Octave Schully, III v. Continental Casualty Company, et al

Filing 511134205

Octave Schully, III v. Continental Casualty Company, et al

Doc. 511134205

Case: 09-30668

Document: 00511134205

Page: 1

Date Filed: 06/07/2010

IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
June 7, 2010 N o . 09-30668 Lyle W. Cayce Clerk

O C T A V E FOERSTER SCHULLY, III, Plaintiff - Appellee v. C O N T I N E N T A L CASUALTY COMPANY; HARTFORD FINANCIAL S E R V IC E S GROUP INC; HARTFORD LIFE GROUP INSURANCE COM PANY, Defendants - Appellants

A p p e a l from the United States District Court for the Eastern District of Louisiana U S D C No. 2:07-CV-1456

B e fo r e JOLLY and GARZA, Circuit Judges, and MILLER, District Judge.* P E R CURIAM:* * I n this dispute over long-term disability benefits, the defendants, c o lle c t iv e ly "the Hartford," appeal the district court's conclusion that the H a rt fo r d abused its discretion in denying physical disability benefits to the p la in tiff, Octave Foerster Schully, III. The Hartford also asks us to overturn the

*

District Judge, Southern District of Texas, sitting by designation.

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 R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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

**

Dockets.Justia.com

Case: 09-30668

Document: 00511134205

Page: 2

Date Filed: 06/07/2010

No. 09-30668 d is t r ic t court's discretionary grant of attorney's fees under 29 U.S.C. § 1132(g)(1). For the following reasons, we AFFIRM the district court in both r e s p e c ts . S c h u lly has been suffering from degenerative back disease and mental d i s o r d e r s for over ten years. These problems interfere with his ability to

fu n c tio n as an attorney and, in 2003, he applied for disability benefits through h is firm's long-term disability plan. His initial claim was granted with respect t o his mental disability, but denied with respect to his physical disability. For t w o years--the maximum time available under his policy--Schully received m e n ta l disability benefits. After these benefits terminated he renewed an

e a rlie r claim for physical disability benefits. That claim was denied and that d e n ia l was maintained through a lengthy administrative appeal process. I n its final administrative review, the Hartford relied on the opinions of t h r e e independent experts, each of whom concluded that Schully had not s u p p o rt e d his physical limitations and accounts of pain with objective medical e v id e n c e , as required under the policy. On the basis of these opinions, the H a r t fo r d rejected Schully's treating physicians' conclusions that Schully was d is a b le d , as well as the results of a Functional Capacity Evaluation that c o n c lu d e d Schully was not fit for sedentary work. In making its determination, t h e Hartford also noted that Schully remained listed as an attorney on his firm w e b s it e , indicating that he was capable of performing the duties of an attorney. F o l lo w in g this final denial, Schully brought the instant action in federal court. A ft e r reviewing the administrative record, the district court, in an e x t e n s i v e and thoughtful opinion, concluded that the Hartford abused its d is c r e t io n in denying Schully physical disability benefits. In so concluding, the d is tr ic t court noted that Schully's alleged functional limitations and subjective a c c o u n t s of pain had been repeatedly corroborated by objective medical evidence. T h e court found this evidence "overwhelming," and reasoned that both the 2

Case: 09-30668

Document: 00511134205

Page: 3

Date Filed: 06/07/2010

No. 09-30668 H a rt fo r d and its independent physicians concluded otherwise only by crediting a rb it r a ry or inconclusive evidence. The district court also observed that the H a r t fo r d was operating under a conflict of interest that could have had some e ffe c t on its decision, and that Schully had qualified for disability benefits from t h e Social Security Administration, a point that the Hartford had failed to a d d r es s. Because the Hartford "deliberately ignored overwhelming objective

m e d ic a l evidence" supporting Schully's claims, the district court also saw fit to a w a r d Schully attorney's fees. O n appeal, the Hartford has challenged both the conclusion that the H a r t fo r d abused its discretion and the award of attorney's fees. A. W e review the district court's conclusion that the Hartford abused its d is c r e t io n de novo, applying the same standard as the district court. Crowell v. S h e ll Oil Co., 541 F.3d 295, 312 (5th Cir. 2008). After reviewing the record and th e district court's lengthy but careful and cogent opinion, we find no reversible e r r o r in the district court's holdings and its conclusions that reversed the H a r t fo r d 's denial of benefits to Schully. The district court correctly reasoned t h a t it was an abuse of discretion for the Hartford to base its denial of benefits o n the conclusion that Schully's claim was not supported by objective medical e v id e n c e . To be sure, there were lacunas in the Hartford's experts' reports c o n c e r n i n g relevant matters to which the plaintiffs' experts opined, which were n o t explained by the Hartford when denying the plaintiff's claims, as detailed in t h e district court's opinion. The Hartford also failed to consider Schully's

lo n g s t a n d i n g subjective complaints of pain, which were repeatedly corroborated b y the physicians most familiar with his condition and which were consistent w it h the medical evidence. As we have often explained, there is no treating p h y s ic ia n preference in the context of ERISA, but neither may an administrator 3

Case: 09-30668

Document: 00511134205

Page: 4

Date Filed: 06/07/2010

No. 09-30668 a rb itra rily refuse to credit reliable evidence. See Black & Decker Disability Plan v . Nord, 538 U.S. 822, 834 (2003). It surely should not effectively ignore it. Nor m a y an administrator rely on an expert opinion without considering its basis or w h e t h e r , as was the case here, it is in plain conflict with the medical records. G o th a r d v. Metro. Life Ins. Co., 491 F.3d 246, 250 (5th Cir. 2007). T h e remainder of the Hartford's challenges to the district court's c o n c lu s io n are likewise unavailing. To the extent that the district court may h a v e improperly relied on the determination by the Social Security A d m in is t r a t io n 's ALJ that the plaintiff qualified for disability benefits on the b a s is of his mental disability, that error was harmless in the light of the e x te n s iv e medical evidence demonstrating a physical disability within the m e a n in g of the policy. Moreover, we believe the district court properly took note o f the Hartford's conflict of interest and used it as a factor in its analysis in a m a n n e r consistent with Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105 (2 0 0 8 ). But even if the district court did err by relying on the conflict to apply a less deferential standard of review, that error was harmless. B. W e review the district court's award of attorney's fees for abuse of d is c r e tio n . See Donovan v. Cunningham, 716 F.2d 1455, 1475 (5th Cir. 1983). A ft e r reviewing the district court's opinion, we conclude that the court did not a b u s e its discretion in awarding attorney's fees. According to the district court, t h e Hartford "deliberately ignored" Schully's medical evidence in order to s u p p o r t its "preferential and predetermined conclusions." There is significant e v id e n c e that supports this finding and such a finding is not clearly erroneous. I n such circumstances, a district court does not abuse its discretion by awarding fee s under 29 U.S.C. § 1132(g)(1). F o r the foregoing reasons, the district court's judgment is AFFIRMED.

4