In Fontaine v. Metropolitan Life Ins.Co., 2014 U.S.Dist.LEXIS 41253 (N.D.Ill. March 27, 2014), DeBofsky, Sherman & Casciari scored a major victory in securing an award of long-term disability insurance for a partner in a major law firm. The plaintiff, Mary Fontaine, enjoyed a successful career as a partner practicing in the field of structured finance for the law firm of Mayer Brown in Chicago where she worked for thirty years. As a benefit of her employment, Fontaine purchased both long-term disability and individual disability income insurance from MetLife. Unfortunately, she had to seek benefits under both policies due to myopic macular degeneration, which progressively worsened her vision from when the condition was diagnosed in 1997 until 2011 when she ceased working. Although several treating and examining doctors, along with other vocational and functional test results supported Fontaine’s claim, MetLife denied the claim and a pre-suit appeal. Fontaine then brought suit against MetLife, and the parties agreed to present the case to the court as a trial on the papers pursuant to Federal Rule of Civil Procedure 52. The court ruled for Fontaine.
The group policy defined “disability” as an inability to earn more than 80% of pre-disability income as well as an inability “to perform each of the material duties of Your Own Occupation.” “Own Occupation” was defined as “the specialty in the practice of law in which You were practicing just prior to the date Disability started.”
The individual disability policy defined “disability” as being “Prevented from performing the material and substantial duties of Your Regular Occupation.” “Regular Occupation” was defined as “Your usual occupation (or occupations, if more than one) in which You are Gainfully Employed at the time You become Disabled.”
In her claim submission, Fontaine described the demanding nature of her work and the volume of reading she had to undertake each day, most of which involved dense financial statements and spreadsheets. Workdays often ran in excess of 12 hours per day. In her claim submission, Fontaine explained that her inability to work had to do with her difficulty “reading and digesting complex cash flow formulas that go on for pages and often involve footnotes in tiny type,” “reading numbers and accurately noting where the decimal point is placed,” and “discerning the subtle differences between similar contract provisions during contract negotiations conducted in concentrated time frames.” She further stated that she could not “generate timely issue summaries for clients, or lead them through a line-by-line review of lengthy contracts.” Fontaine also complained of an inability to appropriately supervise the work of attorneys under her direction and that she had “misplaced words in documents in a way that change[d] their legal meaning.” Nor was she able to “read fast enough to get through the volume of work on [her] desk each day.” And Fontaine also complained that she could “no longer effectively generate new business” because she could not read materials to prepare for meetings with a potential client and had difficulty reading name tags and business cards. She also expressed worry about making mistakes that could result in liability risks to her law firm.
Fontaine began seeing a vitreoretinal specialist in 1997 because of experiencing floating distortions in her vision and flashes in her left eye. Diagnostic testing revealed “[m]yopic retinal degeneration” in both eyes. The plaintiff’s condition worsened over the following years; and by 2009, Fontaine complained to her retinologist that straight lines appeared to “wave or twist.” In July 2009, Fontaine experienced a sudden crease in visual acuity in her left eye and was referred to another retinal specialist who tested Fontaine and found visual acuity as 20/200 in her left eye and 20/25 in her right eye. That doctor also diagnosed myopic degeneration. Although the left eye improved somewhat following an injection, as time went on, Fontaine’s depth perception worsened, and she described injuring herself as a result of hitting her head while getting into a cab; and she was “seeing double at [a] distance with street signs, driving, and movies. She was not having any problems at work and there was a slight halo effect with her distance vision.” Another injury due to depth perception issues occurred in March 2011 – Fontaine fell in an elevator; and she advised her ophthalmologist that her visual acuity would go in and out of focus, objects appeared “crinkled,” and she had noticed some floaters in her eye. The doctor noted complaints of work difficulties at that visit as well.
Shortly thereafter, Fontaine submitted her claim for benefits accompanied by an attending physician statement completed by her ophthalmologist who had diagnosed myopic macular degeneration, and listed Fontaine’s symptoms as “blurred vision – progressive.” The attending physician also wrote that no treatment was available and that he advised her to cease her occupation because of her worsening condition.” MetLife contracted with a doctor, Robert Nelson, M.D., to review the claim submission. Dr. Nelson suggested that “burn out” might be the cause of Fontaine’s problems. Nelson supplemented his report with the following conclusion: “I do not feel that the objective evidence supports a visual basis for [Fontaine’s] concerns. It is my opinion that her present visual capabilities would permit her to utilize a computer, read, drive an automobile, and perform the employment requirements that she has described competently and capably.”
The treating ophthalmologist wrote a rebuttal report explaining that the corrective lenses recommended by Dr. Nelson were inadequate to enable Fontaine to work because her vision was “impaired by a combination of conditions, including myopic macular degeneration; and she also experiences floaters that also interfere with her ability to continuously read documentation.” Other treating doctors, such as Fontaine’s optometrist, concurred in reporting that none of the plaintiff’s issues could be corrected with a different eyeglass prescription. Dr. Nelson continued to disagree, however.
MetLife also performed surveillance and conducted a field visit; and ultimately denied the claim for benefits in November 2011. Fontaine appealed a few weeks later, including additional evidence from other medical specialists, along with vocational testing and evaluation findings, and supportive witness statements. A retinal specialist found “definite vitreous floaters with posterior vitreous detachment.” He also found “some lacquer cracks consistent with myopic degeneration.” Thus, he concluded that the findings meant Fontaine’s vision could be compared to “sort of a Swiss cheese where certain letters may disappear and appear as she scans reading material. This can make prolonged reading more difficult.” A second optometrist administered basic reading tests and performed other eye testing that confirmed central relative scotomas consistent with macular degeneration. And the results of an optical coherence tomography (“OCT”) scan further corroborated the same conclusion that Fontaine’s vision would be like
trying to read or see something while looking through a piece of Swiss cheese. Sometimes she may find a “sweet spot” in her vision to allow her to see a word o[r] figure or part of a sentence or group of numbers, but then the word or figures immediately following may be missing or blurred or distorted. Her vision can fluctuate due to this pattern. This can negatively impact visual tracking which is essential for efficient reading. She can easily lose her place, [and] skip words or key information required for accurate comprehension.
Vocational testing, which included the administration of clerical tests which look at the ability to work with numerical data, charts and graphs, revealed that Fontaine scored in the 35th percentile on a reading comprehension test, and in the 1st-5th percentile on a clerical test. Hence, the vocational consultant found the test results “confirm deficits that directly impact Ms. Fontaine’s ability to perform the material and substantial duties of her regular occupation as a Structured Finance Partner.” The vocational expert added,
Ms. Fontaine’s error rate in testing would negatively impact the “qualitative” aspects of her job and jeopardize the exacting nature of her work. Her consistently slow production speed falls well below an acceptable competitive standard and would negatively affect the “quantitative” aspects of her job. . . . [I]t is my opinion that Ms. Fontaine meets the definition of “total disability” as defined in the MetLife policy language. . . .
Letters from Fontaine’s supervisors and co-workers attested to her performance, zeal, and commitment to maintaining a high level of work activity. A report from Fontaine’s psychiatrist also rebutted the suggestion of “burn out.”
In response to the appeal, MetLife retained additional doctors to perform file reviews. Although the ophthalmologist retained by MetLife conceded that Fontaine would have difficulty reading small fonts or that her retinal impairment might cause a reduction in reading speed, the reviewing doctors found Fontaine could work; and they all questioned why she stopped working when she did when there was no evidence of a significant change at that time. MetLife also retained a vocational consultant who disagreed with the plaintiff’s consultant’s selection of test instruments and with his conclusions.
MetLife was also informed after the commencement of litigation that Fontaine had been approved to receive Social Security disability. The entire claim record and the recording of the hearing were also provided. The court quoted from Fontaine’s testimony at the hearing, as well as the testimony given by an independent vocational expert who had testified at the hearing. The court also quoted from the administrative law judge’s oral findings at the hearing.
Turning to the merits of the claim, the court determined that the de novo standard of review was applicable to the claims under both policies. Although the group LTD policy contained language that would ordinarily trigger a deferential standard of review, an Illinois Insurance Regulation, 50 Ill.Admin.Code § 2001.3, issued in 2005, made the incorporation of such language unlawful in policies issued or delivered in Illinois. MetLife challenged the validity of the regulation, asserting the Director of Insurance lacked authority to promulgate such a regulation. However, the court disagreed, citing rulings upholding the Director’s authority to issue the regulation. Schlattman v. United of Omaha Life Ins. Co., No. 12 C 7847, 2013 WL 3147368, at *5 (N.D. Ill. June 19, 2013); Zuckerman v. United of Omaha Life Ins. Co., No. 09 C 04819, 2012 WL 3903780, at *6 (N.D. Ill. Sept. 6, 2012).
The court likewise rejected MetLife’s argument that the regulation is preempted by ERISA, finding that the regulation falls within ERISA’s savings clause, 29 U.S.C. § 1144(b)(2)(A). The court cited Zaccone v. Standard Life Ins. Co., No. 10 CV 00033, 2013 WL 1849515, at *4 (N.D. Ill. May 1, 2013) (collecting cases) and Schlattman, 2013 WL 3147368, at *5 (“This precise argument [that Section 2001.3 is preempted by ERISA] has been vetted and rejected by two circuit courts of appeal (considering similar regulations) and no less than seven judges within the Northern District of Illinois (considering Section 2001.3 specifically).”).
In addition, the court rejected MetLife’s claim that while discretionary authority to interpret the contract might be prohibited, the insurer retained discretionary authority to make benefit decisions. The court pointed out that Zaccone considered and flatly rejected that same argument. The court deemed Zaccone’s reasoning persuasive.
Turning to whether Fontaine established her disability, the court rejected the plaintiff’s argument that she need only show an inability to perform one or more material job duties. Instead, the court interpreted the policy requirement that the plaintiff establish an inability to perform “each of the material duties of your own occupation” meant that “Fontaine must show that she is unable to perform all of the material duties of a structured finance partner.” The court found that burden to have been met, initially noting that “Fontaine had no reason to lie about [her claimed] symptoms, and MetLife has offered no evidence to dispute them.”
The court found that there was really no dispute in the evidence as to whether Fontaine had a scotoma in one or both of her eyes. Moreover, the court found there to be no dispute as to Fontaine’s occupational description. Instead, the main dispute centered on MetLife’s principal argument that Fontaine had “good visual acuity.” Fontaine never argued a lack of visual acuity as the basis of her disability, though.
The court also questioned Dr. Nelson’s findings, which were deemed “more like a work of advocacy than a dispassionate analysis.” The court was particularly concerned about Dr. Nelson’s speculation that Fontaine’s problem was due to “burn out.” The court wrote: “Dr. Nelson has no expertise in psychiatry and is wholly unqualified to offer an opinion that Fontaine was suffering from anxiety or burn out. It is troubling that MetLife would rely on such a wildly speculative opinion.”
The court also disagreed with MetLife’s contention that there was no evidence of material worsening in Fontaine’s condition. The court explained:
As the Seventh Circuit has noted, this argument “would be correct were there a logical incompatibility between working full time and being disabled from working full time, but there is not. A desperate person might force himself to work despite an illness that everyone agreed was totally disabling.” Hawkins v. First Union Corp. Long-Term Disability Plan, 326 F.3d 914, 918 (7th Cir. 2003). Moreover, Dr. Hauser is a family practitioner; he has no special training rendering him qualified to opine on what Fontaine’s job performance indicates about her visual acuity. The court finds his conclusion irrelevant.
In contrast, the court found Fontaine’s treating doctors credible without evidence of bias, noting:
Unlike the reports of many of MetLife’s experts, Fontaine’s treating physicians restricted their conclusions to her eye conditions and how they might affect her ability to do her job. They agreed that by 2011, Fontaine’s eye disease had progressed to the point where she was unable to read at the level that is required of a structured finance partner. The weight of the testimony from these doctors, then, supports a finding that Fontaine was disabled.
Other factors supporting the plaintiff included the court’s determination that the plaintiff was a credible witness and had been found credible at her Social Security hearing. Moreover, her professional accomplishments supported her credibility; and the statements from her colleagues show Fontaine was “a leader in her field and one of the most highly respected and hardest working partners at her firm.” Nor was there any hint of malingering. Instead, the court determined “the record suggests that Fontaine genuinely loved her work and would have continued to work were it not for her disability.” Thus, the court ruled for the plaintiff, awarding benefits due since October 28, 2011 at a rate of $33,500 per month less $2,444 in Social Security plus a 3% cost of living adjustment. The court denied an award of attorneys’ fees, however, finding that MetLife’s position was “substantially justified.”
Discussion: Although the court required that the plaintiff had to show an inability to perform “every” duty, that conclusion is contrary to the majority viewpoint on that issue. For example, in Saffle v. Sierra Pacific Power Company Bargaining Unit Long Term Disability Plan, 85 F.3d 455 (9th Cir. 1996), where the plan required a showing of inability to perform “each and every” material duty in order to qualify for benefits, the court ruled:
Reading “each and every” literally could mean either that a claimant is not totally disabled if she can perform any single duty of her job, no matter how trivial – or that a claimant is totally disabled if she cannot perform any single duty, no matter how trivial. There is little question that the phrase should not be given the former construction, as “total disability” would only exist if the person were essentially non-conscious. See, e.g., Helms v. Monsanto Co., Inc., 728 F.2d 1416 (11th Cir. 1984) (holding that arbitrator’s literal interpretation of “total disability” as absolute helplessness was unreasonable because it would render the entire plan meaningless and would contradict policies underlying ERISA; rather insured can recover if he is unable to perform all the substantial and material acts necessary to the prosecution of some gainful business or occupation); Torix v. Ball Corp., 862 F.2d 1428 (10th Cir. 1988) (same). On the other hand, Saffle’s preferred construction would effectively convert benefits for total disability into benefits for partial disability. Given two possible literal meanings that are not wholly sensible, it cannot be unreasonable for the Committee to interpret the Plan so as neither to qualify, nor to disqualify, virtually everyone. 85 F.3d at 458-9.
Similarly, in McClure v. Life Insur.Co. of North America, 84 F.3d 1129 (9th Cir. 1996), the Ninth Circuit found an ambiguity interpreting “each” to mean “every single one.” Similarly, in Dewitt v. State Farm Insurance Companies Retirement Plan for United States Employees, 905 F.2d 798 (4th Cir. 1990), the Fourth Circuit construed pension plan provisions regarding a claim for disability retirement and explained the difference between “occupational” and “general” disability requirements. The Court found that “an ‘occupational’ disability policy provides benefits if the claimant is unable to perform his regular job.” 905 F.2d at 802. The Seventh Circuit cited DeWitt when it elaborated further:
Disability provisions generally fall within one of two classifications, and the difference between them is substantial. An “occupational” disability policy provides benefits if the claimant is unable to perform his regular job; a “general” disability provision provides benefits if the claimant is unable to perform any job for which he is qualified by reason of education, training or experience. Vanderklok v. Provident Life and Accident Insurance Co., 956 F.2d 610, 614 (6th Cir. 1992); Dewitt v. State Farm Insurance Companies Retirement Plan, 905 F.2d 798, 802 (4th Cir. 1990). Although broad in scope, “general” disability provisions should not be construed so literally that an individual must be utterly helpless to be considered disabled. Rather, the insured should be entitled to recover provided he or she is unable to perform all of the substantial and material acts necessary to the prosecution of some gainful business or occupation. Torix v. Ball Corp., 862 F.2d 1428, 1431 (10th Cir. 1988); Helms v. Monsanto Co., Inc., 728 F.2d 1416, 1420 (11th Cir. 1984).
The fee denial is also inexplicable. Although the court cited Hardt v. Reliance Standard Life Insurance Co., 560 U.S. 242, 254 (2010), where the Supreme Court interpreted ERISA’s fee shifting provision, holding that a court may award fees to an ERISA litigant if she has achieved “some degree of success on the merits,” the court relied on a test that is not stated in the ERISA statute. Just as Hardt rejected a prevailing party standard that was not contained in the ERISA law, the use of a standard from the Equal Access to Judgment Act, 28 U.S.C. § 2412, is questionable. In Raybourne v. CIGNA Life Ins.Co., of N.Y., 700 F.3d 1076 (7th Cir. 2012), while the court of appeals decided it need not determine whether the traditional five-factor test for deciding ERISA attorneys fees remains viable, the key element of that test, the relative merits of the parties’ positions, clearly favored the plaintiff here.
That proposition was also highlighted in a recent ruling from the U.S. Court of Appeals for the Second Circuit, Donachie v. Liberty Life Assur.Co. of Boston, 2014 U.S.App.LEXIS 4593 (2nd Cir. March 11, 2014). There, the court overturned a fee denial as an abuse of discretion. The court ruled that “a party need not prove that the offending party acted in bad faith in order to be entitled to attorneys’ fees.” (citing Slupinski v. First Unum Life Ins. Co.,554 F.3d 38, 47, 48 (2d Cir. 2009)(internal quotations omitted). In addition, fee awards are justifiable based on “culpability,” which consists of the unjustified rejection of material evidence; and in consideration of the relative merits of the parties’ positions. Given the court’s finding that it was troubled by aspects of MetLife’s claim adjudication and that the insurer relied on irrelevant evidence, the appropriate standards appear to have been met.
