Smith v. Continental Cas. Co.

• Decision Date: 28 May 2004
• Docket Number: No. 03-2105.,No. 03-2435.,03-2105.,03-2435.
• Citation: 369 F.3d 412
• Parties: Neal S. SMITH, Plaintiff-Appellee, v. CONTINENTAL CASUALTY COMPANY, Defendant-Appellant. Neal S. Smith, Plaintiff-Appellee, v. Continental Casualty Company, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

369 F.3d 412

Neal S. SMITH, Plaintiff-Appellee, v. CONTINENTAL CASUALTY COMPANY, Defendant-Appellant.

Neal S. Smith, Plaintiff-Appellee, v. Continental Casualty Company, Defendant-Appellant.

No. 03-2105.

No. 03-2435.

United States Court of Appeals, Fourth Circuit.

Argued: May 4, 2004.

Decided: May 28, 2004.

COPYRIGHT MATERIAL OMITTED

ARGUED: Bryan David Bolton, Funk & Bolton, P.A., Baltimore, Maryland, for Appellant. Scott Bertram Elkind, Elkind & Shea, Silver Spring, Maryland, for Appellee. ON BRIEF: Michael R. McCann, Hisham M. Amin, Funk & Bolton, P.A., Baltimore, Maryland, for Appellant. Stephen F. Shea, Elkind & Shea, Silver Spring, Maryland, for Appellee.

Before WILLIAMS and TRAXLER, Circuit Judges, and PASCO M. BOWMAN, II, Senior Circuit Judge of the United States Court of Appeals for the Eighth Circuit, sitting by designation.

Vacated and remanded by published opinion. Judge WILLIAMS wrote the opinion, in which Judge TRAXLER and Senior Judge BOWMAN joined.

OPINION

WILLIAMS, Circuit Judge:

Continental Casualty Company appeals the district court's grant of summary judgment to Neal S. Smith on his claim for wrongful denial of benefits under an ERISA plan. Because the district court relied on a Social Security ruling dealing with subjective complaints of pain that does not apply to this ERISA benefits plan, we vacate the grant of summary judgment for Smith. Given our holding on the benefits issue, we vacate the district court's award of attorneys' fees to Smith.

I.

Smith was a vice president of sales in the floor covering department at J.J. Haines & Co., Inc., a wholesale distributor, where he was in charge of carpet, ceramics and wood. As part of his job, he was required to "travel independently up to 60% of the time within the [d]omestic United States to attend various meetings with other personnel and public" and "to visit suppliers and customers." (J.A. at 172.) According to his job description, Smith was "frequently required to sit" and "required to stand and walk." (J.A. at 172.) His job also required "[e]xtensive automobile travel ... to visit suppliers and customers." (J.A. at 172.) Smith's geographical territory extended from Pennsylvania to South Carolina.

Smith has had a long history of back problems. Between March 14, 1997 and May 3, 2000, Smith had three surgeries performed on his lower back. Smith experienced some temporary improvement following the surgeries and was even able to travel during the late fall of 2000.¹ On January 14, 2001, however, Smith was watching a football game, and when he jumped up to celebrate a touchdown, "his back went out again." Smith indicated that since January 2001, he has been unable to stand or walk for more than three to five minutes at a time before he has to lie down.

On February 23, 2001, Smith filed a claim for long term disability benefits under the ERISA plan (the Plan) that Continental Casualty administered for his employer.² Smith's claim was based on his degenerative disc disease and joint disease of the lumbar spine.

The Plan provides for benefits for all full-time officers, managers, and administrators. Continental Casualty concedes that Smith is a covered person. Under the Plan, a covered person is "Disabled" or has a "Disability," and thus, is entitled to benefits, if he meets the "Occupation Qualifier or the Earnings Qualifier." (J.A. at 134.) The Earnings Qualifier is not at issue in this case. The Occupation Qualifier provides:

Disability" means that Injury or Sickness causes physical or mental impairment to such a degree of severity that You are:

1. continuously unable to perform the Material and Substantial Duties of Your Regular Occupation; and

2. not working for wages in any occupation for which You are or become qualified by education, training or experience.

(J.A. at 134.) The Plan defines "Material and Substantial Duties" as "the necessary functions of Your Regular Occupation which cannot be reasonably omitted or altered." (J.A. at 146.)

The Plan also provides that "[t]he policy does not cover any loss caused by, contributed to, or resulting from: ... Disability beyond 24 months ... if it is due to a diagnosed condition which manifests itself primarily with Self-Reported Symptom(s). (J.A. at 139.)" The Plan defines "Self-Reported Symptoms" as "the symptoms of which You tell Your Doctor, and are not verifiable or quantifiable using tests, procedures, or clinical examinations Generally Accepted in the Practice of Medicine. Examples of these manifestations include the following, but are not limited to: fatigue, pain, headaches, stiffness, soreness, tinnitus (ringing in the ears), dizziness, numbness, or loss of energy." (J.A. at 146.)

In the section entitled "Proof of Disability," the Plan provides that

The following items, supplied at Your expense, must be a part of Your proof of loss. Failure to do so may delay, suspend or terminate Your benefits:

1. The date Your Disability began;

2. The cause of Your Disability;

3. The prognosis of Your Disability; ...

5. Objective medical findings which support Your Disability. Objective medical findings include but are not limited to tests, procedures, or clinical examinations standardly accepted in the practice of medicine, for Your disabling condition(s).

6. The extent of Your Disability, including restrictions and limitations which are preventing You from performing Your Regular Occupation.

(J.A. at 142.)

Continental Casualty issued its first denial of Smith's claim on April 16, 2001. Smith filed an administrative appeal, and after Smith submitted additional information, Continental Casualty's Appeals Committee remanded Smith's file to the Claims Unit for further review and investigation. On November 21, 2001, the Claims Unit once again denied Smith's claim. Smith again appealed. On May 2, 2002, Continental Casualty issued its final denial of Smith's claim. In this denial, Continental Casualty stated that

The information presented does show degenerative disc disease, bilateral laminectomies at L3-4 and 4-5, spinal stenosis and subsequent failed back syndrome. From 1997 to 2000, Mr. Smith had underwent [sic] a total of three back surgeries as follows: 1) March 14, 1997, bilateral lumbar laminectomy; 2) September 28, 1998, L2 through L5 lumbar laminectomy with fusion; and 3) May 3, 2000, L4-L5, L5-S1 hemilaminectomy and forminotomy.

(J.A. at 250.) Continental Casualty also acknowledged that the medical review performed by Dr. Soriano, who was hired by Continental Casualty, indicated that Smith "would need to avoid sitting or standing for prolonged periods of time over 1-2 hours." (J.A. at 253.) After listing all of the medical evidence, however, Continental Casualty concluded that

the physical findings show full muscle strength, no atrophy and no neurological deficits....

... We can appreciate that Mr. Smith may have some back pain and difficulties associated with his longstanding back pain history and surgeries, but the information presented does not support a functional loss that would preclude him from performing the full duties of his regular occupation as of February 23, 2001.... The primary limiting factor affecting Mr. Smith is his pain complaints, which are disproportionate when compared to the diagnostic and physical findings presented.

(J.A. at 253.)

On September 13, 2002, Smith filed a complaint in the United States District Court for the District of Maryland for wrongful denial of his claim for long-term disability benefits. Smith sought back benefits, plus interest, future benefits, reinstatement of his term life insurance, "waiver of premium" coverage, and reasonable attorneys' fees.

Both parties moved for summary judgment. The district court granted summary judgment in part for Smith, awarding back benefits with interest, and future benefits. The district court's decision relied heavily on its adoption of a Social Security Ruling regarding subjective evidence of pain. Given its ruling on the benefits issue, the district court remanded the waiver of premium issue to Continental Casualty. The district court also granted Smith's attorneys' fee petition in total. This appeal followed.

II.

"We review the entry of summary judgment in favor of Appellees de novo." Peters v. Jenney, 327 F.3d 307, 314 (4th Cir.2003). Summary judgment is appropriate only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In deciding whether there is a genuine issue of material fact, "the evidence of the nonmoving party is to be believed and all justifiable inferences must be drawn in its favor." American Legion Post 7 v. City of Durham, 239 F.3d 601, 605 (4th Cir.2001).

"It is well-established that a court reviewing the denial of disability benefits under ERISA initially must decide whether a benefit plan's language grants the administrator or fiduciary discretion to determine the claimant's eligibility for benefits, and if so, whether the administrator acted within the scope of that discretion." Gallagher v. Reliance Standard Life Ins. Co., 305 F.3d 264, 268 (4th Cir.2002) "`Where discretion is conferred upon the trustee with respect to the exercise of a power, its exercise is not subject to control by the court except to prevent an abuse by the trustee of his discretion.'" Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 111, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) (quoting Restatement (Second) of Trusts § 187 (1959)). "Thus, a trustee's discretionary decision will not be disturbed if reasonable, even if the court itself would have reached a different conclusion." Booth v. Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan, 201 F.3d 335, 341 (4th Cir.2000). "Under the abuse of discretion standard, the plan administrator's decision is...