7th Circuit orders Lilly to reinstate ex-employee’s disability benefits

Eli Lilly and Co. must reinstate disability benefits to its former human resources director after a divided 7th Circuit Court of Appeals found insufficient evidence to support the company’s argument that the former director could still work despite her fibromyalgia symptoms.

Cathleen Kennedy began working for Lilly in 1982 and quickly advanced to become the company’s human resources executive director, earning $25,011 a month. However, Kennedy was forced to quit her job in 2008 due to disabling symptoms of fibromyalgia, which 7th Circuit Court of Appeals Judge Richard Posner defined as “a common and chronic disorder characterized by widespread pain, diffuse tenderness, and a number of other symptoms.”

Kennedy was a member of Lilly’s Extended Disability Benefits plan, so she requested and was approved for monthly benefits of $18,972.44 a month, beginning in May 2009. However, her benefits were cancelled in late 2012, prompting her to file the instant case against the Extended Disability Plan, which reserves discretion to deny claims that do not meet its standard.

Specifically, the plan states an employee has a disability if he or she is unable “to engage, for remuneration or profit, in any occupation commensurate with the Employee’s education, training, and experience.” Lilly’s Employee Benefits Committee revoked Kennedy’s benefits because it found fibromyalgia was not disabling.

However, Lilly “is familiar with fibromyalgia because it markets a drug called Cymbalta … for treating the disease,” Posner wrote in a Thursday opinion. Judge William T. Lawrence of the U.S. District Court for the Southern District of Indiana award summary judgment to Kennedy for more than $537,000 in past benefits and prejudgment interest and ordered Lilly to reinstate her benefits retroactively to December 2012.

A divided 7th Circuit panel affirmed that decision Thursday, with Posner writing there were several deficiencies in Lilly’s evidence from various doctors and further noting the company “failed to indicate what job or kind of job, and at what level, Kennedy would be capable of performing if the company is permitted to cancel her benefits.”

“Ms. Kennedy was informed by a liaison to the Employee Benefits Committee that if she could work 20 hours per week as a secretary she would not be considered disabled,” Posner wrote. “Yet in its written decision the Committee said only that Kennedy could work in ‘various non-executive positions in compensation, benefits, and other human resources fields,’ which is both vague and inconsistent with the medical evidence.”

Judge Daniel Manion dissented, writing in a separate opinion “it was not improper for the (benefits) administrator to rely on Dr. (Dayton) Payne’s conclusion that Kennedy’s medical records did not support functional limitations, irrespective of the diagnosis of fibromyalgia.” Further, Manion said the Social Security Administration found Kennedy was not disabled, so “the administrator in this case should have been entitled to rely in part on a negative Social Security finding.”

The case is In Cathleen Kennedy v. The Lilly Extended Disability Plan, 16-2314