In Their Opinion : Seventh Circuit Court of Appeals Commentary : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

MAJESKI v. METROPOLITAN LIFE INSURANCE CO. (December 29, 2009)

Kirsten Majeski was a nurse consultant for Metropolitan Life Insurance Co. ("MetLife"). Her typical workday involved sitting at a desk, using a phone and computer. In 2006, she was diagnosed with cervical radiculitis, a compression in the upper spinal. MetLife originally approved short-term disability benefits. It later determined that Majeski was not entitled to benefits, concluding that her impairment did not prevent her from performing her job. Majeski appealed and submitted medical evidence from her doctor and physical therapist. The conclusion of the medical evidence was that she had difficulty sitting and using her hands -- and was thus unable to perform her job. MetLife had a physician review the records. He concluded that there were "minimal objective findings" to support the suggested limitations. MetLife rejected the appeal. Majeski brought suit under ERISA. The district court granted summary judgment to MetLife. Majeski appeals.

In their opinion, Judges Wood, Evans and Tinder vacated and remanded. The Court first rejected Majeski's argument that the Supreme Court's decision in Glenn required a heightened standard of review. The Court admitted that it was still undecided on how to weigh a Plan administrator's conflict of interest. In Marrs, the Court concluded that the circumstances of the case should determine the impact of the conflict. The Court also rejected Majeski's argument that the district court should have considered evidence outside of the administrative record. On the merits, however, the Court agreed with Majeski. The physician's report on which MetLife solely relies did not address key findings presented by Majeski's medical evidence. Although the report concludes that there were "minimal objective findings," the Court cited several objective findings contained in Majeski's material that MetLife physician failed to mention or rebut. The failure to address this significant medical evidence amounts to an absence of reasoning and lack of fair review. The Court declined to rule directly in Majeski's favor, concluding that the typical and proper course is to remand to the plan administrator.

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WETZLER v. ILLINOIS CPA SOCIETY & FOUNDATION RETIREMENT INCOME PLAN (November 10, 2009)

Thomas Wetzler worked for the Illinois CPA Society for twenty-two years. Throughout his employment, he participated in the Society's Retirement Income Plan (the "Plan"). When he retired, he qualified as a highly-compensated employee ("HCE") under the plan. Wetzler was only the second HCE to retire under the Plan. Although the first was allowed to take a lump-sum payout of Plan benefits, the Plan later determined that the distribution was in error and violated federal regulations. The Plan was amended to require security when an HCE elects a lump-some distribution. When the Plan refused to allow Wetzler to take a lump-sum distribution, he filed suit under ERISA. He alleged that the amendment violated the Act by eliminating a benefit which had been previously available. The district court granted summary judgment to the Plan. Wetzler appeals.

In their opinion, Circuit Judges Manion and Kanne and District Judge Kendall affirmed. The Court first concluded that the lower court applied the correct standard of review. Because the Plan gives its administrator discretion to construe its terms, the court's review of the administrator's decision is under an arbitrary and capricious standard. Next, the Court addressed the merits of the argument that the Plan amendment violated ERISA. The Court concluded that HCEs never had the option of a lump-sum payment. The amendment was simply the Plan's way of correcting the earlier, erroneous distribution. The amendment, therefore, did not violate ERISA. Finally, the Court upheld the administrator's decision to deny the distribution to Wetzler. The fact that the distribution would have been in violation of the Internal Revenue Code gave the administrator a reasonable basis for denial.

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BLACK v. LONG-TERM DISABILITY INSURANCE (September 18, 2009)

Elizabeth Black was the executive director of the Milwaukee World Festival, Inc., the organization that operates an annual summer music festival in Milwaukee. In early 2001, she had surgery to repair two aneurysms. She returned to work after several weeks and was well enough to run the festival that summer. Although her contract was not scheduled to expire until the end of 2003, she sought a renewal after the 2001 festival. The organization deferred a decision until 2002. When that time came, many of her relationships with coworkers had deteriorated. She complained, and had several doctors support her complaints, that the stress and abuse of her job was harmful to her health. In July of 2003, the organization elected not to extend her contract. Within a month, Black claimed that she was disabled and could no longer work. She filed a disability claim with the organization's plan. The plan denied the claim, based on a review of the records she submitted. After an administrative appeal, the plan’s underwriter consulted four physicians and a psychiatrist, each of whom reviewed her records and concluded that she was not disabled. The underwriter denied the appeal. Black appealed to the district court, which granted summary judgment to the plan. Black appeals.

In their opinion, Judges Evans, Williams and Tinder affirmed. The Court reiterated that it’s standard of review, because of the plan’s discretion, is arbitrary and capricious. The Supreme Court's Glenn decision simply requires the court to consider a plan administrator's conflict of interest -- it does not result in a heightened standard of review. On the merits, the administrator's decision was well supported by the record. The plan's consulting physicians were unanimous in their belief that Black's condition was stable. The administrator also considered Black's treating physician's reports. The administrator found those reports to be slanted one way when she was seeking a contract extension and the other way when she was seeking disability benefits. The Court concluded that the administrator was allowed to rely on the thorough and reasonable explanations given by the consulting physicians. Finally, although Black's Social Security disability determination is a factor that should be considered in a benefits determination, the Court noted that the administrator did consider the determination and discounted it because the Social Security Administration did not have the same medical records available to it.

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ESKRIDGE v. COOK COUNTY (August 17, 2009)
 

Michelle Eskridge died of pneumonia after having been treated at Access Community Health Network (Access) and Stroger Hospital. Access was a U. S. Public Health Service facility and Stroger was a Cook County facility. Michelle's parents sued Access and Cook County in state court. The United States removed the case to federal court, where the case against the U.S. was dismissed for failure to exhaust Federal Tort Claims Act remedies. The court remanded the case against Cook County to state court. The Eskridges exhausted their remedies and filed a second suit in federal court against the county and the United States and dismissed the earlier suit. Later, having decided to pursue only Cook County, the Eskridges filed yet a third lawsuit, in state court, against Cook County and moved to dismiss the federal suit. Their motion was granted. Meanwhile, in state court, Cook County moved to dismiss the suit on procedural grounds. Upon realizing the merits of the County’s defense, the Eskridges filed a motion in federal court for relief from their own voluntary dismissal, claiming they intended only to dismiss the United States. The court denied the motion. They then moved for reconsideration, a motion which was considered a second Rule 60(b) motion, which was also denied. The Eskridges appeal.

In their opinion, Judges Evans, Williams and Tinder affirmed. The Court first noted its extremely deferential review. First, Rule 60(b) is itself an extraordinary remedy. Second, appellate review proceeds under an "extremely deferential" standard. Third, here, the Eskridges did not appeal from the original Rule 60(b) order but only from the denial of their request for reconsideration. On the merits, The Court noted that relief under Rule 60(b) typically involves a misunderstanding. Here, the Eskridges' attorney asked for the relief granted. The fact that he did not anticipate the actual consequences of his request does not compel the relief requested.

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RAYBOURNE v. CIGNA LIFE INSURANCE COMPANY (August 6, 2009)

After 23 years on the job, Edward Raybourne went on long-term disability. He was about to have the first of four surgeries on the big toe of his right foot. His disability plan provided payments for 24 months upon a showing that he was unable to perform his regular job. After 24 months, he had to show that he was unable to perform any job in order to continue receiving benefits. After an independent medical examination concluded that Raybourne could return to work, Cigna terminated his long-term disability benefits. Raybourne's treating physician continued to state that he was unable to return to work. After his internal appeals were unsuccessful, Raybourne brought suit under ERISA. The district court granted summary judgment to Cigna, concluding that it had not abused its discretion. Raybourne appeals.

In their opinion, Judges Rovner, Wood and Williams vacated and remanded. An abuse of discretion standard, stated the Court, is appropriate when the plan administrator has discretionary authority. The Court found that Cigna had such authority, notwithstanding Raybourne's contention that the grant of discretion is not included in a plan document. Under that standard, an administrator's decision will be upheld as long as it is supported by evidence in the record and specific reasons are communicated to the claimant. Here, however, the Court noted that the Supreme Court released its opinion in Glenn just a few days before the district court's summary judgment decision. Glenn held that one factor in the abuse of discretion analysis is the structural conflict of interest when a plan administrator is both the arbiter of claims and the payor of successful claims. The Court concluded that the district court's passing reference to Glenn required a remand for a proper analysis of the structural conflict.

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JENKINS v. PRICE WATERHOUSE LONG TERM DISABILITY PLAN (May 4, 2009)

Charles Jenkins went to work for PricewaterhouseCoopers LLP ("PwC") in 1989. He started experiencing health problems related to HIV in 1993. He suffered from fatigue, nerve damage, decreased sensation, dexterity limitations, and infections. By the end of 1993, he was no longer able to work. He filed a claim under PwC’s long-term disability plan. The plan administrator agreed that he met the definition of "total disability" and paid him benefits from 1994 until 2006. Beginning in 2004, the plan administrator began to review Jenkins' file. After two medical record reviews and an independent medical examination, the plan administrator terminated Jenkins' benefits. The more recent reviews concluded that Jenkins' condition was fairly stable and that he may be capable of performing some jobs. In fact, a rehabilitation specialist identified certain specific positions that fit within Jenkins’ limitations. Jenkins' treating physician disagreed with the conclusion and maintained that he was unable to work. After an unsuccessful internal appeal, Jenkins brought an action under ERISA. The district court granted summary judgment to the plan. Jenkins appeals.

In their opinion, Chief Judge Easterbrook and Judges Kanne and Evans affirmed. The Court noted that its review is highly deferential and looks only for "rational support" in the record. The Court found that support. Admittedly, the opinion was not unanimous, the evidence was not conclusive, and the result was not required. However, four medical professionals and significant medical evidence supported the plan's determination. That support was enough to affirm the judgment for the plan.

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LEGER v. TRIBUNE COMPANY LONG TERM DISABILITY BENEFIT PLAN (March 9, 2009)

Lisa Leger suffered from osteoarthritis for years. Prior to 1990, she underwent three different arthroscopic procedures but was able to hold a job and engage in a rehabilitative exercise program. However, in 1990, she stopped working for WGN-TV and went on short-term disability. She began receiving long-term disability benefits in December 1990. She continued to receive benefits through 2005. During that time, she continued to have pain and problems with her knees and underwent multiple additional surgeries. The plan administrator reviewed her benefits in 2005 and requested updated information. Her treating physician advised that she was essentially unable to walk. The plan administrator's medical review concluded that she had significant osteoarthritis but that she was not precluded from sedentary work. A vocational rehabilitation consultant identified several employment positions for which she was qualified. The plan administrator therefore terminated her benefits in October of 2005. Leger appealed and provided additional medical information. The plan administrator arranged for another review of the file. That review highlighted some inconsistencies in her records. For example, the records indicated that she could not sit for more than 30 minutes at a time but she nevertheless was wheelchair bound. The plan administrator upheld the decision to terminate her benefits. Leger brought an action pursuant to ERISA’s section 1132 (a)(1)(b) to reinstate her benefits. The lower court granted summary judgment to the plan, stating that it advanced a reasonable explanation for its decision to terminate the benefits. Leger appeals.

In their opinion, Judges Bauer, Ripple and Evans reversed and remanded. The Court first rejected Leger's position, first brought out on appeal, that the arbitrary and capricious standard was the inappropriate standard of review. It added, however, that the claims determination still must comply with ERISA and that the claimant must be afforded a full and fair review. The Court also rejected Leger's arguments that the fifteen year history of payments or the plan's reliance on a medical file review only created a presumption that the termination decision was arbitrary and capricious. Instead, in determining whether a decision is arbitrary and capricious, the Court said it would look to the specific reasons for the denial, whether the claimant was afforded a full and fair review, and whether there is an absence of reasoning in support of the determination. Here, the Court was concerned that the determination failed to mention Leger's voluminous medical record spanning almost 20 years and 17 surgeries. The Court was also concerned about the treatment of the functional capacity evaluation. The plan ignored the FCE evidence that Leger's complaints of pain were real. The Court indicated that the plan was required to do more than just dismiss the complaints. As such, there was an absence of reasoning in the record and the determination was arbitrary and capricious. The Court recognized that it had the option of either remanding the case for further proceedings or reinstating the benefits. Here, because the plan failed to consider the lengthy medical history and to provide adequate reasoning for its treatment of the FCE, the Court was unable to say definitively that the determination was unreasonable. It therefore remanded the case for further proceedings.
 

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