Levinson v. Reliance Standard Life Ins. Co.

• Decision Date: 30 March 2001
• Docket Number: No. 00-11187,Docket No. 97-00935-CV-ASG,00-11187
• Citation: 245 F.3d 1321
• Parties: (11th Cir. 2001) GARY A. LEVINSON, Plaintiff-Appellee, v. RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant-Appellant. D. C
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1321

245 F.3d 1321 (11th Cir. 2001)

GARY A. LEVINSON, Plaintiff-Appellee, v. RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant-Appellant.

No. 00-11187

D. C. Docket No. 97-00935-CV-ASG

UNITED STATES COURT OF APPEALS ELEVENTH CIRCUIT

March 30, 2001

[Copyrighted Material Omitted] Appeal from the United States District Court for the Southern District of Florida

Before WILSON, KRAVITCH and COX, Circuit Judges.

WILSON, Circuit Judge:

On this appeal, we review a summary judgment entered on behalf of Gary A. Levinson ("Levinson") on his claim against Reliance Standard Life Insurance Company ("Reliance") for long-term disability benefits. Reliance appeals from summary judgment on the issue of liability, the district court's decision refusing to remand the claim decision back to Reliance's plan administrator for further review, and its award of damages to Levinson. To resolve this appeal, we consider three issues: (1) whether the district court erred in determining that Reliance's disposition of Levinson's claim was arbitrary and capricious; (2) whether the district court erred in failing to remand the case to Reliance after concluding that its claim decision was arbitrary and capricious; and (3) whether the district court erred in awarding disability benefits to Levinson.

I. BACKGROUND

Levinson, an attorney, filed a claim for benefits with Reliance under his law firm's group long-term disability policy ("the policy" or "the plan") governed by the Employee Retirement Income Security Act ("ERISA").¹ Levinson claimed that he was entitled to disability benefits due to a "serious problem with the heart, specifically severe prolapse of the mitral valve associated with mitral insufficiency" which precluded him from working on a full time basis. A cardiologist advised Levinson to work only on a part-time basis because job stress caused by working as a full-time real estate attorney could put him at risk for enhancing the progression of his heart condition.

Under the Reliance policy, an insured is entitled to monthly benefits if he "(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 [Reliance]."² The policy also says that those who are partially disabled³ "will be considered Totally Disabled, except during the Elimination Period . . . ." In support of his claim, Levinson submitted an Attending Physician's Statement ("APS") from Dr. Azar (his cardiologist) that said Levinson was totally disabled since June 27, 1995,⁴ and described Levinson's physical limitations as prohibiting him from engaging "in heavy physical work and stressful situations."

Reliance separately obtained Levinson's medical records and denied Levinson benefits, citing a lack of physical symptoms and "objective medical findings." Reliance stated that Levinson's condition did not preclude him from performing the material duties of his occupation, so he did not meet the definition of "Totally Disabled." In making its decision, Reliance relied on the report of a nurse in its medical records department and the opinion of a claims person. Levinson requested formal review of the decision, and submitted a supporting letter from Dr. Azar. After Reliance denied his appeal, Levinson filed this lawsuit in state court pursuant to 29 U.S.C. 1132(a)(1)(B) to recover benefits due to him under a group policy governed by ERISA. Reliance removed to the district court.

Levinson moved for summary judgment, asking the district court to review de novo Reliance's decision. Reliance opposed the motion, and argued that the appropriate standard of review was whether its claim decision was arbitrary and capricious. Levinson conceded in his reply brief that the proper standard was arbitrary and capricious, and that he was entitled to summary judgment under that standard as well. The magistrate judge recommended granting the motion, noting the lack of evidence to support the plan administrator's decision to deny benefits. The district court adopted the magistrate's report and recommendation, finding Reliance liable to Levinson for benefits,⁵ and held a bench trial to determine the amount of damages. Reliance argued that the district court should either remand Levinson's claim to Reliance for an initial calculation of damages, or should limit the evidence of damages to evidence contained in the administrative record. The district court did neither, and determined Reliance had not shown that Levinson's condition had improved, and awarded benefits through the date of trial. The parties had agreed on the monthly benefit amount Levinson was to receive (60% of his covered monthly earnings on the date prior to disability or $3,500 per month). The parties did not agree on the time period over which the past-due benefits were payable (the court decided the period extended to the date of trial), or on the amount of "other income benefits" to be offset from the agreed upon monthly benefit amount. The policy dictated that wages and other compensation benefits were to be offset from the monthly benefits. The court found that Levinson was entitled to damages in the amount of $138,825.62, and the parties agreed to ten percent pre-judgment interest. This appeal followed.

II. DISCUSSION

We review a district court's grant of summary judgment de novo, applying the same legal standards that controlled the district court's decision. See Shannon v. Jack Eckerd Corp., 113 F.3d 208, 210 (11th Cir. 1997). Whether the district court erred in failing to remand the case to Reliance's plan administrator is a question of law subject to de novo review. See id. ("We cannot say that the district court erred in remanding for the Plan administrator to make a reasonably relevant inquiry."). We review the district court's findings of fact for clear error. See Fed. R. Civ. P. 52(a); Worthington v. United States, 21 F.3d 399, 400 (11th Cir. 1994).

A. Whether the Claim Decisions Were Arbitrary and Capricious

The district court concluded, after an independent review of the record and a de novo determination of the issues, that the plan administrator's decision was arbitrary and capricious and that Reliance had no basis upon which it could deny Levinson's claim. The district court found that the plan administrator's decision did not survive even the most deferential standard of review.

Because the policy gives the administrator discretion to determine eligibility for benefits, we must determine whether the administrator's decision was arbitrary and capricious. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Jett v. Blue Cross & Blue Shield of Ala., Inc., 890 F.2d 1137, 1138-39 (11th Cir. 1989). Normally, "[a] decision to deny benefits is arbitrary and capricious if no reasonable basis exists for the decision." Shannon, 113 F.3d at 210. Because Reliance pays out to beneficiaries from its own assets, however, a conflict of interest exists between its fiduciary role and its profit making role. Thus, the proper standard in this case is a heightened arbitrary and capricious standard. That is, the arbitrary and capricious standard "must be contextually tailored" to the case. Brown v. Blue Cross & Blue Shield of Ala., Inc., 898 F.2d 1556, 1563-64 (11th Cir. 1990) (citation and internal quotation marks omitted). When conflicts like the one in this case exist, a highly deferential review is inappropriate. See id. at 1562. "[A] wrong but apparently reasonable interpretation is arbitrary and capricious if it advances the conflicting interest of the fiduciary at the expense of the affected beneficiary or beneficiaries unless the fiduciary justifies the interpretation on the ground of its benefit to the class of all participants and beneficiaries." Id. at 1566-67. "It is fundamental that the fiduciary's interpretation first must be `wrong' from the perspective of de novo review before a reviewing court is concerned with the self-interest of the fiduciary." Id. at 1566 n.12. Whether a claim decision is arbitrary and capricious requires a determination "whether there was a reasonable basis for [Reliance's] decision, based upon the facts as known to the administrator at the time the decision was made." Jett, 890 F.2d at 1139.

To support his initial claim, Levinson submitted an APS from Dr. Azar stating that he was totally disabled. Levinson was under the care of a physician, and there is no dispute that he completed the elimination period. Reliance also had access to Levinson's medical records that detailed his heart condition. At the time Reliance made the decision on Levinson's claim, it appears that the only facts known to it were based on Dr. Azar's APS, Levinson's medical records, and Levinson's status as a full time employee at the law firm. Reliance's decision on Levinson's appeal involved a review of the same facts as its first decision, as well as: (1) Dr. Azar's letter of January 1996 which stated Levinson could not perform the material duties of his occupation on a full-time basis; and, (2) office attendance records showing that between Levinson's initial appointment with Dr. Azar and the date of his termination Levinson had taken two sick days, left early for a doctor's appointment one day, and had taken 11 1/2 vacation days.⁶ It appears, therefore, that Reliance relied on the nurse's review and the opinion of its claim person that Levinson was asymptomatic and not disabled, and not upon any independent medical evidence to conclude that Levinson did not meet the definition of disabled.⁷ Furthermore, Reliance's assertion that Levinson was asymptomatic does not appear to be a reason for denying benefits anywhere in the language of the policy.

We find that Reliance's decisions on Levinson's claims were wrong from a perspective of de novo review, and its self- interest in this case requires that we determine...