Scheuermann v. Unum Life Ins Amer

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Scheuermann v. Unum Life Ins Amer

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Case: 08-51106

Document: 00511163857

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Date Filed: 07/06/2010

IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
July 6, 2010 N o . 08-51106 Lyle W. Cayce Clerk

R O B E R T SCHEUERMANN, P la in t if f -A p p e lla n t v. U N U M LIFE INSURANCE COMPANY OF AMERICA, D e fe n d a n t -A p p e lle e

A p p e a l from the United States District Court for the Western District of Texas U S D C No. 1:07-CV-00348

B e fo r e REAVLEY, SMITH, and DENNIS, Circuit Judges. P E R CURIAM:* T h e plaintiff-appellant, Robert Scheuermann (Scheuermann) seeks longt e r m disability benefits under a Group Disability Policy (Policy) his former e m p lo y e r maintained with the defendant-appellee, Unum Life Insurance C o m p a n y of America (Unum). Unum denied his claim, and, after a bench trial, t h e district court held that Unum had not abused its discretion. We VACATE t h e district court's judgment and REMAND.

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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No. 08-51106 I . PROCEDURAL AND FACTUAL BACKGROUND S c h e u e r m a n n worked as a carpenter for a builder of log homes from 1992 t o September 3, 2003, the day before his first back surgery. After a work-related b a c k injury in the summer of 2003, his orthopedic surgeon, Dr. Tipton, diagnosed S c h e u e r m a n n as suffering from sciatica and performed three back surgeries in a little over six months in 2003 and 2004, followed by another surgery by Dr. F o r e m a n , a rehabilitation specialist, in November 2004. Dr. Malone performed a fifth surgery, in June 2005, and implanted a neurostimulator in S c h e u e r m a n n 's back in November 2006 in an attempt to control the pain. Despite the six surgeries, Scheuermann claims he continues to have severe pain. Prior to the fourth operation, in September 2004, Dr. Tipton stated in an a t t e n d in g physician's statement that Scheuermann was not released to work, w a s unable to lift an object greater than 30 pounds, could not frequently carry o b je c t s greater than 15 pounds, was unable to sit or stand for longer than one h o u r without rests and could not bend repeatedly. Dr. Tipton also noted in a s u b s e q u e n t report that Scheuermann was completely disabled. In his July 2005 a t t e n d i n g physician statement, Dr. Malone opined that Scheuermann was u n a b le to sit or stand continually for more than one hour, could not lift more t h a n five pounds nor push, pull, stoop or climb. In a review of Scheuermann's claim for long-term disability­defined under t h e Policy as a "sickness or injury" rendering the claimant "unable to perform t h e duties of any gainful occupation for which [he is] reasonably fitted by ed u ca tion , training or experience"­Dr. Sentef, an Unum physician, first reviewed S c h e u e r m a n n 's file in April 2006 and opined that he considered Dr. Malone's r e s t r ic t io n s and limitations "overly restrictive." In July 2006, Dr. Tsourmas, on b e h a lf of Unum, performed an independent medical evaluation (IME) and d e t e r m in e d that Scheuermann "should qualify after a rehabilitation of sorts in a light duty capacity, as defined by the Department of Labor." But Dr. Tsourmas 2

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No. 08-51106 s t a t e d that before he would form a definitive opinion on Scheuermann's fu n c tio n a lit y he "would like to review the MRI [by Dr. Malone] of several months b a c k " and requested "extension x-rays to assess instability in a multiplyo p e r a t e d back." On the basis of the IME, Unum vocational consultant Waymire o p in e d that Scheuermann was capable of performing certain sedentary jobs that e x is t e d in the Austin economy. In August 2006, Unum advised Dr. Tsourmas that the MRI he requested w a s unavailable (although it is undisputed that Unum, at that time of the letter, h a d it in its files) and urged him to promptly assess Scheuermann's present fu n c tio n a l level. Although he had not received any new medical evidence or seen S c h e u e r m a n n since the July IME, Dr. Tsourmas responded with an addendum t o his original report, opining that "this patient at present is both employable a n d re-trainable. His avocational activities and home activities suggest he's lig h t duty employable per DOL standards." On that basis, Unum informed Scheuermann in a September 15, 2006 le t t e r that it was terminating his benefits because, based on "the objective m e d ic a l evidence,"he was "both employable and re-trainable," and "no longer m e []t the contractual definition of disability" under the Policy. Up to that point, U n u m had paid Scheuermann short-term benefits for eleven weeks and longt e r m benefits for 33 months pursuant to the Policy. On administrative appeal, Unum physician Dr. Pons was the first to r e v ie w Scheuermann's record, including his April 2006 MRI. He noted the fo llo w in g restrictions and limitations: "no excessive bending, standing or s t o o p in g , lifting is limited from 10-15 pounds. Sit or stand alternately during an 8 hour work day. Sitting and standing, alternating between these positions h o u r ly ." Dr. Pons further opined that "Dr. Tsourmas and Tipton suggest the m ost reasonable R[estrictions] and L[imitation]s while Dr. Malone's

R [e s t r ic t io n s ] and L[imitation]s appear overly restrictive." 3

Next, Unum

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No. 08-51106 n e u r o s u r g e o n Dr. Sternbergh reviewed the file and concluded that Dr. Malone's r e s t r ic t io n s and limitations were "overly restrictive and d[id] not correlate with th e available medical information," while the restrictions and limitations by Drs. T ip t o n and Tsourmas supported that he was capable of performing sedentary w ork . Dr. Sternbergh's suggested permanent limitations and restrictions

in c lu d e d an "accommodation to change positions or activities as needed for c o m fo r t , with no requirement for repetitive bending or lifting[,]" with a lifting lim it a t io n of 15 to 20 pounds occasionally. After the administrative review by Drs. Pons and Sternberg, Unum Senior V o c a tio n a l Rehabilitation Consultant Shannon O'Kelley reviewed

S c h e u e r m a n n 's record and concluded that Waymire's July 2006 vocational a s s e s s m e n t of Scheuermann remained accurate. In a January 31, 2007 letter, Unum informed Scheuermann that it was u p h o ld in g its original denial of long-term benefits. The letter referenced the o p i n i o n s of Drs. Tsourmas, Pons and Sternbergh and O'Kelley's vocational a s s e s s m e n t and explained that "[w]ith the above medical and vocational a n a ly s e s available and based on the totality of documentation in your files, we h a v e no recourse but to find the original decision to deny Long Term Disability B e n e fit s . . . to be contractually and factually supported. . . ." Scheuermann initially filed suit against Unum in Texas state court, c h a lle n g in g its decision to terminate his benefits. Unum removed the case to the d is t r ic t court in May 2007. After a bench trial, the district court upheld Unum's d e n ia l of benefits. I I . STANDARD OF REVIEW " O n appeal from a bench trial, we review the factual findings of the trial c o u r t for clear error. We review conclusions of law de novo, including the trial c o u r t's determination of its own standard of review of an ERISA administrator's d e t e r m in a t i o n of eligibility for benefits." LeTourneau Lifelinke Orthotics & 4

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No. 08-51106 P r o s th e tic s , Inc. v. Wal-Mart Stores, Inc., 298 F.3d 348, 350-51 (5th Cir. 2002) (c it in g Kona Tech. Crop. v. S. Pac. Transp. Co., 225 F.3d 595, 601 (5th Cir. 2000); M e d itr u s t Fin. Servs. Corp. v. Sterling Chems., Inc., 168 F.3d 211, 213 (5th Cir. 1 9 9 9 )). See also Jenkins v. Cleco Power, LLC, 487 F.3d 309, 314 (5th Cir. 2007). Where, as here, "the Plan undisputedly gives the Plan Administrator the d is c r e t io n a r y authority to construe the Plan's terms and to render benefit d e c is io n s , we reverse the Plan Administrator's denial of benefits . . . only if it a b u s e d its discretion." Holland v. International Paper Co. Retirement Plan, 576 F .3 d 240, 246 (5th Cir. 2009) (citing Stone v. UNOCAL Termination Allowance P la n , 570 F.3d 252, 257-58 (5th Cir. 2009)). See also Firestone Tire & Rubber Co. v . Bruch, 489 U.S. 101, 115 (1989); Sanders v. Unum Life Ins. Co. of America, 5 5 3 F.3d 922, 925 (5th Cir. 2008).1 "Under the abuse of discretion standard, `[i]f t h e plan fiduciary's decision is supported by substantial evidence and is not a r b it r a r y and capricious, it must prevail." Corry v. Liberty Life Assurance Co. o f Boston, 499 F.3d 389, 397-98 (5th Cir. 2007) (quoting Ellis v. Liberty Life A s s u r a n c e Co. of Boston, 394 F.3d 262, 273 (5th Cir. 2004)). "`Substantial e v id e n c e is more than a scintilla, less than a preponderance, and is such relevant e v id e n c e as a reasonable mind might accept as adequate to support a c o n c lu s io n .'" Id. at 398 (quoting Ellis, 394 F.3d at 273). "We apply a two-step process when conducting this abuse of discretion r e v ie w . First, we determine whether the Administrator['s] . . . determination w a s legally correct. If so, the inquiry ends and there is no abuse of discretion. Alternatively, if the court finds the administrator's interpretation was legally in c o r r e c t , the court must then determine whether the administrator's decision w a s an abuse of discretion." Stone, 570 F.3d at 257 (citing Crowell v. Shell Oil C o ., 541 F.3d 295, 312 (5th Cir. 2008)). However, where, as here, "[t]he parties
The parties do not dispute that Unum had discretionary authority to construe the terms of the Policy and to determine eligibility for benefits under the Policy.
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No. 08-51106 . . . have not conformed their arguments to our traditional two-step analysis . . . we bypass, without deciding, whether the Plan Administrator's denial was le g a lly correct, reviewing only whether the Plan Administrator abused its d is c r e t io n in denying the claim." Holland, 576 F.3d at 246 n.2.2 A d d it io n a lly , where the claim administrator had a financial conflict of in t e r e s t because it was responsible for both determining eligibility for benefits a n d for paying benefits, as is the case here, we take into account the conflict of in t e r e s t ­ t h o u g h , without changing the standard of review­as one factor in d e c id in g whether the administrator abused its discretion under the second step o f the analysis. Metropolitan Life Insurance Co. v. Glenn, 128 S. Ct. 2343, 2346 (2 0 0 8 ); Holland, 576 F.3d at 247; Stone, 570 F.3d at 257. III. DISCUSSION S c h e u e r m a n n argues that the district court clearly erred when it found t h a t Unum's decision to terminate Scheuermann's long-term benefits was based o n concrete evidence supporting the denial of his claim. We agree. I n its initial denial of long-term benefits, Unum relied on the opinions of it s own physician, Dr. Sentef, and independent medical examiner Dr. Tsourmas. Neither physician's report, however, provides the concrete evidence required. The district court concluded that "Sentef's report [wa]s concrete evidence . . . s u p p o r t in g Unum's decision to deny benefits, because Sentef determined the M a lo n e restrictions and limitations were overly restrictive, based on his review o f Scheuermann's medical records. . . ." But nowhere in his report does Dr. S e n te f state that Scheuermann was not disabled under the Policy. Instead Dr. S e n te f requested that Dr. Malone provide a clearer assessment of

Here, the parties do not dispute the district court's determination that "Scheuermann's arguments implicate only Unum's factual determinations, not its Policy interpretation."

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No. 08-51106 S c h e u e r m a n n 's functional capabilities. Such a vague and incomplete medical o p in io n is an insufficient basis for Unum's denial of long-term benefits. Further, Unum and the district court erroneously relied on Dr. Tsourmas' a d d e n d u m to his original report as concrete evidence supporting the denial of b e n e f it s . After his initial IME report did not give a definitive opinion on

S c h e u e r m a n n 's functional capacities and requested additional records, Dr. T s o u r m a s , upon Unum's urgent request, sent the following addendum: P e r letter 8/11/006 from Unum, I would offer this patient at present is both employable and re-trainable. His avocational activities and h o m e activities suggest he's light duty employable per DOL sta n d a rd s. T h e district court held that "Unum did not abuse its discretion in relying on [Dr. T s o u r m a s ' amended report]." It explained that, "[a]lthough the Tsourmasa d d e n d u m conclusion differs from the conclusion in the original report . . . Tsourmas apparently changed his mind about Scheuermann's abilities between J u ly 6, 2006, and September 8, 2006." The district court further conjectured that D r . "Tsourmas was presumably aware of Scheuermann's condition from the e x a m in a t io n two months prior, and aware of the conclusion of the original report o n which he added the addendum." The district court then reconciled the fact t h a t Dr. Tsourmas had not received any further information after his initial r e p o r t to justify his significantly changed opinion two months later: "Although T s o u r m a s believed, at the time he wrote the addendum, that the information he r e q u e s te d was unavailable, it does not mean his addendum was inaccurate. Upon learning such information was unavailable, Tsourmas did not repeat his r e q u e s t for such information or ask how he could obtain it; he instead responded t o Unum's August 11, 2006 question by changing his earlier assessment. . . ." Therefore, the district court reasoned, "[i]t was rational for Unum to rely on the T s o u r m a s addendum to deny benefits. . . ."

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No. 08-51106 W h ile a plan administrator need not defer to the opinion of a treating p h y s ic ia n over that of a reviewing physician, who, based on the medical evidence in the record, reaches a different conclusion, Gothard v. Metropolitan Life Ins. C o ., 491 F.3d 246, 249 (5th Cir. 2007) (citing Black & Decker Disability Plan v. N o r d , 538 U.S. 822, 831 (2003)); see also Corry, 499 F.3d at 401-02 ("In this `b a tt le of experts' the administrator is vested with discretion to choose one side o v e r the other."), the situation we face here is different. Scheuermann's

c o n t e n t io n is that Unum abused its discretion "when it relied on the addendum fr o m Dr. Tsourmas that was in plain conflict, not only with the opinion of [his] t r e a t in g physicians but with Dr. Tsourmas' own, original report." We agree. Dr. T s o u r m a s ' revised conclusion, in his addendum, that Scheuermann "is both e m p lo y a b le and re-trainable" lacks a reasonable basis for departing from his e a r lie r diagnosis, in his original report, based on the identical medical record, t h a t Scheuermann had "a failed surgical spine" and that, with "a rehabilitation p r o g r a m of sorts," he may only qualify for light duty work. Dr. Tsourmas' o r ig in a l report's prediction that Scheuermann would be "functional" in the future w a s premised on a "rehabilitation program" and "pain management," neither of w h ic h was initiated between the period of the original report and its addendum. Additionally, at the end of his original report, Dr. Tsourmas responded to U n u m 's question as to whether "there [were] any diagnostics that you feel are n e c e s s a r y before formulating an accurate opinion" (emphasis added): "Yes. I w o u ld like to review the MRI of several months prior. Also, this patient needs fle x io n , extension x-rays to assess instability in a multiply-operated back. None o f the recent studies accompany the patient today."3 However, Dr. Tsourmas

Unum's internal notes confirm that Dr. Tsourmas' original report did not provide a definitive opinion on Scheuermann's functionality: "[T]he IME has responded with questions/requests rather than providing answers. The IME did not provide immediate information on Mr. Scheuermann's present functional capacity . . . ." (emphasis added)

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No. 08-51106 n e v e r reviewed the requested materials because Unum advised him that "the a d d it io n a l materials . . . [were] not available," while at the same time urging him t o "[p]lease respond to our questions as to what the claimant's functional level is at the present." Only in response to Unum's urgent request did Dr. Tsourmas c h a n g e his mind. Because Dr. Tsourmas' own original report concedes that the m e d ic a l evidence did not support a conclusion that Scheuermann was functional, h is addendum, based on the identical medical evidence as the original report, is " in plain conflict with the medical records."4 Gothard, 491 F.3d at 250. N e it h e r do the reports by Drs. Pons and Sternbergh, relied on by Unum a t the administrative review as additional evidence, provide concrete evidence supporting its denial of benefits. Dr. Pons, on two occasions in his report, m is in t e r p r e t s Scheuermann's April 19, 2006 MRI. As Unum conceded, he states t h a t "there is a broad based central and left paramedian disc herniation which d o e s not abut the descending left S1 nerve root," when in fact it does. Further, D r . Pons' report references Dr. Tsourmas' opinion that Scheuermann "could be m u c h improved and be much more functional" but doesn't state that S c h e u e r m a n n is not disabled under the Policy at the present time. Dr.

S t e r n b e r g h , in turn, is under the wrong impression that Scheuermann had only t h r e e back surgeries (when he in fact had six), and he repeats Dr. Pons' mistake that Scheuermann's "broad based central and left paramedian disc herniation . . . [did] not abut the descending left S1 nerve root" when in fact it does. Against this background we cannot say that Unum's decision on S c h e u e r m a n n 's long-term disability benefits was "based on evidence, even if d is p u t a b le , that clearly supports the basis for its denial." Holland, 576 F.3d at

Unum does not dispute that Dr. Tsourmas' addendum is based on the identical medical record, and that the conclusions in his original report would not have justified its denial of Scheuermann's long-term disability benefits. Unum further does not dispute Scheuermann's contention that the MRI that it withheld from Dr. Tsourmas showed a deterioration of Scheuermann's medical condition.

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No. 08-51106 2 4 6 (citation and quotation marks omitted). See also Gothard, 492 F.3d at 450 (" W e do not hold that a plan fiduciary has no obligation to consider the basis of t h e expert opinion on which they are relying. . . ."). Accordingly, we conclude t h a t Unum abused its discretion in denying long-term benefits, and that the d i s tr ic t court clearly erred in holding that Unum's denial was supported by c o n c r e t e evidence. I V . CONCLUSION F o r the above reasons, we VACATE the district court's judgment in favor o f Unum and REMAND the case to the district court for proceedings consistent w it h this opinion.

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