Kinstler v. First Reliance Standard Life Ins.

• Decision Date: 08 April 1999
• Docket Number: Docket No. 97-9384
• Citation: 181 F.3d 243
• Parties: (2nd Cir. 1999) MARTHA KINSTLER, Plaintiff-Appellee, v. FIRST RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant-Appellant. August Term 1998 Argued:
• Court: U.S. Court of Appeals — Second Circuit

Page 243

181 F.3d 243 (2nd Cir. 1999)

MARTHA KINSTLER, Plaintiff-Appellee, v. FIRST RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant-Appellant.

Docket No. 97-9384

August Term 1998

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: April 8, 1999

Decided: June 15, 1999

Appeal from the September 30, 1997, judgment, of the United States District Court for the Southern District of New York (Peter K. Leisure, District Judge), applying de novo standard of review to all issues and rejecting insurer's denial of disability benefits in a suit under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (1994). [Copyrighted Material Omitted] Michael J. Burns, New York, N.Y. (Timothy C. Russell, Christie, Pabarue, Mortensen & Young, New York, N.Y., on the brief), for defendant-appellant.

Sean E. Stanton, New York, N.Y., for plaintiff-appellee.

Before: WINTER, Chief Judge, NEWMAN, and SOTOMAYOR, Circuit Judges.

JON O. NEWMAN, Circuit Judge.

This case primarily requires us to determine the appropriate standard of review, under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (1994) ("ERISA"), when an ERISA claim is denied because of an adverse determination not only with respect to an interpretation of the applicable benefit plan but also with respect to a factual question. First Reliance Standard Life Insurance Company ("First Reliance") appeals from the September 30, 1997, judgment of the United States District Court for the Southern District of New York (Peter K. Leisure, District Judge) granting summary judgment to Martha Kinstler on her claim for disability benefits under a group long-term disability program governed by ERISA and denying First Reliance's cross-motion for summary judgment. We conclude that the de novo standard of review applies to all aspects of the denial of an ERISA claim, including fact issues, in the absence of a clear reservation of discretion to the plan administrator. Since the District Court applied this standard, and properly determined that Kinstler is entitled to disability benefits, we affirm.

Background

Kinstler was employed as the Director of Nursing Services at Project Return Foundation, Inc. ("Project Return"), a drug rehabilitation center. She participated in Project Return's long-term disability insurance program, which is an ERISA program funded by a policy (the "Policy") issued by First Reliance. In relevant part, the Policy states:

"Totally Disabled" and "Total Disability" mean that as a result of an Injury or Sickness . . . an Insured cannot perform the material duties of his/her regular occupation. We consider the Insured "Totally Disabled" if due to an Injury or Sickness he or she is capable of only performing the material duties on a part-time basis or part of the material duties on a Full-time basis . . . .

The Policy provides monthly disability benefits if the insured "(1) is Totally Disabled as the result of a Sickness or Injury covered by this Policy; (2) is under the regular care of a Physician; (3) has completed the Elimination Period; and (4) submits satisfactory proof of Total Disability to [First Reliance]."

In June 1993, Kinstler was involved in a car accident and, as a result of injuries to her knee, became disabled. She was deemed to be eligible for long-term benefits for a "total disability" under the Policy, and received such payments from September 5, 1993, until December 5, 1994. By letter dated December 9, 1994, First Reliance terminated the payments, stating that medical evaluations of Kinstler indicated that she was capable of returning to work as a director of nursing. This conclusion resulted from the following process.

Accepting Kinstler's contention, supported by medical records, that she was disabled from all but sedentary work,¹ First Reliance focused its inquiry on the nature of her job. A First Reliance memorandum recommending further inquiry focused on two responses in an Occupational Demands form, which had been completed by the Coordinator of Clinical Support Services at Project Return. Project Return had indicated (1) that Kinstler's job involved no lifting or carrying and (2) that Kinstler spent 75 percent of the work day sitting and 25 percent standing. The form also indicated that Kinstler's job did not require her to stoop, kneel, reach above or below her shoulders, or climb or descend stairs or ladders.

First Reliance obtained an opinion from Dr. Scott V. Haig, one of the treating physicians listed by Kinstler on her claim submission, with respect to his evaluation of her disability in light of the Occupational Demands form. In a letter dated April 5, 1994, Dr. Haig stated that Kinstler "should not work in any capacity where she is expected to walk distances more than 50 feet repeatedly[,] carry loads, lift or climb." Dr. Haig concluded that Kinstler's disability "does restrict her in her ability to perform the job duties which she ha[d] described" to him. He further stated that Kinstler "would be capable of performing sedentary type work . . . if she is kept in a comfortable position such as near recumbency."

First Reliance then obtained an independent medical examination by Dr. Robert J. Roffman, an orthopedic specialist. In his September 7, 1994, report, Dr. Roffman noted that Kinstler "is not only required to perform her administrative functions, but also [to] participate in direct patient care." In an October 13, 1994, addendum to his report, Dr. Roffman concluded that Kinstler "is not totally disabled with regard to performing the duties of her occupation as a Director of Nursing," noting that "[s]he is capable of functioning in a capacity that does not require her to stand or walk for extended periods of time, kneel, squat or lift (specifically in reference to direct patient care)." In Dr. Roffman's opinion, "[i]f the limitations alluded to above can be adhered to," Kinstler would be "capable of working a full 8 hour day."

Another medical evaluation, performed by Dr. Paul G. Jones for the purposes of no-fault automobile insurance coverage, was also obtained. In his report, Dr. Jones stated that Kinstler "cannot return to her regular job as a floor nurse due to the fact that she still requires a cane and is only capable of limited weight bearing and limited use of her left knee." However, he observed that "[s]he could return to work if she only had to do sedentary duties."

Based on these medical evaluations and its understanding that the material duties of Kinstler's regular occupation involved only sedentary tasks, First Reliance determined that Kinstler was no longer totally disabled from performing the material duties of her regular occupation. Accordingly, First Reliance informed Kinstler that her disability benefits would be terminated. Though the termination letter specifically referred to the fact that Kinstler's job "required [her] to sit 75% of the day and stand 25% of the day," the letter noted that the physical requirements of her job "are classified as sedentary activities by the U.S. Department of Labor and Industry."

Kinstler requested a review of the denial of benefits, submitting a copy of her Project Return job description in connection with the request. The job description indicated that Kinstler's job comprised 60 percent administrative duties and 40 percent clinical duties. It also indicated that one of her duties was to respond to health crises if the need arose and that cardiopulmonary resuscitation certification (which requires kneeling) was required. Kinstler's counsel argued that, although a director of nursing in a hospital setting or a large institution with a full nursing staff typically would perform only sedentary activities, Kinstler's regular occupation at a small health care facility like Project Return was not limited to sedentary tasks, and her educational background and work experience precluded her from obtaining employment as a director of nursing in a larger institution. Kinstler also submitted a copy of a Social Security award letter indicating that she would receive disability benefits commencing in December 1993 (i.e., after five consecutive months of disability as required for receipt of Social Security disability payments) until such time as the Social Security Administration determined she was no longer disabled.

As part of the insurer's review, Thomas Hardy, a "vocational specialist" at First Reliance, conducted an assessment of Kinstler's occupation. Hardy's assessment was based on his review of the "OASYS JD" for "Director of Nursing"--the job description given in a vocational profiler computer program, which is apparently based on the occupational definitions contained in the United States Department of Labor's Dictionary of Occupational Titles. According to Hardy's report:

Review of OASYS JD indicates all material duties of position. [Kinstler] appears able to perform all duties as noted and occupation appears within restrictions placed by Dr. Roffman in his addendum dated 10/13/94. While an objection is raised regarding performance of CPR, this does not appear to be an essential duty of this occupation.

In light of policy language requiring [claimant] to be disabled from all duties of her occupation, she does not appear totally disabled.

In a later memorandum, Hardy stated that "[r]eview of vocational information indicates that Ms. Kinstler is capable of sedentary activity: Director of Nursing Service is a sedentary activity." With regard to Kinstler's objection that her position of Director of Nursing at Project Return involved direct patient care and that she could not, based on her education and experience, obtain a purely administrative or managerial position, Hardy noted that Kinstler's attorney

fail[ed] to take into account that our decision is based not on a specific job as performed at a specific place of employment--rather, we have chose[n] to use the Department of Labor standards as...