (which found moderate limitations precluding skilled work) and by using an overly generic DOT classification ("Manager, Department") that omitted the specialized audit and accounting duties of the claimant's Senior Manager position. United also failed to address the combination of physical and cognitive impairments, including medication side effects. The court remanded for a fresh administrative decision, noting that the structural conflict of interest (administrator as both evaluator and payor) was a factor but not the sole basis for reversal.

Holdings

1. United's denial of benefits was arbitrary and capricious because the administrator failed to acknowledge and address the mental limitations found by Dr. Fritz in the SSA's mental residual functional capacity assessment, which determined that Lacko was moderately limited in understanding and remembering detailed instructions, carrying out detailed instructions, and responding appropriately to changes in the work setting, and that she was limited to unskilled work. The administrator's statement that SSA eligibility requirements 'may differ' was insufficient to constitute a reasoned consideration.
2. United's use of the DOT title 'Manager, Department' was improper because the vocational expert's job description omitted essential technical and specialized duties of Lacko's position as Senior Manager in the Audit Department, such as conducting technical research in complex accounting areas and maintaining a CPA license. The failure to reconcile with the SSA's classification as an Auditor or Accountant and the failure to consider the mental skill level required for the position rendered the determination arbitrary.
3. The plan's requirement of a 'change' in functional capacity does not preclude a degenerative condition from qualifying if the deterioration eventually prevents the claimant from performing her job. United's focus on the long duration of the conditions without considering the point at which they became unmanageable was unreasonable.

Questions Presented

1. Whether United erred in concluding that there was no change in Lacko's functional capacity that would prevent her from performing her job.
2. Whether United used an incorrect occupational description in determining her eligibility for LTD benefits.
3. Whether United failed to adequately address the Social Security Administration's disability determination.
4. Whether United failed to address the combination of impairments, including mental limitations.
5. Whether United improperly relied on the opinions of non-examining physicians.

Disposition

reversed_and_remanded