Murphy v. Unum Group

Filing 20

ORDER denying 12 Motion for Summary Judgment; granting 14 Motion for Summary Judgment. Signed by Judge Donald W. Molloy on 6/20/2012. (dle)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA,
MISSOULA DIVISION

SHEILA M. MURPHY,
Plaintiff,
vs.
UNUM GROUP,
Defendant.
______________________________

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Cause No. CV-11-104-M-DWM

ORDER

The parties to this Employee Retirement Income Security Act (ERISA)
action have filed cross-motions for summary judgment. Plaintiff Sheila M.
Murphy challenges the calculation and termination of her claim for long-term
disability benefits by Unum Life Insurance Company of America (“Unum”).
Unum counters that its interpretation of Plaintiff’s policy was reasonable based on
the information it had before it and that Plaintiff failed to prove her entitlement to

benefits. For the reasons discussed below, summary judgment is granted in favor
of Unum.
I. STATEMENT OF FACTS
Sheila Murphy (“Plaintiff”) is the General Manager of Sheila Callahan and
Friends, Inc., d/b/a KMSO Radio. Her husband, Max Murphy, (“Mr. Murphy”) is
the Chief Financial Officer, and they co-own the business. In 2001, KMSO Radio
purchased a long-term disability insurance policy, Policy No. 557224 (the
“Policy” or “Plan”), through Unum. (Stipulations of Fact and Law, doc. 11 at 2.)
Plaintiff was a participant in the Plan, and paid premiums based on the
representation that she earned $4500 a month.
The Plan delegates to Unum discretionary authority to make benefit
determinations, including “determining eligibility for benefits and the amount of
any benefits, resolving factual disputes, and interpreting and enforcing the
provisions of the Plan.” (AR 118.) It defines disability as follows:
You are disabled when Unum determines that:
you are limited from performing the material and substantial
duties of your regular occupation due to your sickness or
injury, and
you have a 20% or more loss in your indexed monthly earnings
due to the same sickness or injury.
(AR 97). The Plan requires a claimant to provide proof of both the medical and
financial components of her claim, including “the appropriate documentation of
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[her] monthly earnings,” proof of disability earnings, and proof of “the extent of
[her] disability, including restrictions and limitations preventing [her] from
performing [her] regular occupation.” (AR 80, 99.) It warns that failure to
provide “the appropriate information” may result in Unum denying the claim or
stopping payments on the claim. (AR 80.)
On May 14, 2009, Plaintiff fractured her ankle when she missed a step while
descending stairs at her home. (AR 124–25.) She underwent surgery to repair the
fracture on May 22, 2009, and on July 22, 2009, filed a claim for benefits under
the Plan. (Doc. 11 at 2.)
Several problems developed during Unum’s evaluation of the claim that
delayed payment and ultimately resulted in the termination of payments. Unum
was not satisfied with the documentation Plaintiff provided to substantiate her
monthly earnings prior to being injured, but Plaintiff refused to provide the
information Unum requested. Unum also determined that Plaintiff failed to prove
that she had “a 20% or more loss . . . in indexed monthly earnings due to the same
sickness or injury.” (AR 97.) Despite repeated requests, she did not provide any
documentation of her disability earnings. (See AR 599, 607, 754.) Additionally,
Unum found Plaintiff’s medical information did not support her claim that she

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remained unable to perform the “material and substantial duties of [her] regular
occupation.” (AR 97, 625, 636.)
In February 2010, Unum released benefits through January 12, 2010, noting
that a recalculation would be required if Plaintiff returned to work prior to that
date. (AR 607.) It declined to make further payments until it received proof of
Plaintiff’s earnings and ongoing disability, and warned that her claim would be
closed if the requested documentation was not received. (Id.) Plaintiff filed
additional medical proof, but no further proof of her monthly or disability
earnings. Unum thus closed the claim on May 13, 2010. (AR 771–72.) Unum
affirmed its decision on appeal after considering additional medical records. (AR
1114–18).
II. ANALYSIS
Summary judgment is proper if “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). A party may not rely on mere assertions or denials, but must, by
“citing to particular parts of materials in the record,” establish that there is or is
not a genuine issue for trial. Fed. R. Civ. P. 56(c).
An ERISA plan participant may bring an action in federal district court “to
recover benefits due to him under the terms of his plan, to enforce his rights under
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the terms of the plan, or to clarify his rights to future benefits under the terms of
the plan.” 29 U.S.C. § 1132(a)(1)(B). A “denial of benefits challenged under §
1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan
gives the administrator or fiduciary discretionary authority to determine eligibility
for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115 (1989). The parties here agree that the Plan grants
Unum this discretion (Stipulations of Fact and Law, doc. 11 at 1; AR 118), and
they do not argue that a heightened standard of review is required under
Metropolitan Life Insurance Co. v. Glenn, 544 U.S. 105 (2008) or Harlick v. Blue
Shield of California, ___ F.3d ___, 2012 WL 1970881, *4–5 (9th Cir. 2012).
Though Unum apparently makes coverage decisions and pays benefits, there is no
evidence that it gave inconsistent reasons for its decision, failed to provide a full
review of any material portions of the claim, or failed to follow proper procedures
in denying the claim. Harlick, 2012 WL 1970881, *5 (citations omitted). Nor is
there evidence of a “history of biased claim administration” or a lack of a “neutral,
independent review process.” Id. (citations omitted). Thus, a deferential standard
of review is appropriate. Id.; Conkright v. Frommert, ___ U.S. ___, 130 S. Ct.
1640, 1646 (2010).

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“A plan administrator abuses its discretion if it renders a decision without
any explanation, construes provisions of the plan in a way that conflicts with the
plain language of the plan, or fails to develop facts necessary to its determination.”
Anderson v. Suburban Teamsters of N. Ill. Pension Fund Bd. of Trustees, 588 F.3d
641, 649 (9th Cir. 2009) (citing Schikore v. BankAmerica Supp. Ret. Plan, 269
F.3d 956, 960 (9th Cir. 2001)). A decision is not arbitrary or capricious if “it is
based upon a reasonable interpretation of the plan’s terms and if it was made in
good faith.” Sznewajs v. U.S. Bankcorp Am. and Restated Supp. Benefits Plan,
572 F.3d 727, 736 (9th Cir. 2009) (quoting McDaniel v. Chevron Corp., 203 F.3d
1099, 1113 (9th Cir. 2000)). The Court bases its review of the insurer’s decision
on the “administrative record,” the evidence that was before the insurer when it
denied the claim. See Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 632
n. 4 (9th Cir. 2009) (citation omitted).
A. Benefits Calculation and Proof of Plaintiff’s Monthly Earnings
Unum’s calculation of Plaintiff’s benefits entitlement complied with the
Plan and was reasonable based on the information in the record. Under the Plan1,
a claimant’s pre-disability “monthly earnings” are used to determine whether she

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The terms of the Plan govern Plaintiff’s benefit entitlement. 29 U.S.C. § 1132(a)(1)(B).
Thus, it is irrelevant how Unum calculated Plaintiff’s premiums. However, according to Unum,
Plaintiff may seek reimbursement if the premium was overpaid based on inaccurate income
representations. (Doc. 19 at 7–8.)
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is disabled (AR 99) and the payment amount to which she is entitled (AR 97–98).
In relevant part, the Plan provides:
[For owners,] “[m]onthly earnings” means your average monthly
income from your Employer just prior to your date of disability and is
computed based on the sum of your Schedule K-1 and W-2 income
averaged over...the 3 most recent tax years (36 months).
....
Schedule K-1 income is derived from the line that refers to “ordinary
income (loss) from trade or business activities” received from your
Employer.
W-2 income is derived from the income box on your W-2 form that
reflects “wages, tips and other compensation” received from your
Employer. It is your total income before taxes. It is prior to any deductions made for
pre-tax contributions to a qualified deferred compensation plan.
(AR 97.) The Plan obligates the claimant to provide Unum “appropriate
information” to substantiate these earnings. (AR 80.)
Plaintiff refused to provide verifiable income information, despite repeated
requests by Unum for copies of Plaintiff’s actual personal and business tax filings.
(E.g. AR 130, 332, 903–04, 943–44.) Instead, Plaintiff provided two conflicting
sets of Schedule K-1 forms (AR 271–76, 542, 546, 549), neither of which
appeared to be the forms that had been filed with the IRS (AR 320, 335). Using
Schedule K-1 forms that Unum received from the Montana Insurance
Commissioner and Plaintiff’s W-2 forms, Unum applied the monthly earnings
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calculation described in the Plan. (AR 553.) It arrived at a monthly earnings
average of $1,540.71 and a monthly benefit of $924.43. (AR 1114.)
Plaintiff insists that the “amended” Schedule K-1 forms that Mr. Murphy
sent to Unum in September 2009 should have been used instead. Mr. Murphy
explained that he had not separated KMSO Radio’s Section 179 deductions from
the ordinary business income on the other Schedule K-1 forms. (AR 573,
855–57.) Thus, the Schedule K-1 income amounts used by Unum reflect Section
179 deductions for 2006 and 2008 (doc. 13 at 8).
Unum does not dispute Plaintiff’s claim that Schedule K-1 income should
reflect ordinary business income prior to Section 179 depreciation. (AR 1130.)
However, Plaintiff refused to provide any documentation to substantiate the
claimed Section 179 deductions. (AR 1130–31, 1139.) Accordingly, Unum
upheld its calculation as the most reasonable based on the evidence in the record.
The Plan obligates the claimant to show “the appropriate documentation of
[her] monthly earnings” and notes that she may be “required . . . to provide nonmedical information as part of [her] proof of claim.” (AR 80.) The Plan does not
define “appropriate documentation” but grants Unum the discretionary authority to
construe the Plan’s terms. (AR 118.) It was reasonable for Unum to demand
objective and verifiable earnings information. It did so repeatedly, but no
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documentation substantiating Plaintiff’s arguments was forthcoming. Only Mr.
Murphy’s assertions support using the “amended” K-1 forms over the K-1 forms
that Mr. Murphy provided to the Commissioner. It was not arbitrary or capricious
to require additional proof, particularly given the discrepancies between Mr.
Murphy’s original estimate of Plaintiff’s monthly earnings (AR 130), his
subsequent estimate based on the “amended” K-1 forms (AR 269–70), and the
calculation based on the K-1 forms provided to the Commissioner (AR 1114).
Accordingly, the record shows that Unum did not abuse its discretion in
interpreting the Plan, resolving the factual dispute, or calculating Plaintiff’s
“monthly earnings” based on the information it had before it.
B. Proof of continuing disability
Unum did not abuse its discretion in terminating Plaintiff’s benefits.
Plaintiff failed to provide any proof of her disability earnings, making it
impossible for Unum to determine if she remained disabled or the amount she was
entitled to receive. Additionally, Unum reasonably defined the material and
substantial components of her occupation as it is generally performed and
determined that the medical evidence was insufficient to support a finding of
continuing disability.
1. Disability earnings
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Plaintiff failed to provide evidence to justify further payments under the
Plan. In order to calculate the benefit to which she continued to be entitled, Unum
needed to know how much she was earning after she returned to work. The Plan
defines “disability earnings” as “the earnings which you receive while you are
disabled and working, plus the earnings you could receive if you were working to
maximum capacity.” (AR 111.) The Plan further provides:
During the first 24 months of disability payments, if your monthly
disability earnings exceed 80% of your indexed monthly earnings,
Unum will stop sending you payments and your claims will end.
....
Unum may require you to send proof of your monthly disability earnings
at least quarterly. We will adjust your payment based on your quarterly
disability earnings.
As part of your proof of disability earnings, we can require that you send
us appropriate financial records which we believe are necessary to
substantiate your income.
(AR 99.)
Unum repeatedly requested this information. (AR 685, 878, 903, 943–44,
1038). But Plaintiff failed to provide any payroll information or her 2009 or 2010
tax information. Accordingly, her claim was closed, and that decision was
affirmed on appeal. (AR 1131–32.)

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Plaintiff claims that continuing complications from her injury forced her to
bring a paid employee to public events to help set up or carry equipment and to
pay an employee to cover times that she otherwise would have performed on air.
(Doc. 18 at 7, AR 876–83.) This may have cost KMSO Radio additional money,
possibly reducing Plaintiff’s own earnings as the 51% shareholder. However,
there is no documentation in the record to substantiate that speculation or to show
that Plaintiff’s disability earnings did not exceed 80% of her indexed monthly
earnings. Accordingly, Unum’s denial of her claim for continuing benefits was
reasonable based solely on her refusal to provide proof of her disability earnings.
2. Regular occupation
Unum reasonably determined Plaintiff has the capacity to perform her job as
it “is normally performed in the national economy, instead of how the work tasks
are performed by a specific employer or at a specific location.” (AR 114.) The
Department of Labor’s Dictionary of Occupational Titles defines the varying
levels of exertion required by jobs as they are generally performed in the national
economy. Thus, it was reasonable for Unum to turn to the Dictionary of Titles to
determine how a position is “normally performed in the national economy.”
The identification of Plaintiff’s occupation was also reasonable. Both of the
vocational consultants who reviewed Plaintiff’s file classified her job duties as
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being most consistent with those performed by a Station Manager. (AR 514,
1115–15.) That occupation largely fits Plaintiff’s position as she described it
originally. As “General Manager” of a radio station (AR 158, 296), Plaintiff
represented she managed staff, planned and organized events, approved sales
contracts, managed service and sales accounts as well as media partnerships, and
visited clients’ businesses. (AR 125, 296.) She also asserted that she had made at
least 120 public appearances the previous year and that she “sometimes would do
on-air work” and provide “voice talent.” (AR 158, 296.) However, she did not
represent that on-air work was a key part of her position. “Voice talent” was listed
among several other duties under the heading “manage local clients and
partnerships”; in total, these duties consumed 10 hours per week. (AR 296.) She
also reported to her ENT that she did “intermittent, remote reports for Mountain
Broadcasting.” (AR 803.) It was only later that she began to describe herself as
an “on-air personality.”
A Station Manager directs and coordinates the activities of a radio or
television station. (AR 512.) Primary duties include supervising personnel,
working with marketing personnel or directly promoting sales, discussing station
policy and procedures, and involvement with customer contact, general marketing
and sales promotion, and community service. (AR 512, 1165.) A Station
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Manager’s job requires “a frequent level of talking and hearing—(from 1/3rd to
2/3rds of the work day),” typically during interactions with staff and in the
“context of sales calls, community service interactions, and ongoing customer
relations calls and/or visits.” (AR 1116.) However, the second vocational analyst
concluded that Plaintiff’s on-air and public speaking duties are not material and
substantial components of the position as it is generally performed:
Based on the size and scope of the radio, television, or cable station, the
Station Manager position may or may not have an on-air presence or
participate in the actual production of on-air materials. As such, this
component of a claimant’s work would not be considered a material and
substantial component of the overall occupation. Nor would direct
event personality broadcasts or event “emcee” appearances be
considered a material and substantial duty of the overall Station
Manager occupation.
While duly noting this claimant’s Job Description references to on-air
production work and to external event appearance/emcee
responsibilities, we would consider these activities to be specific
requirements of the claimant’s position with this policyholder and not
necessarily representative of the manner in which the overall Station
Manager occupation is performed.
(Id.) In accordance with the Policy, the analyst relied on how the position is
generally performed, “instead of how the work tasks are performed by a specific
employer or at a specific location.”
Unum did not abuse its discretion in assessing her limitations based on the
Station Manager description in the Dictionary of Titles. Unum reasonably
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identified the occupation that most closely equates with Plaintiff’s position as she
described it. Accordingly, Plaintiff’s on-air work and public appearances are not
“material and substantial” components of her occupation as it is generally
performed.
3.

Medical evidence

The medical evidence also supports Unum’s determination that Plaintiff did
not have a continuing disability.
It was reasonable to conclude that the medical records concerning Plaintiff’s
ankle injury and neuroma do not support her claim of continuing disability. (AR
1109.) Unum’s Designated Medical Officer, Dr. Matheny, considered Plaintiff’s
medical history, including references to a need for a second surgery. (AR
1088–90.) Plaintiff fractured her ankle in May 2009. (AR 1088.) It apparently
healed well, if slowly. (AR 1090.) She saw her attending orthopedic surgeon, Dr.
Heid, on October 15, 2009, and did not return for another visit until April 2010.
(Id.) A neuroma had developed between two of her toes. (AR 1089–90.) Though
Dr. Heid performed a steroid injection, she noted that Plaintiff was able to walk
two miles, had been working out, had a normal gait, and that the ankle had healed
well and was well-aligned. (AR 1067.) Plaintiff saw Dr. Heid again in May 2010.
Dr. Heid mentioned that Plaintiff wanted to “consider excision of [the] neuroma in
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the fall.” (AR 932.) However, no follow-up medical reports were filed. (AR
1090.) In November 2010, Plaintiff again informed Unum that she planned to
have the neuroma excised (AR 882), but no evidence suggests she ever scheduled
the surgery or that she required ongoing use of pain medication. (AR 1090.)
Based on the evidence in the record, Dr. Mathena and Unum reasonably concluded
that “the clinical findings, functional information, and low ongoing treatment
intensity related to the right ankle fracture, mild post traumatic ankle arthritis, and
right foot neuroma were not consistent with impairment that would preclude
work” as a Station Manager. (Id.)
Plaintiff also claims she remains disabled because her ability to use her
voice “to perform on-air job duties” and act “as the master-of-ceremony for many
local community functions” is limited. (Doc. 13 at 11–12.) Plaintiff does not
claim that she is unable to engage in the occupation’s “frequent level of talking
and hearing—(from 1/3rd to 2/3rds of the work day)” during interactions with
staff and in the “context of sales calls, community service interactions, and
ongoing customer relations calls and/or visits.” (AR 1116.) As discussed above,
Unum reasonably determined that on-air performances and community
appearances are not material and substantial components of Plaintiff’s position as

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it is generally performed in the national economy. Accordingly, under the Policy,
limitations in performing these duties do not constitute continuing disability.
Though Plaintiff does not challenge Unum’s implicit finding that she is able
to engage in a frequent level of talking, a brief review of the record suggests that
the finding was reasonable. The record does not reflect any vocal problems until
January 2010, when Plaintiff returned to work. At that time, she reported to her
family practice practitioner that she had suffered laryngitis and was losing her
voice about a minute into on-air announcements. (AR 694.) In April 2010, she
returned to the practitioner, complaining of a persistent cough. (AR 702.)
Bronchitis and asthma were identified as the causes. (AR 702–03.) Defendant
visited an ENT in April 2010 and May 2010. The ENT opined that her
“intermittent hoarseness [was] related to professional voice use.” (AR 801.)
Plaintiff, however, speculated that a difficult intubation during her May 2009
ankle surgery was the cause. (AR 803.) The ENT performed a videostroboscopy,
but did not notice any scarring, lesions, nodules, or polyps. (AR 802–03.) Rather,
he diagnosed vocal strain and noted that in their conversations, Plaintiff had a
“normal, fluent voice without significant friction, voice breaks, or breathiness.”
(AR 801, 803.) Similarly, the Unum representative who conducted a personal

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field visit in November 2010 opined that her voice “sounded unremarkable.” (AR
879.)
The ENT referred Plaintiff to a speech therapist and deferred to the speech
therapist’s opinions on her limitations. (AR 801, 1099.) Plaintiff saw the speech
therapist regularly between May 26, 2010, and July 20, 2010, then does not appear
to have pursued further care. (AR 1134.) The speech therapist prescribed
breathing and relaxation exercises. (AR 801, 829–36.) In March 2011, she was
contacted by Unum for an opinion on Plaintiff’s vocal limitations. Though she
had not seen Plaintiff for over seven months, she reported that Plaintiff has
“limitations in her ability to sustain vocal projection.” (AR 1109.) She noted that
Plaintiff was unable to complete more than two 20-second radio spots, but did not
opine that Plaintiff was unable to engage in frequent casual conversation. (Id.)
Though Plaintiff experienced some hoarseness and voice loss between
January 2010 and July 2010, the record supports Unum’s conclusion that she was
not substantially limited by these problems. Her voice at each appointment
sounded unremarkable and the videostroboscopy revealed no significant physical
impairments. Plaintiff’s complaints were typically limited to on-air or public
speaking experiences, which are not material or substantial components of the
Station Manager position. Accordingly, Unum did not abuse its discretion in
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terminating benefits despite her voice complications and her speech therapist’s
opinion that she is limited in her ability to project her voice as is required on-air.
IV. CONCLUSION
Summary judgment is thus granted in favor of Unum. The Plan provided
Unum discretionary authority to interpret the terms of the Plan, resolve factual
disputes, and determine a claimant’s eligibility for and the amount of benefits.
Unum acted reasonably and in accordance with the Plan in requesting information
to substantiate Plaintiff’s claimed monthly earnings, disability earnings, and
continuing limitations. Plaintiff, however, failed to provide verifiable evidence of
her monthly earnings or disability earnings, and provided inadequate medical
evidence to support her claimed limitations. This constituted a sufficient,
independent basis for terminating benefits and closing Plaintiff’s claim.
Unum’s benefits calculation also comported with the Plan, though the
parties dispute which piece of conflicting evidence should have been used in the
calculation. It was Plaintiff’s obligation to provide the information requested by
Unum that would have clarified this factual dispute, but Plaintiff refused. Unum
reasonably used its discretion in resolving this dispute. It also followed the terms
of the Plan in analyzing Plaintiff’s limitations based on the definition of the
Station Manager occupation as described in the Dictionary of Titles. It reasonably
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construed the evidence in the record to determine that Plaintiff was no longer
limited in performing the material and substantial components of the position as it
is generally performed in the national economy. The rationale and factual basis
for Unum’s conclusion is adequately described in the Appeals Decision, and the
record supports the conclusions therein.
Accordingly, IT IS HEREBY ORDERED that Plaintiff’s Motion for
Summary Judgment (doc. 12) is DENIED and Unum’s Cross-Motion for Summary
judgment (doc. 14) is GRANTED.
The Clerk is directed to enter judgment in favor of Defendant and against
Plaintiff in accordance with this Order.
The Clerk is directed to notify the parties of the entry of Final Judgment in
this case.
Dated this 20th day of June 2012.

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