Post v. Hartford Ins. Co.

• Decision Date: 13 September 2007
• Docket Number: No. 05-4927.,05-4927.
• Citation: 501 F.3d 154
• Parties: Carol A. POST, Appellant v. HARTFORD INSURANCE COMPANY.
• Court: U.S. Court of Appeals — Third Circuit

501 F.3d 154

Carol A. POST, Appellant v. HARTFORD INSURANCE COMPANY.

No. 05-4927.

United States Court of Appeals, Third Circuit.

Argued January 17, 2007.

Opinion Filed September 13, 2007.

Donald P. Russo, Esquire (Argued), Bethlehem, PA, for Appellant.

Brian P. Downey, Esquire (Argued), Pepper Hamilton, Harrisburg, PA, Stacey I. Gregory, Esquire, Pepper Hamilton, Philadelphia, PA, for Appellee.

Before: McKEE, AMBRO and STAPLETON, Circuit Judges.

OPINION OF THE COURT

AMBRO, Circuit Judge.

Carol Post believes that she is entitled to long term disability benefits under her former employer's disability plan. Her treating physicians maintain that she is disabled. On the other hand, Hartford Insurance Company, the plan administrator (who also happens to fund the plan), has hired reviewing physicians who maintain that Post is not disabled. In other words, the central issue in this case— whether Post is disabled—is a "battle of the experts."

"Battle-of-the-experts" cases are often easy for a reviewing court. If the trial court's standard of review is arbitrary and capricious, then Hartford usually wins when it has produced sufficient evidence supporting its position. It cannot be said to have acted arbitrarily, and summary judgment in its favor is appropriate. On the other hand, if the standard is de novo, then summary judgment for either party must be vacated because there is credible evidence on both sides of the key fact question.

But this case, a claim that ERISA benefits were improperly denied, is anything but easy, for the trial court's standard of review is neither arbitrary and capricious (at least in its traditional form) nor de novo. In these cases, district courts must select a standard of review that accords with the extent to which the plan administrator operates under a conflict of interest. Here we conclude that the District Court did not select the proper standard of review, and so we vacate and remand for consideration under the standard we deem to apply.

We affirm, however, the Court's grant of summary judgment on Post's claim for breach of fiduciary duty because it is barred by res judicata.

I. Facts and Procedural History

Carol Post was in a serious car accident in November 1993, just a few days after having major dental surgery. At the time, she was employed as a dentist by Overlook Hospital in Summit, New Jersey. She sustained a whiplash injury in the accident, but she nonetheless attempted to return to work soon afterward. After six days of working, she was forced to stop because of intractable pain. Overlook, however, offered for her to try working as a pharmacist for a while (as she has both dentistry and pharmacy degrees), and she accepted. She returned to work in December 1993, but was forced to take nearly a day off each week because of pain. After nine months of off-and-on working, she resigned due to pain in September 1994. During this period, she tried numerous physical therapy treatments, none of which significantly improved her condition. She returned to work again in January 1995, but resigned four months later because of continuing pain. She has not worked since.

Post's medical record is voluminous. Between 1993 and 2003, she visited 14 doctors. Her pain management regimens ranged from traditional treatments like prescription drug combinations, trigger-point injections, and various forms of physical therapy, to more exotic treatments like acupuncture and biofeedback. She reports that none has given her significant relief. Her primary treating physician is currently Dr. Carolyn Britton, a professor of neurology at Columbia University. According to Dr. Britton, Post suffers from chronic post-traumatic pain syndrome characterized by severe myofacial pain; regular, debilitating headaches accompanied by sensitivity to light, nausea, and vomiting; irritable bowel syndrome; and insomnia. Dr. Britton believes that this syndrome is directly attributable to Post's car accident and that it renders her disabled from any sustained employment.

In keeping with Dr. Britton's determination, Post's view of the record is that it indicates that she sustained a traumatic whiplash injury that sensitized her central nervous system, thus triggering the development of chronic pain syndrome. This is Dr. Britton's diagnosis, and it is supported by a number of other evaluations in the record.

Hartford, on the other hand, believes that the record indicates that Post suffered no more than a whiplash injury that has now healed. While it concedes that Post continues to report pain, it contends that the record contains no reliable diagnosis of a recognized debilitating condition. In support of its view, Hartford primarily relies on the reports of Dr. Ekaterina Malievskaia, its reviewing physician, and Dr. Christopher Lynch, who performed an independent medical examination. Hartford also cites the opinions of Drs. Michael John Fiore and Joel Harris,¹ who evaluated Post in 1994 and 1996, respectively.

This case is governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461, because Overlook Hospital's disability plan (the "Plan") is an "employee welfare benefit plan" as defined by 29 U.S.C. § 1002(1). Post filed a disability claim with Hartford, Overlook's disability carrier, soon after she ceased working in 1995. Hartford approved her claim, subject to periodic renewal. To be considered "totally disabled" under the Plan after December 6, 1997, she had to be "prevented by [d]isability from doing any occupation or work for which [she was] or could become qualified."

From 1995 until 2002, Hartford paid out benefits. In August 1998, the Social Security Administration approved Post's application for disability benefits, citing intractable cervical pain, chronic pain syndrome, and fibromyalgia² as the relevant diagnoses. Soon after Post was approved for Social Security benefits, Hartford asked her to submit a copy of the administrative decision so that it could offset her benefits. She responded through counsel that Hartford was not entitled to an offset under the plain language of the Plan, but she did provide Hartford with a copy of the decision. Hartford eventually relented and accepted Post's reading of the Plan.

For reasons not apparent from the record, sometime in late 1999 Hartford took a renewed interest in Post's claim. The company surveilled her and reported in its claim notes that surveillance was unsuccessful, as she was not seen leaving her house. Hartford also began requesting copies of Post's tax records, ostensibly to take a non-Social Security income offset, as the Plan allowed. It provides that "Hartford has the right to require, as part of Proof of Loss: (1) your [Post's] signed statement identifying all Other Income Benefits, and (2) [s]atisfactory proof to the Hartford that you and your Dependents have duly applied for all Other Income Benefits which are available. The Hartford reserves the right to determine if proof of loss is satisfactory." Hartford contends that the "proof . . . that you . . . have duly applied for all Other Income Benefits" language gives it the right to demand tax returns, though it is not clear how a tax return would reflect whether Post had applied for other income benefits. The plain language of this provision does not authorize the review of tax returns. (Incidentally, the tax returns confirm that Post was not receiving any income during the disputed period.)

In June 2001, Hartford determined that Post should submit to an independent functional capacity evaluation to confirm her disability. This was permissible under the Plan. Hartford hired a third-party service to notify Post of its request and to set up the evaluation. Because Post had requested that all communication go through counsel, the service's operator phoned her attorney to schedule the evaluation. Here, the confusion began. As Hartford's counsel explained at oral argument, apparently the service's operator told Post's attorney that Post had requested that he be phoned to schedule the evaluation—meaning simply that Post had requested that all communication go through him. Post's attorney took the statement to mean that Post had requested the evaluation; thus, when he spoke with Post and found that she knew nothing about it, he relayed to the service that she had not requested it. It then reported to Hartford that Post had refused an evaluation in violation of the Plan. No written request was ever made.

In lieu of a functional capacity evaluation, Hartford referred Post's file to its medical director, Dr. Malievskaia. She conducted a paper review and concluded that Post was not disabled because of a lack of objective findings, specifically the absence of 11 of 18 potential trigger points that would support a diagnosis of fibromyalgia.

In January 2002, Hartford terminated Post's benefits. In its termination letter, Hartford quoted the Plan's termination triggers, putting the following in bold font: "the date you refuse to be examined, if The Hartford requires an examination." The letter went on to cite as the bases for termination Post's alleged failure to submit to an evaluation at Hartford's request and Dr. Malievskaia's conclusion that Post was not disabled. The letter also invited Post to file an appeal within 60 days and to send any documents that she believed relevant. In March 2002, Hartford denied Post's appeal. Hartford, however, recognized the confusion over scheduling the evaluation and offered to revisit its decision if she agreed to one. In the meantime, Post had sued Hartford for wrongful denial of benefits, and undergoing an evaluation became part of a settlement agreement. The settlement fully resolved that lawsuit.

Because Post's treating physicians refused to write a prescription for a full-scale functional capacity evaluation, citing the damage it might cause given Post's condition, Hartford agreed to a less strenuous examination. To...