Perlman v. Swiss Bank Corporation Comprehensive Disability Protection Plan, 1999 U.S. App. LEXIS 28143 (7^th Cir. November 2, 1999)-Judith Perlman worked as a lawyer for Swiss Bank Corporation until September 1994, when she quit. Ever since, Perlman and Swiss Bank have contested whether she was entitled to disability benefits for her serious medical problems which arose from an automobile accident in 1988.  She did not work for a year after the accident and received short-term disability benefits again for shorter periods in 1991 and 1992.  She returned to full time work between 1992 and 1994, although she regularly saw a psychiatrist for assistance in coping with the stress caused by the accident and her medical conditions. Swiss Bank was satisfied with her work, and contended that she quit for personal rather than medical reasons, seizing an opportunity to leave the labor force and move to the Wisconsin countryside.

UNUM Life Insurance Company, which administers Swiss Bank's disability plan (a "welfare benefit plan" covered by ERISA), denied the application for short-term disability benefits which Perlman made immediately after quitting. The company found that her medical conditions did not prevent her from performing the material duties of her occupation.  Section 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B) makes decisions of this kind reviewable in federal court, and Perlman asked the district judge to direct UNUM to pay both short- and long-term disability benefits. The judge agreed that UNUM's decision was "arbitrary and capricious" because it failed to obtain the assistance of any outside experts, and did not perform a detailed study of Perlman's job duties. But, rather than order payment of benefits,  the judge directed UNUM to reconsider Perlman's application. Both sides appealed. UNUM also appealed the judge’s determination that Perlman was a prevailing party deserving of attorneys fees, since no order to pay benefits had yet been rendered.

In an apparent attempt to force UNUM to reconsider its decision to refuse benefits to Perlman, the district judge mistakenly "remanded" the "case" to UNUM. In resolving the jurisdictional problems, this court determined that a remand in this situation can be appealable as a final decision under 28 U.S.C. § 1291. This court reasoned that although it is doubtful that a district court may "remand" ERISA claims, courts may treat welfare benefit plans just like administrative law judges implementing the Social Security disability-benefits program. In finding that a "remand" could be appealable, this court cited cases dealing with review of Social Security decisions, as well as cases dealing with the appealability of orders directing arbitration.

As for standard of review, the district court concluded that language in Swiss Bank's plan and UNUM's policy gave UNUM enough discretion in administering benefits that deferential review was called for.  But the court then "put a thumb on the scale against UNUM, reasoning that its self-interest as an insurer of long-run benefits created at least a potential for bias in making decisions." This court declined to follow this line of thinking, suggesting that where the administrator is a large corporation, the connection between the decision maker’s motivations and the general self-interest of the company is tenuous at best. Bias is therefore unlikely. Since deferential review was appropriate, the district court erred in permitting discovery into the details of UNUM's decision-making. Six courts of appeals have held that when review under ERISA is deferential, courts are limited to the information submitted to the plan's administrator.

As for the central question of whether UNUM make an arbitrary or capricious decision in denying Perlman’s benefits, this court found it did not. Perlman's successful performance of the job between 1992 and 1994 showed that the 1988 accident did not prevent her from doing an attorney's work. UNUM's insistence that she demonstrate a worsening of her condition could not be called arbitrary, capricious, or otherwise unreasonable.