Doyle v. Paul Revere Life Insurance

144 F.3d 181, 1998 U.S. App. LEXIS 11493, 1998 WL 271260

• Court: Court of Appeals for the First Circuit
• Decided: June 2, 1998
• Docket: 97-1275
• Status: Published

Opinions

ALDRICH, Senior Circuit Judge.

Plaintiff-appellee Robert Doyle, as an engineer at Textron, Inc., was insured for long term total disability benefits under a group policy issued to Textron by defendant-appellant Paul Revere Life Insurance Company (Paul Revere) pursuant to an employee welfare benefit plan. The plan is subject to the Employee Retirement and Income Security Act (ERISA), 29 U.S.C. § 1001, et seq.; the policy was managed by Paul Revere. After Doyle ceased work in December 1989, he applied for and received interim benefits. Paul Revere discontinued them on March 27, 1991 when it found him not totally disabled, and therefore ineligible, and it rejected his later appeal. The principal issue here is whether the district court erred in denying Paul Revere’s motion for summary judgment and, instead, entering summary judgment for Doyle.¹ We reverse.

Review

We review the district court’s grant of summary judgment de novo. See Grenier v. Cyandmid Plastics, Inc., 70 F.3d 667, 671 (1st Cir.1995); Allen v. Adage, Inc., 967 F.2d 695, 699 (1st Cir.1992). Our first question is Paul Revere’s authority to determine eligibility. The parties agree that it had discretion. Normally this means that its decision must be upheld unless “arbitrary, capricious, or an abuse of discretion.” Diaz v. Seafarers Int’l Union, 13 F.3d 454, 456 (1st Cir.1994); see also Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111-15, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Recupero v. New England Tel. & Tel. Co., 118 F.3d 820, 828 (1st Cir.1997). This standard means that its decision will be upheld if it was within Paul Revere’s authority, reasoned, and “supported by substantial evidence in the record.” Associated Fisheries of Maine, Inc. v. Daley, 127 F.3d 104, 109 (1st Cir.1997) (Administrative Procedure Act). Substantial evidence, in turn, means evidence reasonably sufficient to support a conclusion. Sufficiency, of course, does not disappear merely by reason of contradictory evidence. See Sprague v. Director, O.W.C.P., 688 F.2d 862, 865-66 (1st Cir.1982); see also Sandoval v. Aetna Life & Gas. Ins. Co., 967 F.2d 377, 382 (10th Cir.1992); Jett v. Blue Cross & Blue Shield of Alabama, Inc., 890 F.2d 1137, 1140 (11th Cir.1989).

This deferential standard may not be warranted, however, when a conflict of interest exists, such as when the policy manager has a personal interest contrary to the beneficiary’s. In this case, any award of benefits would come out of Paul Revere’s own pocket. Plaintiff notes, also, that Paul Revere was a Textron subsidiary. However, here we suggest an important competing motive: having a benefit plan is to please employees, not to result in the employer’s bad reputation. See Van Boxel v. Journal Co. Employees’ Pension Trust, 836 F.2d 1048, 1051 (7th Cir.1987). Indeed, we venture that an employer would not want to keep an overly tight-fisted insurer. The conflict is not as serious as might appear at first blush.

The question comes as to how this should be handled. The circuits have varied from giving the manager no deference, see Armstrong v. Aetna Life Ins. Co., 128 F.3d 1263, 1265 (8th Cir.1997) (2-1 decision; reh’g and suggestion for reh’g en banc denied), to shifting the burden of exoneration to the insurer, see Brown v. Blue Cross & Blue Shield of Alabama, 898 F.2d 1556,1566 (11th Cir.1990), cert. denied, 498 U.S. 1040, 111 S.Ct. 712, 112 L.Ed.2d 701 (1991), to applying a sliding scale involving “careful judicial scrutiny to make sure the[] action was reasonable,” Van Boxel, 836 F.2d at 1053.

There are advantages in having a simple procedure, cf. Sandoval, 967 F.2d at 380, which the Armstrong approach forecloses despite the parties’ agreement to accept the insurer’s discretion. The Massachusetts district court has prophesied that in ease of conflict our court would merely “giv[e] ‘more bite’ to the arbitrary and capricious standard.” Doe v. Travelers Ins. Co., 971 F.Supp. 623, 630 (D.Mass.1997). We so do, interpreting “more bite” as adhering to the arbitrary and capricious principle, with special emphasis on reasonableness, but with the burden on the claimant to show that the decision was improperly motivated. Cf. Sullivan v. LTV Aerospace & Defense Co., 82 F.3d 1251, 1255 (2d Cir.1996). To do more would sacrifice the advantages of the offered arrangement. Doyle has made no showing except to point out the subsidiary relationship and the fact that Paul Revere decided which claims it would pay, which is not enough.

This leaves our question not which side we believe is right, but whether Paul Revere had substantial evidentiary grounds for a reasonable decision in its favor. We first review the policy, and after, the evidence.

The Policy

An employee is eligible for benefits under the policy if “totally disabled from any occupation.”

Totally disabled from any occupation, or total disability from any occupation means: ■

1. because of injury or sickness, the employee is completely prevented from engaging in any occupation for which he is or may become suited by education, training or experience ____ (emphasis added).

We, of course, agree that such “‘general’ disability provisions should not be construed so literally that an individual must be utterly helpless to be considered disabled.” Hammond v. Fidelity & Guar. Life Ins. Co., 965 F.2d 428, 431 (7th Cir.1992). How far from that has been variously; and perhaps even irreconcilably, described. See, e.g., id. (unable to “perform all the substantial and material acts necessary to the prosecution of some gainful business or occupation”); VanderKlok v. Provident Life & Accident Ins. Co., 956 F.2d 610, 615 (6th Cir.1992) (unable to “pursue ‘gainful employment in light of all the circumstances.’” (citation omitted)); Torn v. Ball Corp., 862 F.2d 1428, 1431 (10th Cir.1988) (“inability to follow any occupation from which [the claimant] can earn a reasonably substantial income rising to the dignity of an income or livelihood”); Helms v. Monsanto Co., 728 F.2d 1416, 1420 (11th Cir.1984) (same); Boss v. Travelers Ins. Co., 4 N.E.2d 468, 296 Mass. 18, 22 (1936) (unable to “perform[] remunerative work of a substantial and not merely trifling character” (quotations and citation omitted)). In addition to “totally disabled,” we note the policy reads “completely prevented,” a further emphasis. Within reason, Paul Revere’s discretionary power includes not only factual findings as to plaintiffs condition, but interpretation of policy terms. See Allen, 967 F.2d at 697; cf. Marecek v. BellSouth Telecommunications, Inc., 49 F.3d 702, 705 (11th Cir.1995).

The Evidence

In favor of Paul Revere is the following. Paul Revere sent Doyle to a neurosurgeon, Dr. Bruce Cook, in October 1990 for an Independent Medical Examination. It provided Dr. Cook with medical information from its files and a description of Doyle’s job, and also asked Doyle to provide Dr. Cook with “any other information that pertains to your condition.” Asked to determine Doyle’s medical restrictions arid assess their effect on his ability to do his job at Textron, Dr. Cook said, “I do not think that the mild residual myelopathy impairs him from either the written or verbal description that I Was given.” Acknowledging Doyle’s “pain syndrome,” he offered that treatment should focus on adjusting Doyle’s physical position at work to reduce strain on his neck, and he recommended supervision by an occupational therapist. He concluded, “His restrictions in work would be predominantly in the physical realm where he should not do any lifting, bending or stretching and should be able to change positions on a frequent basis.”

Apparently .on Dr. Cook’s advice, Paul Revere had Doyle meet with Brian Delahanty, a rehabilitation consultant, in January 1991. Delahanty had information about Doyle’s previous work history, education (college degrees in engineering and business management), medical history, and “expressed current functioning levels.” Delahanty concluded that, although Doyle was pessimistic, “Various job modifications are available that would allow Mr. Doyle to perform computer related employment utilizing his engineering skills,” and he contemplated Doyle returning to work at Textron in a modified position.

On Delahanty’s recommendation, Paul Revere had Doyle undergo a Physical Capacity Evaluation in February 1991 at the New England Rehabilitation Center of Southern New Hampshire (NERC). A physical therapist and an occupational therapist, asked to determine his ability to do his former job, assessed Doyle over the course of three hours. Among other details, they documented his expressed functional tolerances: 30-60 minutes for sitting (45 observed); 10 minutes for standing (15 observed); one third mile for walking; 15 miles for driving; and 15-20 miles for car riding. After describing other limitations, many due to pain, they concluded that Doyle had a “sedentary work capacity” at that time and recommended a “comprehensive pain program” involving various therapies in order to “facilitate a gradual return to work” in his former position. They also recommended that Doyle have a “job site visit to alter or adjust the environment to facilitate proper body positioning thus decreasing [his] pain and allowing [him] to return to work part time.”

Following up the NERC report, Delahanty contacted Doyle to discuss work and rehabilitation options, including the recommended “pain program.” (Paul Revere previously had agreed to continue benefits for six months while Doyle participated in rehabilitation.) Doyle repeatedly expressed resolute pessimism as to his ability to work or even to attempt rehabilitation. Although it is true, as Doyle said much later, that he never expressly declined it, both Delahanty and Paul Revere understood him to refuse to participate. The record, on the whole, supports them. Although the policy did not require Paul Revere to rehabilitate Doyle, its willingness to do so bolsters its overall reasonableness.

On the basis of this evidence, Paul Revere found Doyle not totally disabled and discontinued benefits in March 19.91. We accept that the evidence sufficiently supports the conclusion that Doyle, fifty-four years old, college educated in both engineering and business management, and most recently working as a senior engineer for a major defense contractor, was not “totally disabled from any occupation” because he retained a “sedentary” work capacity and a potential for further rehabilitation that Paul Revere was willing to pursue with a combination of job-site restructuring, further therapy, and decreased hours. That his capacity,- initially at least, may have been limited to part-time work does not require concluding otherwise.² Cf. August v. Offices Unlimited, Inc., 981 F.2d 576, 582 (1st Cir.1992) (implying that total disability means inability to work either part-time or full-time); Marecek, 49 F.3d at 705 (finding that part-time work capacity precluded total disability status); Simari’s Case, 11 Mass.App.Ct. 904, 414 N.E.2d 629 (1981) (workmen’s compensation) (noting that one who was capable of “light part-time sedentary work” and who could, with treatment, resume full-time work was not permanently and totally disabled).

Conclusion

The collection of conflicting expert opinions is on the whole equivocal, the fault of Paul Revere, whose practice was to ask about limitations on claimant’s ability to do his present job, not “any occupation.” Nevertheless, we believe we have recited an ample basis within a reasonable interpretation of the policy terms. One interesting circumstance is the opinions, given prior to termination of benefits, in which-Dr. Donald Pettit (Doyle’s treating physician) maintained the totality of Doyle’s disability, coupled with assurances that he saw no hope for the future, contrasted with his finding in September 1993 effectively conceding at least halftime work capacity.³ It is true, of course, that Paul Revere did not have the latter information in March 1991, and that this described Doyle’s condition two and a half years later, but, by confirming, it does lend color to the earlier appraisals relied upon by Paul Revere.

It is a matter of judgment, but we have given much thought to the record appertaining to Doyle’s submissions before termination of benefits in March 1991, including the careful opinion of the district court, as to which, however, see Review, supra, and we conclude in favor of defendant. Paul Revere’s denial was reasonably supported by substantial evidence. The court erred by not granting summary judgment on Count I in its favor. This, automatically, ends the case for later years.⁴

The summary judgment for Doyle is reversed; judgment to be ordered for Paul Revere.

1 . Strictly, Paul Revere appeals from the summary judgment for Doyle. This left Paul Revere's motion effectively denied as moot. The motions are obverse, and, because there are no issues on either side that would require a trial, reversal of Doyle’s judgment permits the granting of Paul Revere’s.

2 . The dissent argues that Paul Revere acted arbitrarily and irrationally in refusing to find Doyle to be “totally disabled” based on his reports of debilitating pain. In our view, however, the evidence concerning Doyle's pain is not so overwhelming that it could be thought to compel a finding of total disability. Although the dissent suggests that Doyle's pain was an "insurmountable barrier” that prevented him from undertaking even sedentary work, none of the reports discussed by the dissent describes Doyle’s symptomology in such unequivocal terms. Indeed, while the reports do acknowledge Doyle's complaints of pain, they express no opinion as to whether his pain symptoms were sufficiently severe to prevent him from returning to work. The record as a whole leaves this an open question. It is particularly noteworthy that the NERC found a presently existing sedentary work capacity despite the well-documented pain limitations. Further, the suggested pain program was intended to return Doyle to his former job, not "any occupation.” We think it follows that it could not have been irrational or arbitrary for Paul Revere to decide that Doyle retained some residual capacity for work, notwithstanding his complaints of chronic pain. Finally, with respect to the dissent’s ultimate conclusion, Paul Revere did view the expert evidence that Doyle offered at the Social Security hearing. We cannot think it arbitrary for it to "ignore” the lay ALJ’s decision thereon.

3 . Dr. Pettit performed a Residual Functional Capacity Evaluation in September 1993. He concluded that, in an eight hour workday, Doyle was able to sit for up to four hours, stand for up to two, walk for up, to one, and do a combination of the three for up to four. He could "occasionally” (0% to 33%) lift and carry up to ten pounds. He was able to use both hands for simple grasping, pushing and pulling, and fine manipulating. He could use both feet for repetitive movements, such as operating foot controls. Finally, he could bend or reach above shoulder level occasionally, but could not squat, crawl, or climb.

4 . Eligibility requires an employee to have been working fulltime at the time he became totally disabled and to remain totally disabled thereafter. Thus, because substantial evidence supports Paul Revere’s finding that he was not totally disabled in March 1991 (assuming he was totally disabled from December 1989 to'that time), Doyle could not later become eligible. Therefore, we need not consider Count II, which sought benefits from the date of judgment until the earlier of his 65th birthday or the date he was no longer totally disabled. Also, we need not consider assessments of his post-March 1991 condition, nor assessments of his condition in 1990-91 that Paul Revere received after that date. Even assuming the Social Security Administration’s November 1991 award of benefits, made on the basis of the same information before Paul Revere, could have any relevance, it had no binding effect. See, e.g., Cox v. Mid-America Dairymen, Inc., 965 F.2d 569, 572-73 (8th Cir.1992).