Freeland v. UNUM Life Insurance Company of America
Filing
38
OPINION AND ORDER denying 33 Motion to Strike; granting in part and denying in part 11 Motion for Summary Judgment; and granting in part and denying in part 21 Motion for Summary Judgment. Signed by District Judge William M. Conley on 8/16/2013. (lak)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
BRUCE FREELAND,
Plaintiff,
OPINION AND ORDER
v.
11-cv-053-wmc
UNUM LIFE INSURANCE
COMPANY OF AMERICA,
Defendant.
In this action, plaintiff Bruce Freeland alleges that defendant Unum Life Insurance
Company of America terminated his long-term disability benefits in violation of ERISA
(29 U.S.C. §§ 1001, et seq.). Both parties have moved for summary judgment.1 Based on
the record before it, this court agrees that Unum acted arbitrarily and capriciously in
failing to consider evidence that (1) Freeland‟s job at Luther Hospital was a major cause
of his disability and (2) Freeland‟s return to work would likely trigger a relapse.
Accordingly, the court will grant summary judgment to Freeland on his claim for
wrongful benefit termination, but will order reinstatement of benefits for only one year
because Unum reasonably determined that Freeland‟s disability was due to a
psychological illness. The court will also grant Freeland‟s motion for attorney‟s fees, but
1
Jurisdiction over plaintiff‟s claim is proper in this court under 28 U.S.C. § 1331 and 29
U.S.C. § 1132(e)(1). Venue is proper in the Western District of Wisconsin pursuant to
28 U.S.C. § 1391 and 29 U.S.C. § 1132(e)(2).
deny his motion to bar Unum from applying set-offs for SSDI and retirement payments
against his benefit award.2
UNDISPUTED FACTS
From the parties‟ complaint, answer, proposed findings of facts and responses, the
court finds the following facts undisputed for the purpose of deciding the present
motions.
A.
The Parties
Plaintiff Bruce Freeland, age 65, was employed as Director of the Cardiac Clinic at
Luther Hospital in Eau Claire, Wisconsin for over 30 years, until September 30, 2008.
At the time that he stopped working, Freeland suffered from PTSD, depression, anxiety,
coronary atherosclerosis, and several other orthopedic and cardiovascular conditions.
Incident to his employment, Mr. Freeland received coverage under Luther Hospital‟s
group, long-term disability insurance plan (“the Plan”), which is underwritten, insured
and administered by Unum Life Insurance Company of America (“Unum”).
After
leaving work, Freeland received short term disability benefits for two months, making
him eligible for long term disability payments from the Plan beginning December 30,
2008.
2
The court will also deny defendant‟s motion to strike plaintiff‟s Reply Memorandum in
Support of Cross-Motion for Summary Judgment. (Dkt. #33.) The court entered a
scheduling order, which allowed for the brief in reply to be filed by July 1, 2011. (Dkt.
#21.) When the court subsequently indicated that no further scheduling was needed (see
dkt. #25), it did not revoke that briefing schedule. Accordingly, plaintiff‟s brief in reply
(dkt. #32), filed on June 20, was timely.
2
B.
The Plan
The Plan is subject to regulation under the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), 29 U.S.C. §§ 1001 et seq. Among other duties,
Unum serves as the Plan‟s claim fiduciary with “discretionary authority to make benefit
determinations under the Plan.” Under the terms of Freeland‟s policy,
Benefit determinations include determining eligibility for
benefits and the amount of any benefits, resolving factual
disputes, and interpreting and enforcing the provisions of the
Plan. All benefit determinations must be reasonable and
based on the terms of the Plan and the facts and
circumstances of each claim.
(Affidavit of Denise J. Laverriere (“Laverrierer Aff.”), Ex. 1 (dkt. #14) at UA-CL-0001450001813.)
To be found disabled under the Plan, UNUM must find 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.
****
After 24 months of payments, you are disabled when
Unum determines that due to the same sickness or injury,
you are unable to perform the duties of any gainful
occupation for which you are reasonably fitted by education,
training or experience.
The Plan also defines the following, relevant terms:
LIMITED means what you cannot or are unable to do.
3
The citation shorthand “UA-CL ######” refers to documents in the administrative
record of plaintiff‟s earlier appeal, as marked with Bates stamped page numbers.
3
MATERIAL AND SUBSTANTIAL DUTIES means duties
that:
are normally required for the performance of your
regular occupation; and
cannot be reasonably omitted or modified.
REGULAR OCCUPATION means the occupation you are
routinely performing when your disability begins.
****
Unum will look at your occupation as it is normally
performed in the national economy, instead of how the work
tasks are performed for a specific employer or at a specific
location.
****
GAINFUL OCCUPATION means an occupation that is
or can be expected to provide you with an income within 12
months of your return to work, that exceeds 80% of your
indexed monthly earnings, if you are working or 60% of your
indexed monthly earnings, if you are not working.
The Plan also contains a “lifetime cumulative maximum benefit period for all
disabilities due to mental illness” of 24 months, “even if the disabilities are not
continuous; and/or are not related.” “MENTAL ILLNESS” is defined by the Plan as
a psychiatric or psychological condition classified in the
Diagnostic and Statistical Manual of Mental Health
Disorders (DSM), published by the American Psychiatric
Association, most current as of the start of a disability. Such
disorders include, but are not limited to, psychotic, emotional
or behavioral disorders, or disorders relatable to stress.
In relevant part, the Plan also directs Unum to “subtract from your gross disability
payment the following deductible sources of income:”
4
The amount that you, your spouse and your children receive
or are entitled to receive as disability payments because of
your disability under:
The United States Social Security Act.
****
The amount that you
receive as disability payments under your Employer‟s
retirement plan
voluntarily elect to receive as retirement payments
under your Employer‟s retirement plan
receive as retirement payments when you reach the
later of age 62 or normal retirement age, as defined in
your Employer‟s retirement plan.
(Id. at UA-CL 000145 -181.)
Finally, to file a proof of claim under the Plan, a claimant must show:
the extent of your disability, including restrictions and
limitations preventing you from performing your
regular occupation; and
the name and address of any hospital or institution
where you received treatment, including all attending
physicians.
C.
Unum’s Duties Pursuant to the Regulatory Settlement Agreement of
2004
On November 18, 2004, Unum entered into a Regulatory Settlement Agreement
(“RSA”) with various state departments of insurance, including Wisconsin‟s, as a result of
a multi-state lawsuit accusing Unum of the systemic handling of claims in bad faith. (Pl‟s
5
Prop. Finding of Fact, Ex. A (dkt #23) ¶¶ 17-20.)4 In the RSA, Unum bound itself to
“consider and afford appropriate weight to all diagnoses and impairments, and their
combined effect on the whole person, when evaluating medical data in [any] claim file.”
Id. UNUM also acknowledged that when multiple medical professionals are involved in
reviewing a claim, all are responsible for coordinating their opinions and ensuring that
each understands how the various opinions fit together for a “coherent view of the
claimant‟s medical condition, capacity, and restrictions/limitations.” Id.
The RSA also requires Unum to give
significant weight to an award of Social Security disability
benefits as supporting a finding of disability unless the
Companies have compelling evidence that the decision of the
Social Security Administration was (i) founded on an error of
law or an abuse of discretion; or (ii) inconsistent with the
applicable medical evidence; or (iii) inconsistent with the
definition of disability contained in the applicable insurance
policy.
Id.
4
Defendant asserts that the court should disregard the RSA because it is not part of the
administrative record. The court disagrees. As a matter of fact, the RSA is mentioned in
the administrative record. In its appeal letter, plaintiff pointed out defendant‟s
obligations pursuant to the RSA. (UA-CL-000944-000946.) More importantly, the
purpose of this court‟s review is to determine whether defendant correctly weighed the
facts contained within the administrative record in light of (external) law, of which the
RSA is a part. In a separate argument, plaintiff claims that the Unum‟s own Benefits
Center Claims Manual imposes duties similar to those in the RSA, but does not explain
where to find this Manual.
6
D.
Freeland’s Long Term Disability (LTD) Benefits Claim
1.
Initial Denial
On November 15, 2008, Freeland made a claim for LTD benefits, indicating that
he was unable to perform his job duties due to PTSD and coronary disease “that ha[d]
gotten worse due to the stress of [his] job.” Freeland submitted an attending physician
statement from his psychiatrist, Paul Erickson, M.D., which indicated a primary
diagnosis of PTSD and restricted Freeland from work for six months.
Freeland also
submitted extensive treatment notes and an attending physician statement from his
cardiologist, John Rozich, M.D.
Rozich noted that Freeland had an ongoing cardiac
condition since 2000, including several coronary angiography procedures and stenting
related to angina and coronary artery disease, and explained that Freeland was morbidly
obese, had severe sleep apnea, dyslipidemia hypertension, and occasional left chest pain.
Rozich also noted that despite these diagnoses, Freeland was still “[l]ow risk . . . for
ischemic coronary artery disease.”
Rozich did not impose any work restrictions or
limitations based on Freeland‟s overall cardiovascular condition.
Unum evaluated Freeland‟s claim for benefits by requesting that a psychiatrist, Dr.
Nicholas Kletti, review Freeland‟s psychiatric records. Kletti found that Freeland‟s file
suggested an ongoing history of PTSD, anxiety, frustration and depression. However,
after analyzing the evidence, Dr. Kletti noted that:
There is little documentation of significant depression, PTSD
or other anxiety symptom. There is no documentation of any
significant non-occupational impairment. There has been no
change to claimant‟s medication regimen since January 23,
2008.”
7
(UA-CL-000734.)
Dr. Kletti concluded that although Freeland self-reported that he
“could barely function,” the file documentation did not show any actual work
performance impairment.
As a follow-up to his review of Freeland‟s psychiatric file, Dr. Kletti contacted
Freeland‟s psychiatrist, Dr. Erickson, regarding the nature and extent of Freeland‟s
impairments, restrictions and limitations, and ability to work. In a response dated April
6, 2009, Dr. Erickson explained that he had been treating Freeland for PTSD and
depression since October 2008, and that Freeland reported his continued “struggle with
depression and anxiety symptoms,” which he indicated “functionally impaired his ability
to work.” (UA-CL-000762.) From this conversation, Kletti concluded that Dr. Erickson
“does not appear to certify psychiatric impairment” and “does not provide [restrictions
and limitations].” Kletti also notes that Erickson “does not address the substantive issues
outlined in [my] letter of inquiry, particularly the concerns that claimant did not go out
of work and has not remained out of work due to psychiatric impairment.”
Dr. Kletti then referred Freeland‟s file to Unum medical consultant Keith A.
Caruso, M.D., a psychiatrist and neurologist. Dr. Caruso concurred with Dr. Kletti‟s
opinion, explaining that Freeland had not received treatment consistent with what one
would expect for a person with illness as severe as Freeland self-reported, and opining
that Freeland “made the decision to leave work prior to presenting to his providers.” Dr.
Caruso concluded that Freeland “has not provided standard, accepted medical evidence
to support a psychiatrically impairing condition that would preclude work.” (UA-CL000779.)
8
Unum sent Freeland a letter dated April 20, 2009, indicating that it was denying
his request for benefits, and echoing the reasons provided by Drs. Kletti and Caruso. In
response, Freeland submitted a letter dated May 19, 2009, which disputed many of the
assertions in Unum‟s denial and requested that additional evidence be given
consideration. Freeland also stated that he would have stayed at work if he had a choice,
but that his depression, anxiety and cardiac conditions had been affecting his ability to
perform his job.
(UA-CL-000819.)
Freeland included several additional pieces of
evidence. First, a copy of a letter Dr. Rozich sent to the Department of Veterans Affairs
(“VA”) in September 2008, indicating that Freeland could not continue in his current job
because of a combination of cardiovascular and psychological conditions.
Second, a
March 31, 2009, letter from his supervisor Dennis Pope, a Vice President at Luther
Hospital, which described his declining job performance over the past several years.
Third, a VA cardiology report dated March 3, 2009, which noted that Freeland had mild
mid-chest air hunger associated with exertional activity. Fourth, additional VA Medical
Clinic treatment notes from March and April 2009, showing Freeland suffered from
anxiety and depression that impacted his verbal memory recall.
Unum submitted the additional information to Drs. Kletti and Caruso, requesting
that they review the information and determine if it altered their prior conclusions.
Neither doctor found that the additional information altered their analysis. Kletti stated
that “cognitive testing does not find significant deficits and there is no documented need
for medication adjustment. . . . [p]sychotherapy notes continue to document work
9
around self-esteem and interpersonal relationships and are not consistent with
psychiatrically impairing symptoms or concerns.”
Tim Andenmatten, a Unum vocational rehabilitation consultant, then performed a
vocational assessment to determine the material and substantial duties of Freeland‟s
occupation as Director of the Heart Clinic. Andenmatten determined that Freeland‟s
position involves primarily administration, direction and coordination tasks; physically
the position is sedentary and requires exerting 20 pounds of force occasionally and 10
pounds frequently, with occasional standing, walking, reaching, handling, fingering and
hearing, and frequent sitting.
In June 2009, Unum medical consultant Nancy L. Heimonen, M.D., also reviewed
Freeland‟s medical records and Andenmatten‟s vocational assessment to determine if a
physical condition precluded Freeland from working as Director of the Heart Clinic. Dr.
Heimonen concluded that “from a purely physical point of view, I see no evidence of a
medical condition that would preclude full-time, primarily seated work capacity at this
time. It is my impression that this is further supported by his reported activities and
exercise tolerance.” In correspondence dated June 16, 2009, Dr. Heimonen shared her
opinion with Freeland‟s cardiologist, Dr. Rozich, who agreed with Dr. Heimonen‟s
assessment.
On August 4, 2009, Unum affirmed its initial decision to deny benefits because
Freeland‟s mental health condition and coronary disease did “not rise to the level to
preclude work capacity.”
10
2.
Successful Appeal of Benefits Denial
In June 2009, Freeland was awarded Social Security Disability Insurance
(“SSDI”), retroactive to March 2009. The SSDI determination found that Freeland had
been unable to engage in “substantial gainful activity” as of September 30, 2008. The
primary diagnosis was “anxiety related disorders” and the secondary diagnosis was
“lumbosacral DDD” [a spinal disc disorder].
On December 21, 2009, Freeland appealed Unum‟s benefits decision. Enclosed
with his appeal was additional information from (1) the Department of Veteran Affairs,
which had recently increased Freeland‟s disability rating, (2) his entire SSDI file, which
contained the medical documentation and reviews underlying the recent SSDI disability
determination, and (3) another letter from Dr. Rozich.
The VA report found that “[t]he evaluation of post traumatic stress disorder and
dysthymic disorder is increased to 50 percent disabling effective May 8, 2007,” because
of “reduced reliability in your stressful position at work due to panic attacks, increased
anxiety, and disturbances of motivation and mood.” However, the VA noted that “a
higher 70 percent evaluation is not warranted as the VA examiner opined that your
symptoms are not of such severity as to result in deficiencies in most areas, such as
work[.]” The VA found Freeland‟s coronary heart disease 20 percent disabling based on
the presence of a mild ventricular hypertrophy in his January 2008 treatment records,
and found his lumbrosacral degenerative disc disease ten percent disabling based on his
reports of pain and evidence of mild disc degeneration. Freeland‟s request for disability
11
ratings for his hip and leg were rejected. Finally, the VA rejected his claim of individual
unemployability in any “substantially gainful occupation.”
The Social Security documents contained, among other things, a psychological
analysis by Dr. B. Ahn. Dr. Ahn found evidence of “mental impairment related to PTSD
and depressive disorder with treatment.” He also found Freeland “moderately limited” in
some cognitive areas, and less than moderately limited (“not significantly limited”) in
other cognitive areas. Dr. K. Farrell provided a physical analysis, finding that Freeland‟s
lumbosacral disk problems, obesity and nerve damage prevented him from climbing
ladders, kneeling and crawling, and allowed him to only occasionally climb stairs,
balance, stoop or crouch. Farrell found that Freeland was able to occasionally lift up to
20 pounds, frequently lift up to 10 pounds, stand and/or walk for at least 2 hours in an
8-hour work day, sit approximately 6 hours in an 8-hour workday and engage in
unlimited pushing and/or pulling. The Social Security Administration awarded monthly
SSDI benefits in the amount of $2,127.00 retroactive to March 2009, based on a
“combination of . . . psychological and physical impairments [which] substantially limit
the ability to . . . complete a normal workday and workweek.” (UA-CL-001048.)
In his letter dated November 24, 2009, Dr. Rozich opined that Freeland‟s “health
conditions (both cardiovascular and psychological) were such that he could no longer
perform the essential functions of the Director position.” (UA-CL-000948.) Dr. Rozich
did not reference any new testing or examination in support of this opinion, but did
opine that “from a purely cardiac standpoint” Freeland would be able to do an average
12
sedentary job, but would not be able to handle the combination of psychological and
cardiac stress imposed by his job as Director of the Luther Heart Clinic.
In January 2010, Unum submitted the appeal file to two medical consultants. Dr.
Stuart Anfang, a forensic psychiatrist, reviewed the information to determine whether
Freeland‟s psychological illness supported restrictions and limitations and diminished
occupational functional capacity from October 1, 2008 onward. He found that it did
through “at least spring 2009” (the most recent behavioral health clinical data on file).
Dr. Alfred Parisi -- board certified in internal medicine, cardiovascular disease and
echocardiography -- reviewed the physical health data to determine whether Freeland‟s
cardiac condition impaired his functional capacity. He found no indication in the file
supporting the contention that Freeland‟s coronary disease progressed during or after
2008. Dr. Parisi also noted that Freeland‟s other physical conditions were well-controlled
and well-treated and did not interfere with his functioning, including hypertension,
hyperlipidemia, sleep apnea, obesity, prostatic hypertrophy and low back pain. Based on
these findings, Dr. Parisi found no “evidence for impairment from claimant‟s
cardiovascular disease taken in conjunction with all of his remaining physical medical
comorbidities that would preclude functional capacity for light work or a substantive
basis for restricting him from same as of 10/1/08.”
After receiving these additional opinions, Unum advised Freeland on February 12,
2010, that it was reversing the prior denial of benefits and granting benefits based on his
PTSD with associated anxiety/depressive symptoms.
Unum explained: “The medical
evidence would support impairment at least through the spring of 2009, which is the
13
most recent behavioral health clinical data on file. The decision is also consistent with
the reviews completed by the SSA and the VA.”
Unlike the SSA and VA, Unum‟s
determination of disability was based on Freeland‟s psychiatric illness only, noting that
“[i]n regard to Mr. Freeland‟s physical conditions, the medical evidence does not support
restrictions and/or limitations that would preclude him from performing a sedentary or
light occupation based on Mr. Freeland‟s cardiac condition taken in conjunction with his
other conditions[.]”
In conjunction with its February 12 award of benefits, Unum advised Freeland
that “the [24-month] policy limitation [ ] related to the limitation of benefits due to
mental illness is applicable to [your] claim.”
On May 19, 2010, Unum sent Freeland
correspondence reiterating that his disability was subject to this twenty-four month
limitation. On May 20, 2010, Freeland‟s counsel contested Unum‟s determination that
the claim was limited to twenty-four months of benefits and requested copies of all
medical documentation submitted since the appeal.
When it awarded Freeland benefits in February 2010, Unum also advised him
that, pursuant to the Plan‟s policy, it would be subtracting any retirement payments and
Social Security Disability payments from his Plan benefits.
On February 19, 2010,
Unum sent Freeland a letter with the calculated benefit amount before these deductions,
resulting in a gross monthly disability benefit of $6,029.69. On April 20, 2010, Unum
sent a letter to Luther Hospital seeking additional information regarding any
pension/retirement benefits being received by Freeland.
On May 3, 2010, Unum
received a response from Luther indicating that Freeland began receiving a defined
14
pension payment of $3,250.53 on April 1, 2009.
Based on this information, Unum
applied a retirement/pension monthly offset of $3,250.53 beginning on April 1, 2009,
along with an additional SSDI offset of $2,127.00 monthly beginning March 1, 2009.
After offsets, this meant Freeland received a net monthly disability benefit of $652.16
beginning April 1, 2009.
3.
Unum Requests Medical Documentation to Support A
Finding of Disability Beyond March 2010.
On May 19, 2010, Unum requested medical documentation to support ongoing
restrictions and limitations beyond March 2010.
On May 22, 2010, Freeland sent
Unum additional medical records for the period of April 1, 2009 through April 21, 2010,
and later sent records through June 2010. The additional records noted that Freeland
still reported feeling anxious at times, with bouts of poor sleep, and “up and down”
emotions. (See, e.g., UA-CL-001543.) However, the notes also showed a general trend of
improvement in his stress and anxiety.
(See, e.g., UA-CL-001539.)
For example, on
December 31, 2009, Freeland‟s psychiatrist, Dr. Erickson, wrote that Freeland:
notes he is off wellbutrin and restarted on venlafaxine and
doing well, in fact states, “this is the best that I‟ve felt in a
while. He rates his mood at 6/10 with 10 being good, denies
any thoughts of suicide, anxiety “much better,” more
motivated, “more ambition,” exercising more. He notes he is
planning a vacation to Florida during winter, home life is
going well.
On June 4, 2010, Unum received an Attending Physician Statement from Dr.
Erickson, which indicated that although Freeland was still “being treated for symptoms
related to PTSD and depression,” his last examination occurred on March 29, 2010, and
15
that the next scheduled examination would be September 30, 2010. Erickson described
Freeland‟s ongoing treatment program succinctly: “medication and therapy as needed.”
On June 9, 2010, a Unum claims representative contacted Freeland to inquire
about his health status. Freeland indicated that he had been seeing Dr. Erickson every 23 months, but reduced his visits to every six months, and that he had not seen Dr. Erbes,
his psychotherapist, since the previous summer. Freeland also indicated that he changed
his medication “a couple of months ago and that seems to be helping a lot.”
With
respect to his coronary disease, Freeland indicated that his chest “feels good now that he
is not working.” Freeland stated that he had been doing “some walking in the mornings,”
“trying to do a little fishing,” “mow[ing] the lawn”, and “do[ing] some chores around the
house” and that he had not traveled.
Unum provided this additional information to Drs. Kletti and Caruso for review.
Dr. Kletti concluded that:
[t]he updated file records document significant improvement
in symptoms, functional abilities and reduction of treatment
intensity which would be consistent with resolution of
psychiatric impairment as of December 31, 2009 office visit
notes with Dr. Erickson. That claimant has not returned to
work after December 31, 2009 appears to be the result of
non-clinical factors, e.g., retirement, and not because of any
ongoing global or pervasive impairment precluding ability to
work.
(UA-CL-001624). Dr. Caruso observed that,
[t]he data in the file fails to support [restrictions and
limitations] beyond 12/31/09 because of a lack of
documented impairing depressive or PTSD symptoms. Dr.
Erickson‟s 12/31/09 [office visit notes] described significant
improvement, and this was apparently sustained in his
3/29/10 [office visit notes]. Therapy has been terminated for
16
over a year, and medication management is now only every 6
months. Both [Freeland] and his psychiatrist report that he
is doing well. Mr. Freeland‟s current treatment regimen
consists of submaximally dosed antidepressant monotherapy
with venlafaxine 150 mg qd. His current level of treatment is
not consistent with that of an impairing psychiatric
condition.
(UA-CL-001735.)
4.
Discontinuation of Benefits
On June 30, 2010, Unum advised Freeland that it was discontinuing payment of
benefits beyond March 2009. Unum explained that his medical records did not establish
that his conditions rendered him unable to work after March 31, 2009. Specifically, it
stated:
Your primary diagnosis by SSDI is anxiety related disorders
and your secondary diagnosis is lumbrosacral degenerative
disc disease. Although these conditions may have been
disabling at the time of the SSDI decision, the [SSDI]
decision was completed using medical information from May
8, 2007 through April 8, 2009. We have determined that
you have not been impaired by these conditions since
December 31, 2009. (UA-CL-001724.)
On September 3, 2010, Freeland appealed Unum‟s discontinuation of benefits
and the determination that his benefits were subject to the twenty-four month limitation
for mental illness pursuant to 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1. (UA-CL001781-001789.) The appeal letter included: VA medical records from June 2009 to
the time of appeal; a March 12, 2010, cardiology report from Dr. Rozich; and a report
from Dr. Joseph Hebl, who evaluated Freeland at the request of Dr. Rozich.
The cardiology report from Dr. Rozich stated that Freeland remained
compromised in any stressful situation based on Rozich having watched Freeland
17
unsuccessfully deal with work stress, gain excessive weight, have angina and become
increasingly dyspneic with activity.
(UA-CL-001773-001774.)
Although Freeland‟s
obesity was improving and the stress related to PTSD and his work environment had
partially resolved, Rozich noted that his psychological limitation was “still a significant
subacute problem and remains very easy to resurface under the appropriate adverse
conditions.” Rozich also noted that Freeland still complained of “mid-chest air hunger”
associated with activities of daily living, and pointed out that he had lost significant
mobility in his leg.
Rozich concluded that he was very concerned that it would be
detrimental if Freeland put himself back into a stressful environment.
Dr. Hebl, an occupational medicine specialist, opined that:
The patient has numerous medical conditions which, in my
opinion, preclude him from returning to gainful employment.
These conditions include chronic degenerative arthritis of the
entire spine with chronic cervical pain, weakness and loss of
range of motion, and chronic low back pain, weakness and
loss of range of motion. In addition, the patient suffers with
morbid obesity. He also has a sleep disorder, namely sleep
apnea. The patient also has unstable angina. . . . In addition,
the patient has suffered with post-traumatic stress disorder
for about 40 years[.]
(UA-CL-001786.) Hebl noted the potential risk of exacerbation of Freeland‟s cardiac
condition as a further basis for his inability to work: “In my judgment, it would be
improper for him to return to stressful environments as the risk of cardiac complications
is simply unacceptable.” Hebl determined that Freeland would be able to sustain only 23 hours of sedentary type activity per day, would likely need to take breaks after
performing any light chores or activity, and could not return to any role that would raise
his stress level.
18
Dr. Hebl also completed an attending physician statement on August 4, 2010, in
which he listed Freeland‟s diagnoses as coronary atherosclerosis, abnormal respiratory
condition, hyperlipidemia, and hypertension. He commented that Freeland was unable
to return to gainful employment because of multiple musculoskeletal, cardiac and mental
health conditions, including chronic degenerative disc disease, chronic low back pain,
foot drop, unstable angina, and PTSD.
Finally, Dr. Hebl completed an estimated
functional abilities form, again finding Freeland limited to sedentary, non-stressful
activity for only 2-3 hours per day and “nothing more.” He opined that there would
“never” be a change in his functional ability, except that it would continue to deteriorate.
(UA-CL-001770-001771.)
Unum submitted Freeland‟s additional medical records and the reports by Drs.
Rozich and Hebl to its Senior Clinical Consultant, Brenda Nunn, R.N., for review on
appeal. Nurse Nunn reviewed the medical records in the claim file, with a particular
focus on Dr. Hebl‟s reports, and provided the following analysis:
With respect to the whole person analysis, Dr. Hebl and the
employee‟s treatment providers indicate impairing conditions
of degenerative arthritis of the cervical, thoracic and lumbar
spine, chronic PTSD with no tolerance for even low stress
activities, and unstable angina as the result of coronary artery
disease. Dr. Hebl even noted the employee‟s cardiac status
would be placed at significant risk if he engaged in even low
stress activities. He also noted co-morbid diagnoses of morbid
obesity, sleep apnea and the left foot drop.
Degenerative arthritis of the cervical, thoracic and lumbar
spine is not supported as an impairment as a whole because
there are no cervical or thoracic studies on file. The 8/4/10
examination by Dr. Hebl does document bilateral spasm in
the neck and pain with extreme ranges of motion and limited
range of motion in the lumbar spine as the employee had 40
19
degrees of forward flexion and 10 degrees of extension for the
cervical or thoracic spine . . . Chronic PTSD is controlled as
evidenced by the active life the employee is leading reflected
in his travels and reporting he feels “the best” he has felt in a
long time. In addition, going more than a year without
psychotherapy, no medication changes in more than six
months, and reducing psychiatric medication sessions to
twice a year would not indicate a level of care to support an
impairing psychiatric condition. Coronary artery disease
continues to be stable as evidenced by 7/09 nuclear stress
testing revealing no ischemia or focal wall motion
abnormality with an ejection fraction of 51 percent. In
addition, the employee has admitted he has infrequent
episodes of angina. The left foot drop is a condition he has
had since 1967 and has not precluded him from participating
successfully in the workplace. As for the conditions of
obstructive sleep apnea with which the employee is compliant
with CPAP, hypertension controlled on medication and
hyperlipidemia, and morbid obesity, there is no medical data
on file to support these conditions, considered separately or
collectively, would support a lack of functional capacity.
(UA-CL-002090-002095.)
After Nurse Nunn‟s evaluation, the file was referred to Dr. Costas Lambrew, also
board certified in internal medicine. Lambrew concluded based on his review that
there is no evidence that [Freeland‟s] comorbid medical
conditions, when considered in relationship to his PTSD and
anxiety, would preclude sustained, full time, light level work,
that the perceived, self-reported level of stress that he reports
to Dr. Erickson, and that his sustained work from 5/16/76
through 10/1/08, without any acute cardiac event, or angina
since 2003 precludes return to work, given its effective
treatment.
(UA-CL-002111.)
Following Dr. Lambrew‟s review, the file was referred to Unum medical consultant
Peter Brown, M.D., board certified in psychiatry, for additional review on appeal. Dr.
Brown stated that
20
[w]ith regard to the claimant‟s psychiatric condition, he has
been stable and has not reported any significant symptoms or
side effects during the timeframe in question. Consistent with
this analysis the claimant‟s level of treatment (moderate dose
antidepressant with follow-up visits every 6 months) is
consistent with a stable disorder of, at most, a mild to
moderate symptoms or impairment.
(UA-CL-002125.)
By letter dated November 4, 2010, Unum affirmed its earlier decision to
discontinue long-term disability benefits payments to Freeland as of December 31, 2009.
In this letter, Unum reiterated that “the medical evidence did not support conditions
that rose to a level of impairment that would preclude Mr. Freeland from performing his
regular occupation.” Unum explained that there had been additional review of Freeland‟s
co-morbid conditions, but concluded that “the totality of the medical evidence does not
support restrictions and/or limitations for physical or behavioral health conditions either
singly or in combination that would preclude sustained work activity in Mr. Freeland‟s
regular occupation.”
OPINION
The parties have filed cross-motions for summary judgment.5 Defendant argues
that it was not arbitrary and capricious in terminating benefits because the medical
5
Plaintiff contends that “summary judgment” is inappropriate in cases that require the
court to conduct a review on the administrative record (although this did not stop
plaintiff from moving for summary judgment himself). (Pl.‟s Br. (dkt. #22) 5-6.)
Summary judgment is indeed inappropriate if material issues of fact are disputed -- as
may often be the case when the court is called to make a de novo disability determination
based on an administrative record -- but the court is satisfied that the disposition of this
dispute on summary judgment is appropriate here. While the record in this case does
21
documentation did not support restrictions and limitations for psychological illness,
coronary disease, or any other physical condition after March 31, 2009. Plaintiff argues
that Unum acted arbitrarily and capriciously in terminating benefits because it: (a) gave
undue weight to the opinions of its own experts; (b) failed to fully consider the comorbidity of Freeland‟s various impairments; and (c) failed to give due weight to the
disability determinations of the VA and SSDI systems. Plaintiff argues that Unum also
acted arbitrarily and capriciously in applying the two-year psychological illness restriction
to its award of benefits. Finally, Freeland asks the court to use its equitable powers to
cancel out the benefit offsets in Unum‟s policy, both retroactively and for any prospective
award.
A.
Standard of Review
Where an ERISA insurance plan grants the administrator discretion to determine
eligibility, this court review of the administrator‟s decision has both a substantive and
procedural component.
Substantially, the decision must meet the arbitrary and
capricious standard. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989);
Holmstrom v. Metro. Life Ins. Co., 615 F.3d 758, 766 (7th Cir. 2010). While this standard
of review is obviously highly deferential, the Seventh Circuit has cautioned that it does
contain conflicting assertions of fact about Freeland‟s medical condition, the purposes of
the task at hand -- review to see if Unum abused its discretion -- is basically a legal, not a
factual inquiry, and none of the remaining factual disputes are material.
22
not make the court a “rubber stamp.”6
Holmstrom, 615 F.3d at 766.
“For ERISA
purposes, the arbitrary and capricious standard is synonymous with abuse of discretion.”
Id. at 767 n.7 (internal citation, quotation marks and alterations omitted).
ERISA requires that “the administrator [] weigh the evidence for and against [the
denial of benefits], and within reasonable limits, the reasons for rejecting evidence must
be articulated if there is to be meaningful appellate review.” Halpin v. W.W. Grainger,
962 F.2d 685, 695 (7th Cir. 1992) (internal quotation omitted). The court will uphold
an administrator‟s decision “if (1) it is possible to offer a reasoned explanation, based on
the evidence, for a particular outcome, (2) the decision is based on a reasonable
explanation of relevant plan documents, or (3) the administrator has based its decision
on a consideration of the relevant factors that encompass important aspects of the
problem.” Militello v. Cent. States, Se. & Sw. Areas Pension Fund, 360 F.3d 681, 686 (7th
Cir. 2004) (internal quotation marks and citations omitted).
The court is also mindful that Unum serves a dual function in having “both the
discretionary authority to determine eligibility for benefits and the obligation to pay
6
In some cases, the Seventh Circuit has stated that the decision must be “downright
unreasonable” before reversal would be appropriate. In Holmstrom, the court recently
clarified that phrase, explaining that the standard of review:
should not be understood as requiring a plaintiff to show that
only a person who had lost complete touch with reality would
have denied benefits.
Rather, the phrase is merely a
shorthand expression for a vast body of law applying the
arbitrary-and-capricious standard in ways that include focus
on procedural regularity, substantive merit, and faithful
execution of fiduciary goals.
615 F.3d at 766 n.5.
23
benefits when due.” Jenkins v. Price Waterhouse Long Term Disability Plan, 564 F.3d 856,
861 (7th Cir. 2009) (citing Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 108 (2008)). This
“conflict of interest” does not alter the standard of review -- the abuse of discretion
standard still applies -- but is “weighed as a factor in determining whether there is an
abuse of discretion.”
Glenn, 554 U.S. at 115 (citing Firestone, 489 U.S. at 115)
(quotation marks omitted).7
In reviewing the termination of benefits under ERISA, there are also two core
procedural requirements that must be met by the administrator‟s decision: (1) “that
specific reasons for denial be communicated to the claimant”; and (2) “that the claimant
be afforded an opportunity for a „full and fair review‟ by the administrator.” Hackett v.
Xerox Corp. Long-Term Disability Income Plan, 315 F.3d 771, 775 (7th Cir. 2003) (quoting
Halpin, 962 F.2d at 688-89); see also 29 U.S.C. § 1133. Substantial compliance with
these two requirements is sufficient to satisfy ERISA. Hackett, 315 F.3d at 775; Halpin,
962 F.2d at 690.
B.
Unum’s Decision to Award Freeland LTD Benefits for Psychological
Illness Only
Freeland‟s LTD insurance policy states that “[t]he lifetime cumulative maximum
benefit period for all disabilities due to mental illness is 24 months.” (UA-CL-000165
(emphasis added).) Freeland now disputes whether this two-year cap on benefits applies
to him.
7
Recently, the Seventh Circuit has described this factor as a “key consideration.”
Holmstrom, 615 F.3d at 766.
24
When it found for Freeland on appeal and decided to award disability benefits,
Unum‟s analysis was apparently based on two separate opinions from its medical experts.
Stuart Anfang, a forensic psychiatrist, reviewed Freeland‟s file to determine the extent of
his disability based on his psychological condition.
(UA-CL-001362.)
Dr. Anfang
determined that the data “reasonably substantiates claimed psychiatric [restrictions and
limitations] (including cognitive difficulties).”
Concurrently, Alfred Parisi, a board
certified specialist in internal medicine, cardiovascular disease and echocardiography,
reviewed Freeland‟s file to assess the extent of his disability based on his cardiac
condition and other physical ailments. (UA-CL-001353.) Parisi stated that he did “not
find evidence for impairment from claimant‟s cardiovascular disease taken in conjunction
with all of his remaining physical medical comorbidities that would preclude functional
capacity for light work.” (UA-CL-001356.)
None of Unum‟s experts appeared to consider Freeland‟s physical and
psychological co-morbidities together -- Dr. Parisi and other medical experts reviewed his
physical condition and Dr. Anfang and other psychological experts separately reviewed
his psychological condition. This violated the Regulatory Settlement Agreement to which
Unum is bound.
Specifically, the RSA requires Unum to “consider and afford
appropriate weight to all diagnoses and impairments, and their combined effect on the
whole person, when evaluating medical data in the claim file.” (Pl.‟s Proposed Findings of
Fact, Ex. A (dkt. #23).)
Under the RSA, Unum is also bound to ensure that when
multiple medical professionals are involved in reviewing a claim, all are responsible for
coordinating their opinions and understanding how the various opinions fit together for a
25
“coherent
view
of
the
claimant‟s
medical
condition,
capacity,
and
restrictions/limitations.” Id.
On this record, there appears a distinct possibility that Unum might have found a
disability that was contributed to by both psychological and physical factors if all of
Freeland‟s co-morbidities had been analyzed together. Unfortunately for Freeland, this
mistake also appears to have been harmless -- whether Unum defined the disability as
purely psychological, or part-physical and part-psychological, it would have been at least
reasonable in labeling it a disability “due to mental illness” since there is overwhelming
evidence supporting Unum‟s determination that Freeland was not rendered incapable of
work but for his psychological illness.
Indeed, the plain language of the phrase
“disabilit[y] due to mental illness” describes a condition that rises to the level of a
disability because of the psychological illness.
Here, Dr. Parisi reasonably found that plaintiff‟s physical condition alone was
insufficient to constitute a disability. Dr. Rozich, plaintiff‟s own cardiac doctor, also
stated that “from a purely cardiac standpoint,” Freeland would be fine in his mostly
sedentary job. The VA similarly found that Freeland‟s coronary heart disease was only
20 percent disabling and his back pain only 10 percent disabling. Finally, the Social
Security Administration found that he was able to lift up to 10 pounds frequently; stand
and/or walk for at least 2 hours in an 8-hour work day; sit approximately 6 hours in an 8hour workday; and engage in unlimited pushing and/or pulling.8
8
There is almost no evidence to suggest that plaintiff‟s physical condition has changed
since these analyses were performed. The only doctor to suggest that plaintiff‟s physical
condition is now independently sufficient to render him disabled is plaintiff‟s chosen
26
Unum‟s determination that Freeland suffered from a “disability due to mental
illness” also finds some support in a case considered by the Second Circuit. In Sheehan v.
Metropolitan Life Ins. Co., 368 F. Supp. 2d 228 (S.D.N.Y. 2005), the policy language was
admittedly even stronger, since it denied monthly benefits if the disability “in any way
results from, or is caused or contributed to by a mental or nervous disorder.” Id. at 23435. Still, the basic issue was the same and the Second Circuit concluded that “where
comorbidity exists between coronary artery disease and [] neurosis, entitlement to
disability payments under the Plan exists only if the cardiac condition by itself would
constitute a total disability.” Id. at 264 (internal quotation marks omitted).
C.
Unum’s Decision to Terminate Freeland’s LTD Benefits
In its letter terminating plaintiff‟s benefits, defendant asserted that the updated
medical documents plaintiff submitted showed that his psychological condition had
improved and that he had been able to work since December 31, 2009. In making this
determination, defendant relied upon office visit notes by plaintiff‟s psychiatrist, Dr.
Erickson, who noted that plaintiff had changed medication, was often feeling better, and
expert, Dr. Hebl, whose a cardiac and orthopedic restrictions are significantly greater
than anything Dr. Rozich, the SSA or the VA have ever supported – and were made at a
time when plaintiff admitted that his “chest felt better” than before. Dr. Hebl also did
not purport to make his findings based on new medical tests, but merely reinterpreted
plaintiff‟s file with the aid of an in-person patient visit. Moreover, Dr. Hebl did a poor
job of explaining how plaintiff‟s diagnosed conditions translate into functional disability,
particularly in light of the fact that he appeared to be relying primarily upon plaintiff‟s
own self-assessment during the one-time office visit. (UA-CL-001786-001789.)
Dr.
Hebl‟s assertions of extreme physical inability are also contradicted by Dr. Rozich‟s
contemporaneous letter, which noted that plaintiff was “able to exercise somewhat” and
that his “angina [had] decreased” over time. Given all this, it was not unreasonable for
defendants to discount Hebl‟s opinion.
27
had reduced the frequency of his visits. (E.g. UA-CL-001539.) Defendant also relied
upon plaintiff‟s own self reporting that his chest pain had decreased since he stopped
working and that he had been doing “some walking in the mornings,” “trying to do a
little fishing,” “mow[ing] the lawn”, and “do[ing] some chores around the house” and
that he had not traveled. (UA-CL001601-001602.)
The foundation for Unum‟s initial decision to terminate benefits was the opinion
of their medical experts, Drs. Kletti and Caruso, who read the updated medical
information and made a determination about plaintiff‟s psychological health.
Kletti
opined that “[t]he updated file records document significant improvement in symptoms,
functional abilities and reduction of treatment intensity which would be consistent with
resolution of psychiatric impairment as of December 31, 2009, office visit notes with Dr.
Erickson.”
(UA-CL-001624.)
When Freeland appealed, Unum also considered the
opinions of Brenda Nunn, R.N., Costas Lambrew, M.D., and Peter Brown M.D., who
reviewed Freeland‟s full file, including the most recent notes from the VA, a letter from
Dr. Rozich, and an opinion letter from Dr. Joseph Hebl. Nunn, Lambrew and Brown
characterized Dr. Rozich‟s letter as supporting Freeland‟s return to an average sedentary
occupation, but disagreed with his determination that Freeland could not return to his
job as Director of the Heart Clinic.
They also sharply attacked Dr. Hebl‟s more
expansive work restrictions, finding them conclusory and unsupported by reference to
any new findings.
Plaintiff attacks defendant‟s analysis on appeal as both procedurally and
substantively deficient. With respect to the procedural deficiency, Freeland claims that
28
he did not receive a full and fair review because Unum‟s experts failed to consider the comorbidity of all of his illnesses. The court rejects this argument. While Drs. Kletti and
Caruso failed to consider all co-morbidities in their initial analysis of his psychological
record, Dr. Lambrew, in particular, explicitly considered the co-morbidities of all illnesses
upon appeal, especially the impact of mental illness upon cardiac function. (UA-CL002106-002111.)
With respect to substantive deficiency, Freeland claims that Unum‟s experts were
arbitrary and capricious in their interpretation of the record, as well as swayed by
defendant‟s conflicting interests.
The court does not need to reach all of plaintiff‟s
arguments on this point, because it finds that Unum acted arbitrarily and capriciously in
failing to account for the fact that the stress associated with Freeland‟s former job was a
major cause of his initial psychological disability, and that a return to that stress was very
likely to cause a relapse of his psychological impairment.9 Plaintiff explicitly made this
argument in his appeal letter. (UA-CL-001784 (“[T]he reason for the improvement is
due to his absence from the stress of surroundings of his occupation”).)
If Freeland‟s medical assessments and improvement show anything, it is that his
work as Director of the Luther Heart Clinic was a major, if not the single most
significant, source of stress in his life, and an increasingly potent source of stress at that.
9
In fairness, Unum‟s expert Dr. Costas Lambrew touched upon this issue by considering
whether Freeland returning to the stress of his job would exacerbate his heart ailments.
Dr. Lambrew also noted that Freeland had been able to handle the psychological stress of
work until 2008 and, during that year, also suffered two family crises, which exacerbated
his stress. However, none of the experts directly considered the possibility that returning
to work would cause a relapse of his psychological illness, or the fact that, on a daily
basis, Freeland‟s overwhelming stress levels in 2008 appeared to be primarily due to his
increasing inability to handle the strain of his job.
29
For example, Freeland‟s initial claim for long term disability benefits attributed his
increased anxiety to “the stress of [his] job.” (UA-CL-000066.) In their evaluations,
Dr. Rozich and the VA both commented specifically on the extraordinary amount of
stress the Director position put on plaintiff, compared to a more typical sedentary job.
(UA-CL-000948-949; UA-CL-001004.)
Freeland‟s supervisor noted that Freeland‟s
“job performance has been slowly declining for several years. . . . [and] his ability to stay
focused on his tasks has declined. His job has become much more stressful during the
past two years, and he has not been able to stay abreast of his assignments.” (UA-CL000823.) While Unum has challenged Freeland‟s medical claims at virtually every turn,
even it does not challenge the notion that his job at Luther Hospital was a major source
of stress, as well as a significant contributing factor to his illness.
Since Unum had already determined that Freeland‟s psychological illness was
disabling in 2008, it was inappropriate to require him to return to the same job simply
because his symptoms receded after he left work.
To a large extent, the fact that
Freeland got better upon leaving work should have confirmed the accuracy of Unum‟s
original determination, work as a major contributor to his psychological illness.
This case is somewhat similar to Evans v. Unumprovident Corp., 434 F.3d 866 (6th
Cir. 2006). In Evans, a claimant applied for benefits due to a disability caused by her
frequent seizures. Her treating physician opined that the stress associated with her job
duties was responsible for the severity and frequency of the episodes. See id. at 870.
While on medical leave, the claimant saw an improvement in her condition. Her treating
physician determined that it would be in the claimant‟s best interest not to return to
30
work. The insurer nevertheless discounted the impact of work-related stress as merely a
“prophylactic” factor that should be accorded minimal weight in its determination of
disability. The Sixth Circuit found that decision arbitrary and capricious. Id. at 879.
The major difference between Evans and this case is that rather than discounting the
possible impact of work-related stress on a relapse of plaintiff‟s PTSD and anxiety, here
defendant did not even address the issue.
For the purposes of an initial determination of disability, and for the first 24
months after awarding benefits (which is the only relevant period here), the Plan policy
defines disability with reference to the claimant‟s “occupation as it is normally performed
in the national economy, instead of how the work tasks are performed for a specific
employer or at a specific location.” (UA-CL-000181.) There is nothing in the record to
suggest that the position of Director of Luther Hospital Cardiac Clinic is more or less
stressful a workplace than a similar center at an average hospital. From the record before
the court, it appears quite likely (although not certain) that if, after a period of rest,
Freeland had started working again as director of any cardiac clinic, the same stressinduced disability would have rapidly reappeared, preventing him from performing his
job duties. Given the likelihood of relapse, Unum acted arbitrarily and capriciously in
summarily finding Freeland could return to his position at Luther Hospital or a similar
one without experiencing a spike in stress levels, return to his psychiatrist, and the need
to re-apply for disability.
This is not to say that Unum is stuck paying for most (or even a significant
majority of) people who become disabled as a result of a workplace injury and refuse to
31
return to work. First, there is the 24-month limit in the policy itself, after which the
claimant faces the burden of showing that he is incapable of any “gainful occupation for
which [he is] reasonably fitted by education, training or experience,” which is a much
higher hurdle to clear.
Second, if there is a reasonable basis to determine that the
disability is temporary in nature and will not be re-aggravated by returning to work,
Unum may, of course, deny benefits once symptoms recede. But Unum must properly
evaluate that possibility and make an affirmative determination. Unum certainly may
not ignore, as it did here, substantial evidence to the contrary.
D.
Remedy
1.
Reinstatement Of Benefits
Having found a violation of ERISA, this court is directed by the Seventh Circuit
to determine the appropriate remedy by focusing on the “claimant‟s benefit status”
before the wrongful denial. Holmstrom, 615 F.3d at 778 (citing Schneider v. Sentry Group
Long Term Disability Plan, 422 F.3d 621, 629 (7th Cir. 2005)). The goal is to “restor[e]
the status quo prior to the defective proceedings.” Schneider, 422 F.3d at 629; see also
Hackett, 315 F.3d at 776. In cases involving wrongfully terminated benefits, “the status
quo prior to the defective procedure was the continuation of benefits,” making “a
reinstatement of benefits” the proper remedy. Hackett, 315 F.3d at 776.
Unum originally granted LTD benefits to Freeland for the period from December
30, 2008, to December 29, 2010, and ended Freeland‟s benefits after one year. In order
to return Freeland to the status quo before this termination of benefits, the court will
32
reinstate Freeland‟s benefits through December 29, 2010.
Unum must also pay
prejudgment interest. 29 U.S.C. § 1132(a)(3)(B); Fritcher v. Health Care Service Corp.,
301 F.3d 811, 819-20 (7th Cir. 2002).
Unum cites Majeski v. Metro Life Ins. Co., 590 F.3d 478 (7th Cir. 2009), and Tate v.
Long Term Disability Plan for Salaried Employees of Champion Int’l Corp., 545 F.3d 555, 56263 (7th Cir. 2008), for the proposition that remand to determine eligibility for the
second year of benefits, rather than reinstatement, is the appropriate remedy. Those
cases are distinguishable, however, in that the successful plaintiffs in both cases could not
show they had been entitled to benefits at the time of the defendant‟s decision, so there
was technically no “termination” of benefits. Here, defendant affirmatively terminated
plaintiff‟s benefits arbitrarily and capriciously, making a return to the status quo the
reinstatement of benefits.
2.
Benefit Offsets
Plaintiff argues that the court should use its equitable powers to cancel out the
benefit offsets in Unum‟s policy, both retroactively and for any prospective award.
29
U.S.C. § 1132(a)(3)(b). In this case, such a cancellation would apply to the benefits paid
out (or due to be paid out) for the two-year period between December 30, 2008 and
December 29, 2010. The court declines to do so.
Plaintiff argues first that it is inequitable for defendant to deduct SSDI payments
from its benefit award while simultaneously disregarding the weight of SSDI‟s disability
determination. Since the court is now reinstating benefits for Freeland on other grounds,
33
Unum receives no advantage from allegedly ignoring the SSDI determination, and that
argument appears moot. Freeland also argues that Unum should not be able to deduct
his retirement pension from his disability benefits because it was Unum‟s unreasonable
initial denial of benefits that forced him to apply for early retirement. Without getting
into the equitable merits of that claim, the court notes that Freeland has not supported
his assertion that he was financially “forced” to take early retirement with an appropriate
factual submission or affidavit and, therefore, declines to take up the issue.
2.
Attorneys’ Fees
The Seventh Circuit has recognized two tests for analyzing whether attorneys‟ fees
should be awarded a successful plaintiff under 29 U.S.C. § 1132(g)(1). Hardt v. Reliance
Standard Life Ins. Co., 130 S. Ct. 2149, 2157–58 (2010), under ERISA. The first test
involves five-factors: 1) the degree of the offending party‟s culpability or bad faith; 2) the
ability of the offending party to satisfy personally an award of attorneys‟ fees; 3) whether
or not an award of attorneys‟ fees against the offending party would deter other persons
acting under similar circumstances; 4) the amount of benefit conferred on members of
the pension plan as a whole; and 5) the relative merits of the parties‟ positions. Filipowicz
v. Am. Stores Benefit Plans Comm., 56 F.3d 807, 816 (7th Cir. 1995). The second test
looks to whether or not the losing party‟s position was “substantially justified.” Bittner v.
Sadoff & Rudoy Indus., 728 F.2d 820, 830 (7th Cir.1984). This court will apply the first
test because it more accurately articulates the various equitable factors appropriate to
34
consider in determining whether attorney fees are appropriate, although the result would
be the same under the second test as well for much the same reasons.10
The second and third factors cut very much in favor of granting fees, since Unum
(like many ERISA defendants) is a large and wealthy insurance company with economic
incentives to deny legitimate claims systematically, and has a history of doing just that.
The fifth factor is neutral here, since the court has found in favor of both parties on
significant issues in this case. As for the first factor, the court is struck by the fact that at
several points in the claims process Unum did not even consider Freeland‟s comorbidities, despite entering into a Regulatory Settlement Agreement that explicitly
required it to do so. This, combined with the fact that Unum made only a half-hearted
attempt to oppose a fee award in their response to Freeland‟s proposed findings of fact or
even attempt to rebut Freeland‟s request for attorneys‟ fees in their opposition brief, tips
the scales in plaintiff‟s favor.
The court intends to enter one final judgment that includes the re-instated
benefits, attorneys‟ fees, and prejudgment interest, and requests input from the parties as
set forth in the order below.
ORDER
IT IS ORDERED that:
10
The question has been articulated a third way as well: “was the losing party‟s position
substantially justified and taken in good faith, or was that party simply out to harass its
opponent?” Quinn v. Blue Cross & Blue Shield Ass’n, 161 F.3d 472, 478 (7th Cir. 1998).
However, the court agrees with Orth v. Wisconsin State Employees Union, 2007 WL
2042252 (E.D. Wis. July 11, 2007), that this test applies poorly in some situations,
including this one.
35
1) Defendant Unum Life Insurance Company of America‟s motion to strike
plaintiff Reply Memorandum in Support of Cross-Motion for Summary
Judgment (dkt. #33) is DENIED.
2) plaintiff Bruce Freeland‟s motion for summary judgment (dkt. #21) is
GRANTED IN PART and DENIED IN PART as set forth in the opinion
above;
3) defendant Unum Life Insurance Company of America‟s motion for summary
judgment (dkt. #11) is GRANTED IN PART and DENIED IN PART as set
forth in the opinion above;
4) defendant is directed to submit a calculation of the benefits owed to plaintiff
for the period from December 31, 2009, to December 29, 2010 along with
prejudgment interest on the delayed benefits by Wednesday, August 29, 2013;
5) plaintiff is directed to submit a claim for his reasonable attorney fees by
Wednesday, August 29, 2013; and
6) each side may file a response no later than Wednesday, September 11, 2013.
Entered this 16th day of August, 2013.
BY THE COURT:
/s/
________________________________________
WILLIAM M. CONLEY
District Judge
36
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