Third Circuit Rules Termination of ERISA Disability Benefits Is Abuse of Discretion

On July 29, 2024, in Mullins v. CONSOL Energy Inc. Long Term Disability Plan, the Third Circuit Court of Appeals (Third Circuit) held that the termination of a coal miner’s ERISA long-term disability benefits by the claims administrator, Lincoln Financial Group (Lincoln), was not based on substantial evidence in the record and was therefore an abuse of discretion. The Third Circuit vacated the prior district court judgment upholding Lincoln’s termination decision and remanded the case back to the district court for reinstatement of the miner’s benefits.

In 2015, Timothy Mullins was working as a section supervisor at a coal mine owned by CONSOL Energy, Inc. (Consol) when he sustained an ankle injury and sought benefits from Consol’s disability plan (the plan). The plan provides two phases of disability benefits to eligible employees. The first phase covers up to 12 months of the employee being unable to perform their own occupation (the own occupation period). The second phase covers the subsequent period when the employee cannot perform any other suitable employment (the other occupation period). The plan defined total disability as an employee being either “unable to perform the material and substantial duties of [his] regular occupation or any reasonable alternative offered by the Company” during the own occupation period or “completely unable to engage in any suitable employment” during the other occupation period.

Initially, Mullins was granted disability benefits under the plan. But in 2020, Lincoln terminated the benefits after determining, based on medical evaluations and a 2019 vocational assessment (also known as a transferable skills analysis (TSA)), that Mullins did not have a total disability that prevented him from working at any suitable occupation as required by the plan. Rather, Lincoln decided Mullins could perform suitable sedentary employment because his medical records specified that he could work with some physical limitations, and the TSA indicated he had the qualifications for three alternative jobs.

Following the termination of benefits, Mullins filed a two-count ERISA complaint against the plan alleging wrongful denial of benefits and improper offset of benefits due to Social Security disability benefits. The district court granted summary judgment for the plan, holding that Lincoln’s benefits denial was backed by substantial medical and vocational evidence and was not an abuse of discretion. Mullins appealed.

On appeal, the Third Circuit explained that Lincoln’s determination that Mullins did not suffer a total disability must have been based on adequate evidence that Mullins had both the physical capacity and the relevant education, training, or experience for alternative employment. With respect to physical capacity, the Third Circuit observed that Lincoln relied upon two peer reviews by board-certified physicians who had reviewed at least 35 different medical records and test results, described each examined record, and provided an analysis that concluded Mullins was capable of limited, sedentary work. Mullins did not offer evidence from his treating physicians to dispute this conclusion. Accordingly, the Third Circuit affirmed that Lincoln’s determination with respect to Mullin’s physical capacity was reasonable and supported by substantial medical evidence.

The Third Circuit then considered whether Mullins could satisfy the relevant educational, training, or experience requirements for alternative employment. Significantly, the Third Circuit noted that the 2019 TSA incorrectly reflected Mullin’s job as a mine superintendent instead of a section supervisor. At Consol, the mine superintendent position was held by an individual with two college degrees and prior supervisory experience. According to the DOL job description, the mine superintendent role included duties like reviewing survey reports and geological records, calculating mine operation costs, and reading and enforcing mining laws and safety regulations. However, Mullins had never been a mine supervisor and had only completed the tenth grade and obtained a GED. Additionally, his role as section supervisor involved the “use of hand tools,” the “operation of equipment,” and “obtaining and seeing to the appropriate use of equipment, facilities, and materials to do certain work.”

Similarly, the three alternative roles suggested by the 2019 TSA – production planner, supervisor of terminal operations, and branch manager – required work experience (e.g., production analysis, mathematical calculations, revenue report reviews, budget planning) and an educational background that Mullins did not have. Accordingly, the Third Circuit determined that the district court erred in concluding that section supervisor and mine superintendent are similar managerial positions, noting that that “is a bit like saying that because a TSA lists the skills ‘teaching,’ ‘lesson planning,’ and ‘grading students’ work,’ there is no difference between an elementary school teacher and a university professor.”

The Third Circuit concluded that Lincoln and Consol abused their discretion by failing to identify suitable alternative jobs, based on substantial evidence, as required under the plan before benefits can be terminated. Accordingly, the Third Circuit vacated the district court’s decision and remanded the case for entry of summary judgment in favor of Mullins, retroactive reinstatement of Mullin’s benefits, and determination of the correct amount of a Social Security offset.

This case serves as an important reminder that ERISA plan administrators must exercise their discretion carefully, especially when reviewing claim appeals. They should ensure their decisions are in accordance with the plan terms, substantiated by the evidentiary record, and based on accurate and relevant information. As this case illustrates, failure to adhere to ERISA’s requirements can result in unfair outcomes for plan participants and undesired litigation and adverse court rulings for plan sponsors.

Mullins v. Consol Energy Inc. Long Term Disability Plan »