Long Term Disability Law BlogAttorneys Helping Disabled Claimants Nationwide

American Airlines Pilot Wins Court Ordered Reinstatement of Disability Benefits After Receiving Benefits for 8 years

Mr. Miller received benefits for 8 years, before American Airlines wrongfully determined that he was no longer disabled. After a 5 year legal battle, Mr. Miller finally prevailed. In Miller vs. American Airlines, Inc.; American Airlines, Inc., Pilot Retirement Benefit Program Fixed Income Plan (A Plan); American Airlines, Inc., Pension Benefits Administration Committee, the plaintiff, a Pilot sued his employer, employee benefit plan, and plan administrator (collectively, herein known as “American”), alleging violation of Employee Retirement Income Security Act (ERISA) based upon termination of his long-term disability benefits. Let us examine the Court of Appeal ruling in more detail.

Facts of the Case Against American Airlines

The plaintiff Miller worked as a commercial airline pilot for American Airlines. On August of 1998, the plaintiff suffered a psychotic episode while on duty and was subsequently admitted to the hospital and was prescribed various medications as part of his treatment regimen. Consequently the plaintiff’s FAA medical certification, required for all commercial pilots, was revoked.

Award of Long Term Disability Benefits

The plaintiff applied for long term disability benefits under the American Airlines, Inc. Pilot Retirement Benefit Program Fixed Income Plan and was awarded long term disability benefits in November of 1999. Under the Plan’s “own occupation” definition, a pilot is deemed disabled from employment as a pilot for American and may receive disability benefits even if he could work in a different capacity.

In May of 2003, American informed the plaintiff that it could no longer validate his disability and hence terminated his benefits. The plaintiff’s attending physician subsequently submitted documentation reiterating that the plaintiff had been diagnosed with anxiety and brief reactive psychosis. Upon receiving this information, American determined that the plaintiff “…[m]edically qualifies for [the] disability pension program” and reinstated his LTD benefits.

Termination Of Disability Benefits

On October 23rd 2006, American informed the plaintiff that his LTD benefits were terminated on the ground that “we are unable to verify either the existence of a continuing medical disability or your continued substantial progress towards obtaining your FAA medical certification.” Despite several appeals, America continued to uphold its decision to terminate the plaintiff’s long term disability benefits.

Judicial Review by the District Court

On February 13th 2008, the plaintiff and his Pennsylvania disability lawyer filed a complaint against American in the United States District Court for the Middle District of Pennsylvania alleging a claim for benefits under ERISA. The District Court held that American’s termination decision was not arbitrary and capricious as American had received new information from plaintiff’s attending physician that the plaintiff was “asymptomatic,” and therefore properly concluded that he was no longer disabled.

The District Court also concluded that the termination letter sufficiently described the reasons for discontinuing the plaintiff’s long term disability benefits and that American did not rely on the plaintiff’s failure to obtain his FAA medical certification as a basis for terminating his long term disability benefits.

Judicial Review by the Court of Appeal

The Court of Appeal ruled that to decide whether American’s termination of disability benefits was arbitrary and capricious, it has to “determine lawfulness by taking account of several different, often case-specific, factors, reaching a result by weighing all together.

In the appeal, the Court of Appeal gave significant weight to their conclusions that:

  • American reversed its initial position that the plaintiff was disabled and terminated his benefits without receiving supporting information that differed in any material way from the information upon which it previously relied.
  • American considered the plaintiff’s failure to obtain his FAA medical certification when it was not required under the Plan.
  • American did not comply with ERISA’s notice requirements.
  • American did not fully evaluate the plaintiff’s anxiety diagnosis and reconcile the demanding job requirements of a commercial pilot with the plaintiff’s continuing anxiety and risk that he would experience a recurring psychotic episode.
  • American operated under a conflict of interest in light of its incentive to deny benefits claims as it funded the Plan.

Court of Appeal Conclusion

Taking these factors into consideration as a whole, the Court of Appeal concluded that American’s decision to terminate the plaintiff’s long term disability benefits was not the product of reasoned decision-making and substantial evidence. Rather, the numerous procedural irregularities and substantive errors on American’s part, gave the Court of Appeal “reason to doubt its fiduciary neutrality.”

Hence, the Court of Appeal concluded that American’s termination of the plaintiff’s benefits was arbitrary and capricious. As American abused its discretion in terminating the plaintiff’s long term disability benefits, retroactive reinstatement of his benefits is necessary.

Contact Information