Pannebecker v. Liberty Life Assurance Company of Boston
Filed September 18, 2008
Ninth Circuit court of Appeals
Cite as 06-16654

Court Upholds Disability Benefits of Claimant, Remands Case to Determine Disability Properly

Nancy Pannebecker left her job as a laboratory and department manager for Hughes Electronics in 1996 due to heart disease. Because of this, she began to receive benefits under Hughes’s long-term disability plan, governed by the Employee Retirement Income Security Act (ERISA).

However, after paying benefits for over three years, Liberty Life Assurance Company of Boston, the plan’s administrator, denied continued benefits, asserting that Pannebecker could perform some sedentary work and was therefore not “disabled” under the terms of the plan.

As a result, Pannebecker sued Liberty in district court. During trial, the court found that Liberty had misconstrued the plan’s terms, and remanded for compliance with the plan and identification of specific occupations suited for Pannebecker.

On that remand, Liberty again concluded that Pannebecker was not disabled. The district court upheld Liberty’s decision.

The district court also declined reinstatement of benefits to Pannebecker on Liberty’s initial denial in 2000 and during the remand period before its final benefits determination in 2005.

Following this, Pannebecker appealed.

During review, the Ninth Circuit court of appeals affirmed in part, reversed in part, and remanded, holding that Pannebecker was entitled to continued benefits prior to Liberty’s final benefits determination.

However, the court noted that the record supported Liberty’s conclusion that Pannebecker was able to perform the duties of other occupations.

Further, the Ninth Circuit rejected Pannebecker’s argument that the definition of “disability” should take into account a claimant’s most recent salary or life station. Hughes’s plan required only that Pannebecker be able to perform the duties of any occupation for which she was reasonably fitted by “training, education, experience, age, and physical and mental capacity.”

As a result, pursuant to ERISA, Liberty was given a second opportunity to determine whether Pannebecker was “disabled” under the plan, but that second chance should not have left Pannebecker empty-handed during the time that it took Liberty to comply with the plan.

Further, the appeals court held that the district court should have awarded Pannebecker benefits from the time of Liberty’s improper denial in 2000 until its decision in 2005 to decline to alter its benefits determination.

Finally, because of this appeal, Pannebecker was entitled to have her benefits reinstated for the period following the court’s initial remand. Thus, she achieved some of the benefit that she sought in filing the suit.

The court directed, on remand, that the district court should determine, in its discretion, whether Pannebecker was entitled to reasonable attorney fees and costs.

The Ninth Circuit court of appeals therefore affirmed in part, reversed in part, and remanded a judgment of the district court. The court held that a former employee denied continued long-term disability benefits because she was not disabled under the terms of her ERISA plan was entitled to benefits for the period between the plan administrator’s initial denial and its final benefits determination.