Diaz v. Prudential Ins. Co. of America

• Decision Date: 23 August 2007
• Docket Number: No. 06-3822.,06-3822.
• Parties: Hugo DIAZ, Plaintiff-Appellant, v. PRUDENTIAL INS. CO. OF AMERICA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

499 F.3d 640

Hugo DIAZ, Plaintiff-Appellant, v. PRUDENTIAL INS. CO. OF AMERICA, Defendant-Appellee.

No. 06-3822.

United States Court of Appeals, Seventh Circuit.

Argued April 5, 2007.

Decided August 23, 2007.

Mark D. DeBofsky (argued), Daley, DeBofsky & Bryant, Chicago, IL, for Plaintiff-Appellant.

Daniel J. McMahon, Rebecca Rothmann (argued), Wilson, Elser, Moskowitz, Edelman & Dicker, Chicago, IL, for Defendant-Appellee.

Before EASTERBROOK, Chief Judge, and BAUER and WOOD, Circuit Judges.

WOOD, Circuit Judge.

This is the second time this court has had to review a decision rejecting Hugo Diaz's application for benefits under his company's group insurance long-term disability plan (the "LTD Plan"). After Prudential Insurance Company of America ("Prudential"), the LTD Plan's underwriter, denied Diaz's initial application for the benefits and two appeals of that denial, Diaz sued Prudential under § 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). The district court granted summary judgment to Prudential, but we reversed and remanded, concluding that the district court should not have used the abuse-of-discretion standard in evaluating Prudential's decision. See Diaz v. Prudential Ins. Co. of America, 424 F.3d 635, 640 (7th Cir.2005) (Diaz I). Looking at Diaz's claim de novo, the district court once again found that Diaz could not prevail and thus that Prudential was entitled to summary judgment.

Our review of that judgment is de novo. We conclude that Diaz introduced enough evidence to create a dispute of material fact about whether he was disabled for purposes of the LTD Plan. This evidence includes Diaz's own accounts of his pain, the observations of his physical therapist, and the opinions of at least three different doctors. The time has come to try this case; we reverse and remand for that purpose.

I

As we noted in Diaz I, Diaz began working in 1998 as a computer analyst at Bank One in Chicago. (Bank One has since been taken over by JPMorgan Chase, but for convenience we refer to it under the name it had during Diaz's employment.) As a Bank One employee, he participated in a group disability insurance plan underwritten by Prudential. The plan included long-term disability coverage.

In 2000, Diaz began experiencing persistent lower back pain; he was diagnosed with degenerative disc disease and radiculopathy. For about two years, he underwent a series of medical treatments including lumbar epidural steroid injections, physical therapy, and pain medication. His condition compelled him to stop working on January 31, 2002. Four days later, on February 4, Diaz underwent a lumbar fusion procedure with hardware implantation to correct an annular tear at the lumbosacral joint (L5-S1). Although postoperative examinations showed that the hardware alignment was satisfactory and there were no neurological deficits in his lower extremities, Diaz continued to report varying levels of pain in his back and legs. His doctors could not find anything related to the operation that might have been causing this pain. After months of ineffective physical therapy and pain medication, he concluded that he could not return to work.

Diaz submitted a claim for benefits under the LTD Plan on July 22, 2002, alleging that the back pain had rendered him disabled as of February 4. He supported his application with several doctors' notes expressing the opinion that his condition prevented him from sitting for more than fifteen to twenty minutes at a stretch. Prudential denied the claim on August 27 on the ground that his reported inability to perform his job was not consistent with the medical evidence. Diaz sought reconsideration of the rejection and supported his request with additional medical evidence, but Prudential upheld its negative decision on January 22, 2003. After Diaz filed a second appeal, Prudential submitted his medical documentation to its medical consultant, Dr. Gale Brown, for review. Although Dr. Brown did not personally examine Diaz, she opined based on Diaz's medical records that the clinical and diagnostic evidence relating to Diaz's lumbar spine condition did not support Diaz's reports of persistent pain. She concluded that while Diaz had a "temporary musculoskeletal impairment related to L5-S1 fusion from 1/2002 through 8/05/02," subsequent to August 5, Diaz's condition did not prevent him from performing his job on a full-time basis. Dr. Brown noted, however, that there were non-physical factors that were having an adverse impact on Diaz's ability to engage in gainful employment, including his anxiety over losing his job, depression, and opioid dependency. Diaz was not seeking benefits on any of those bases. On April 16, 2003, Prudential again upheld its decision denying Diaz benefits.

Diaz filed this action in district court on April 22, 2003, challenging Prudential's adverse decision. On May 12, 2004, the district court granted summary judgment in favor of Prudential, finding that Prudential's denial of benefits was not arbitrary or capricious. Diaz appealed, and we reversed because the district court applied the wrong standard of review. See Diaz I, supra. We found that Bank One's LTD Plan was one that merely required the plan administrator "to make a judgment within the confines of pre-set standards," and thus that the proper approach under Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), is de novo. Diaz I, 424 F.3d at 639-40. We remanded the case to the district court for a fresh look from that perspective. Id. at 640.

On remand, both parties again moved for summary judgment. After summarizing the conclusions and reasoning of the medical professionals who evaluated Diaz's claim for Prudential (none of whom had treated or examined him), the district court found Prudential's evidence compelling. Echoing Dr. Brown, it stated that Diaz had been "unable to submit reliable proof of both a continuing disability and treatment by a doctor." The emphasis here must have been on the word "reliable," because Diaz had in fact submitted a great deal of evidence. The court, however, was unimpressed by his evidence: "None of the x-rays, medical reports or physical therapist notes supported Diaz's claim of continued back pain. Plainly put, there is nothing that would prohibit Diaz from performing his duties at his job at Bank One on a full time basis beyond August 5, 2002." The court also criticized what it saw as the lack of expert testimony in the form of depositions that contradicted the evidence submitted by Prudential. It accordingly granted summary judgment in Prudential's favor.

II

Normally, we would not belabor the question of the proper approach toward a motion for summary judgment under FED. R. CIV. P. 56, but for a time there was some confusion in this case about what the district court was being asked to do. At one point, the parties filed a stipulation that would have allowed the district court to conduct a "paper trial" and make findings of fact and conclusions of law under FED.R.CIV.P. 52. The parties also filed cross-motions for summary judgment under Rule 56. In the end, the court elected to dispose of the case on summary judgment, by granting the defendant's motion and denying plaintiff's. No one has made any complaint about that method of proceeding on appeal, and so we proceed as if the stipulation had never been made.

That means that we will review the district court's grant of summary judgment de novo. Atterberry v. Sherman, 453 F.3d 823, 825 (7th Cir.2006). "Summary judgment is appropriate 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 and that the moving party is entitled to a judgment as a matter of law.'" Id. (quoting FED. R.CIV.P. 56(c)). "When, as here, cross-motions for summary judgment are filed, we look to the burden of proof that each party would bear on an issue of trial; we then require that party to go beyond the pleadings and affirmatively to establish a genuine issue of material fact." Santaella v. Metropolitan Life Ins. Co., 123 F.3d 456, 461 (7th Cir.1997). For claims seeking benefits under an ERISA plan, we have held that "at trial the plaintiffs would bear the burden of proving [the ERISA beneficiary's] entitlement to the benefits of the insurance coverage, and the defendant [insurer] would bear the burden of establishing [the beneficiary]'s lack of entitlement. . . ." Id.

The district court's task in engaging in de novo consideration of the decision of the plan administrator is not the same as its job in reviewing administrative determinations on the basis of the record the agency compiled under the substantial evidence rule, as it might do in a Social Security benefits case. See Ramsey v. Hercules Inc., 77 F.3d 199, 205 (7th Cir. 1996). Some of the confusion in this area may be attributable to the common phrase "de novo review" used in connection with ERISA cases. In fact, in these cases the district courts are not reviewing anything; they are making an independent decision about the employee's entitlement to benefits. In the administrative arena, the court normally will be required to defer to the agency's findings of fact; when de novo consideration is appropriate in an ERISA case, in contrast, the court can and must come to an independent decision on both the legal and factual issues that form the basis of the claim. What happened before the Plan administrator or ERISA fiduciary is irrelevant. See Patton v. MFS/Sun Life Financial Distributors, Inc., 480 F.3d 478, 485-86 (7th Cir.2007). That means that the question before the district court was not whether Prudential gave Diaz a full and fair hearing or undertook a selective review of the evidence; rather, it was the ultimate question whether Diaz was entitled to the benefits he...