Crespo v. Unum Life Insur. Co. of America

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Crespo v. Unum Life Insur. Co. of America, 294 F. Supp. 2d 980 (N.D. Ill. 2003)( Issues: Scope of Review, Fibromyalgia). United States Magistrate Judge Morton Denlow of the Northern District of Illinois has long been a strong proponent of “paper trials” in lieu of summary judgment as a means of resolving civil cases ( See: Denlow, “Trial on the Papers” An Alternative to Cross-Motions for Summary Judgment,” The Federal Lawyer Vol. 46, No. 7 p.30 (1999)).  Although this ruling resulted in an award of summary judgment to the plaintiff, rather than a paper trial, Judge Denlow used his opinion to convey a number of provocative thoughts about how ERISA cases are to be resolved.  This case involved an attorney employed by LEXIS who became disabled due to fibromyalgia.  Although Unum approved Crespo’s short-term disability benefits for six months, it refused to pay her long-term disability benefits citing the absence of a rheumatologic evaluation, the absence of a psychological evaluation, and the lack of evidence that the fibromyalgia had worsened at the time Wendy Crespo stopped working.   In her appeal, the plaintiff supplied all of the evidence Unum claimed was lacking; however, Unum refused to reverse its determination.

In ruling on the case, Judge Denlow only considered the claim record compiled by Unum; the court held that it would not consider a favorable Social Security determination reached shortly after the final Unum decision was rendered.  The court also found that Unum had sufficiently reserved discretion to require the application of a deferential standard of review allowing reversal of Unum’s decision only if the Court could find the decision arbitrary and capricious.  However, in the most interesting part of the decision, Judge Denlow pointed out the difficulty in resolving ERISA claims on cross-motions for summary judgment, even under a deferential standard of review, and suggested the parties consider proceeding in all cases with a trial on the papers in accordance with Federal Rule of Civil Procedure 52(a).  Because cross-motions for summary judgment do not weigh the parties’ right to a trial on the merits, nor do cross-motions for summary judgment require a court to choose one side or the other, Judge Denlow complained about the risk of “the potential for a non-decision, extra litigation, additional costs, and unnecessary delay.” *25.  A trial on the papers, on the other hand, “is certain to result in a decision for one party rather than present the risk of a non-decision if the cross-motions for summary judgment are both denied.” *26.  A paper trial also eliminates the risk of a remand for a new trial if summary judgment is reversed on appeal.  *26.

Even where the court applies a deferential standard of review, summary judgment requires that “a court must determine the reasonableness of the plan administrator while drawing all inferences in favor of the claimant.”*28.  The court added,

Furthermore, a defendant's summary judgment motion is difficult to analyze in a situation where the plan administrator is given discretion. On the one hand, the court must look at the evidence in the light most favorable to the plaintiff in analyzing whether the plan administrator abused its discretion. On the other hand, the court must give deference to the administrator's decision. This constitutes complex mental gymnastics that are not necessary in a trial on the papers situation. Under a trial on the papers, the plaintiff must meet its burden of proof that the plan administrator's decision was arbitrary and capricious. For all of these reasons, the Court strongly recommends that, in the future, parties consider a trial on the papers.  *29-*30.

That being said, the court granted the plaintiff’s motion for summary judgment and denied the defendant’s motion.  The court ruled that Unum’s assessment of Crespo’s claim was neither “full nor fair.”  Relying heavily on Hawkins v. First Union Corp. Long-Term Disability Plan, 326 F.3d 914 (7 th Cir. 2003)( May 2003 ), the court found that “Unum did not make a full and fair assessment of Crespo’s claim because it did not contact any of her treating physicians to discuss its concerns.”  Unum rejected later submissions by treating and other examining doctors by claiming those assessments were not relevant to the date of disability; however, the principal treating doctor had a lengthy treatment relationship and Unum made no effort to contact either him or his predecessor to learn more about whether there had been any change in Crespo’s condition.  The court pointed out, “Although Unum need not accord special deference to a treating physician, Unum may not refuse arbitrarily to credit Crespo's reliable evidence, including the opinions of her treating physicians. Nord, 123 S. Ct. at 1972.”  Unum’s refusal to consider the rheumatologic and psychological evaluations was also considered evidence of Unum’s failure to make a “full and fair assessment of Crespo’s claim.” The court criticized Unum’s lack of “effort to place these reports in context to determine if they were consistent with earlier diagnoses by other doctors.” *37.  Next, the court rejected Unum’s counsel’s reliance on an isolated comment in a note from a doctor who had seen Crespo on one occasion.  Unum’s denial made no mention of the significance of that doctor’s notation of “?Fibromyalgia,” and the failure to contact the doctor to see what he meant resulted in the court finding, “Unum's reliance on a one-sided interpretation of an ambiguous note as a basis to discount the findings of Crespo's treating physicians was arbitrary and capricious. See Hawkins, 326 F.3d at 919 (reversing a benefit denial where an insurer offered "nothing more than scraps to offset the evidence presented" by a claimant). *37.

Ticking off additional reasons for ruling in plaintiff’s favor, the court’s fourth basis for finding Unum’s conduct arbitrary and capricious is because the insurer “based its decision on its own in-house doctors [Thomas Reeder and Donna Carr] who never examined her and who made no effort to discuss her condition with her treating physicians.” *37.  The ERISA claim regulations require consultation with a health care professional with appropriate training and expertise in the field of medicine in question.   The court found nothing in the record to indicate the in-house doctors employed by Unum had any particular expertise or experience with the issue in question; nor did those doctors make any effort to discuss their concerns with any treating doctors.

The court’s next point was that Unum failed to refer Crespo for an independent evaluation or even send her records to be reviewed independently.  Citing Seventh Circuit precedent, the court held that seeking “independent expert advice is evidence of a thorough investigation.” *39.  The court also found Crespo was denied a “full and fair assessment” of her claim because Unum made adverse credibility determinations “without a sufficient factual basis.”  Relying on Hawkins, the court pointed out that Unum’s generalized statements that the majority of individuals with fibromyalgia can work is deemed “the weakest possible evidence” that any particular claimant is able to work.  *40.  In addition, the court determined that Unum’s specific reasons for denying benefits were “logically unsound” since Crespo’s activities and efforts to exercise were not reasons for challenging the fibromyalgia diagnosis and were, in fact, prescribed therapies for her condition.  Nor, according to the court, could Unum conclude that Crespo’s activities were consistent with the ability to work a full time job; and Judge Denlow added, “Furthermore, there is no requirement on the disabled to become inert in order to avoid having their disability benefits denied.” *41-*42.

The eighth reason for finding Unum’s rejection of Crespo’s claim arbitrary and capricious was also based on Hawkins which held that just because an individual does not immediately surrender to an impairment and struggles to maintain work activity as long as possible does not disqualify someone from receiving disability benefits.

After enumerating eight reasons for finding Unum’s denial arbitrary and capricious, the court found Unum’s position was “not substantially justified,” thus entitling the plaintiff to attorneys’ fees.  The court also found that remand was unnecessary because “the case is so clear-cut that it would be unreasonable for Unum to deny the application for benefits on any ground.” *44.

Discussion: Judge Denlow’s ruling is so thorough and complete that he leaves little room for discussion.  However, it is useful to return to the provocative discussion with which he begins the opinion.  We hope to explore this topic further in future issues of this newsletter, since the point made is significant.  The standard for summary judgment is often set forth as “summary judgment will not lie if the dispute about a material fact is "genuine," that is, if the evidence is such that a reasonable jury could return a verdict for the non-moving party.”  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).  Putting aside the question of jury trials in ERISA cases, that standard should mean that summary judgment for a plan administrator in an ERISA case is inappropriate, even under deferential review, if a reasonable fact finder could determine that the decision was arbitrary and capricious.  This truly is, as Judge Denlow explains, an exercise in mental gymnastics.  The danger of a trial on the papers, however, is that appellate review of a judgment entered pursuant to Rule 52(a) is under the “clearly erroneous” standard of review, while summary judgment rulings are reviewed de novo. It is far easier to convince an appellate court to overturn a decision under a de novo standard of review.  On the other hand, the danger of a non-decision as pointed out in this ruling, is a threat of significant delay in final resolution of the case.  What this means is that the courts and Congress need to get together to find a more appropriate way of deciding ERISA cases.  For now, we suggest treating ERISA cases the same as any other civil litigation, allowing for the full range of discovery and trial by jury as guaranteed by the Seventh Amendment should the parties choose to pursue that course.  As we have frequently argued, the administrative law model is a very poor way to resolve ERISA disputes since there are no guarantees of fairness, impartiality, due process, and, as Crespo illustrates, the application of expertise, in an insurer’s resolution of a benefit claim.   Until the federal courts develop a different system of resolving cases, the panoply of civil dispute resolution mechanisms currently in place will have to suffice.

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