Donato v. Metropolitan Life Ins. Co., 93-2340

• Citation: 19 F.3d 375
• Decision Date: 22 March 1994
• Docket Number: No. 93-2340,93-2340
• Parties: 18 Employee Benefits Cas. 1186 Christine M. DONATO, Plaintiff-Appellant, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 375

19 F.3d 375

18 Employee Benefits Cas. 1186

Christine M. DONATO, Plaintiff-Appellant, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant-Appellee.

No. 93-2340.

United States Court of Appeals, Seventh Circuit.

Argued Dec. 1, 1993.

Decided March 22, 1994.

Donald V. Young, Young & Associates, Robert H. Mittelman (argued), Chicago, IL, for plaintiff-appellant.

Alvin Pasternak (argued), Michael A. DeMicco, Metropolitan Life Ins. Co., Law Dept., New York City, for defendant-appellee.

Before WOOD, Jr., EASTERBROOK, and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

The plaintiff, Christine Donato, brought an action against Metropolitan Life Insurance Company ("MetLife") under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001-1461. Ms. Donato, a former employee of Kemper Financial Services ("Kemper"), sought a reinstatement of benefits under Kemper's Long Term Disability Benefit Plan (the "Plan"), for which MetLife is the insurer and fiduciary. The district court granted summary judgment in favor of MetLife both on Ms. Donato's claim and on MetLife's counterclaim for overpaid disability benefits. Ms. Donato now appeals. For the reasons that follow, we affirm the judgment of the district court.

I

BACKGROUND

A. Facts

In March 1987, Ms. Donato began working as a legal secretary for Kemper. In the fall The Kemper Plan is an employee welfare benefit plan as defined in ERISA. See 29 U.S.C. Sec. 1002(1). The Plan is underwritten through a policy of group insurance issued by MetLife. The Plan provides that an employee who is either "fully disabled" or "totally disabled" shall receive monthly benefits equal to the lesser amount of 60% of the employee's basic monthly earnings or 70% of the basic monthly earnings less other income benefits. The Plan makes clear, however, that monthly disability benefits are to be reduced by the amount of disability benefits to which the employee is entitled under the Social Security Act. The Plan states that " 'Full Disability' and 'Fully Disabled' means that because of a sickness or an injury, you cannot do your job." R. 23, Exh. A at 3. The Plan defines " 'Total Disability' " or " 'Totally Disabled' " as meaning that, owing to sickness or an injury,

                of 1989, she started to experience frequent headaches and fatigue, and developed an extreme sensitivity to smoke, perfume, carpeting, and paper.  Although a traditional allergist had previously found that she tested negative for allergies, Dr. George Shambaugh, a physician, diagnosed her problem in July 1990 as acquired hypersensitivity to formaldehyde and suggested a two-month leave.  Ms. Donato's condition failed to improve.  Therefore, in October 1990, she consulted Dr. Theron Randolph, a physician who specializes in "clinical ecology."   He diagnosed her as being hypersensitive to a variety of common environmental chemicals and stated that continued exposure would worsen her condition.  As a result, Ms. Donato submitted a claim in February 1991 for disability benefits under the Kemper Plan
                

(a) you can not do your job; and

(b) you can not do any other job for which you are fit by your education, your training or your experience.

R. 23, Exh. A at 3. Further, the Plan states that disability benefits will be paid when MetLife receives proof of claim, and that "[a]ll proof must be satisfactory to us." R. 23, Exh. A at 16. The Plan also states that proof of claim "must describe the event, the nature and the extent of the cause for which a claim is made; it must be satisfactory to us." R. 23, Exh. A at 22.

In April 1991, MetLife approved Ms. Donato's February 1991 claim for disability benefits, and did so retroactive to January 17, 1991 (six months after the asserted onset of the disability, July 1990, in accordance with the Plan). MetLife began to make payments to Ms. Donato at that time. In May 1991, MetLife submitted all of Ms. Donato's medical records, including the reports of Drs. Shambaugh and Randolph, to an independent medical consulting agency, Underwriting Medical Actuarial Consultants ("UMAC"). On May 31, 1991, UMAC issued a report ("UMAC I"), which stated that Ms. Donato's file had been reviewed by a board-certified internist and a roundtable of physicians, including an allergist-immunologist.

UMAC I stated that Ms. Donato's medical records were "wordy, confusing, and provide[d] little if any accepted medical information." R. 23, Exh. C at 1. It further stated that the "therapies and suppositions discussed by [Drs. Shambaugh and Randolph, Ms. Donato's medical care providers,] are not widely supported by the AMA, the American College of Physicians, or recognized medical bodies." R. 23, Exh. C at 2-3. Finding that the "evaluation, tests and diagnoses provided by Drs. Shambaugh and Randolph do not conform to medical standards," UMAC I concluded that "no disability exists that would prevent this patient from performing the activities of daily living or her duties as a legal secretary." R. 23, Exh. C at 3. As a result, MetLife terminated Ms. Donato's benefits. MetLife informed her of this decision in an August 9, 1991 letter.

On August 25, 1991, Ms. Donato wrote to MetLife and requested a review of the denial of her benefits. On September 5, 1991, she forwarded MetLife a copy of the Social Security Administration's decision to grant her disability benefits. MetLife responded by informing Ms. Donato and later her attorney that, despite approval of Social Security benefits, MetLife would adhere to its previous decision. MetLife also stated that it would consider any additional relevant information Ms. Donato obtained. In the fall of 1991, Ms. Donato saw another physician, Dr. Gerald

Ross, at the Environmental Health Center in Dallas, Texas. Dr. Ross arrived at essentially the same conclusion as Drs. Shambaugh and Randolph. Ms. Donato sent Dr. Ross' report to MetLife. MetLife forwarded this additional information to UMAC for a second review by a roundtable of physicians and a board-certified allergist-immunologist. On August 4, 1992, UMAC issued another report ("UMAC II"), which stated that the information Ms. Donato had submitted failed to adduce any medical proof to support the conclusion of Ms. Donato's physicians that she was disabled.

B. District Court Proceedings

Because Ms. Donato had filed suit in early 1992 under ERISA, 29 U.S.C. Sec. 1132(a)(1)(B), ¹ litigation was well underway when, pursuant to UMAC II, MetLife determined conclusively to deny Ms. Donato disability benefits. Thus, following the issuance of UMAC II, MetLife moved for summary judgment both on Ms. Donato's ERISA claim and on MetLife's counterclaim for repayment of overpaid disability benefits. MetLife's counterclaim was based on the Kemper Plan's express reduction of disability benefits by the amount of Social Security benefits received and on an agreement to that effect that Ms. Donato had signed in February 1991.

On April 30, 1993, the district court granted summary judgment in favor of MetLife. Donato v. Metropolitan Life Ins. Co., 822 F.Supp. 535 (N.D.Ill.1993). The district court determined that, because of the deferential language set forth in the Kemper Plan, it would review MetLife's decision on Ms. Donato's benefits only to determine whether that decision had been arbitrary and capricious. Concluding that it was MetLife's prerogative to rely on the determination of independent medical consultants (UMAC) rather than on Ms. Donato's clinical ecology physicians, the court held that MetLife's decision could not be deemed arbitrary and capricious. In addition, because Ms. Donato essentially failed to contest MetLife on its counterclaim, the court entered judgment in favor of MetLife for $4,640.13.

II DISCUSSION

On appeal, Ms. Donato submits that the district court erred in granting summary judgment to MetLife. Specifically, she argues that the district court should not have given deference to MetLife's decision to deny her benefits by applying an arbitrary and capricious standard of review, but rather should have reviewed MetLife's decision de novo. Ms. Donato asserts in the alternative that, even under the deferential standard of review, the district court erred in concluding that no genuine issue of material fact existed as to whether MetLife's decision was arbitrary and capricious. In addition, Ms. Donato claims that MetLife's letter of August 9, 1991, in which MetLife informed her of its decision, did not satisfy the requirements for such letters as set out in ERISA and its corresponding regulations. Finally, with respect to MetLife's counterclaim, Ms. Donato states that, because her benefits were wrongfully terminated, she does not owe MetLife any overpaid benefits. We now review the district court's decision on each of these issues de novo to determine whether any genuine issue of material fact exists and whether MetLife was entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In doing so, we draw all inferences in favor of Ms. Donato. See Anderson v. Liberty Lobby, 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986); Anderson v. Operative Plasterers' & Cement Masons' Int'l, 991 F.2d 356, 357 (7th Cir.1993).

A. Standard of Review

Ms. Donato submits that the district court erred in reviewing MetLife's decision to deny her long-term benefits under the deferential arbitrary and capricious standard. To resolve this issue, we look to Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). In that case, the Supreme Court was called on to set out the appropriate standard of review in ERISA cases arising under 29 U.S.C. Sec. 1132(a)(1)(B), the subsection under which challenges to benefit eligibility determinations are brought. The ERISA statute itself had not given a standard of review. Applying principles of trust law, the Court held "that a denial of benefits challenged under Sec. 1132(a)(1)(B) is to be reviewed under a de novo standard unless the...