June Saffle v. Sierra Pacific Power Company Bargaining Unit Long Term Disability Income Plan

This appeal requires us to decide what should happen when district courts (or we) conclude that an ERISA plan administrator with discretionary authority to interpret and apply a plan has misconstrued the document and applied an incorrect standard to its benefits determination.

June Saffle applied for occupational disability benefits under the Sierra Pacific Power Company Bargaining Unit Long Term Disability Plan, an employee benefit plan governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., on the basis of being totally disabled from performing each and every duty of her regular occupation. The administrator, with discretion to interpret and apply the Plan, construed its definition of “total disability” — “completely unable to perform each and every duty of [the participant’s] regular occupation” — as “unable to perform a substantial portion of her regular job with accommodations that could have been made.” It determined that Saffle was not entitled to benefits, but the district court found that this decision was arbitrary and that Saffle was totally disabled. We agree that the administrator abused its discretion by adding a requirement of…