Mitchell v. Plan

Decision Date26 July 2010
Docket Number08-55686.,No. 08-55277,08-55277
Citation611 F.3d 1192
PartiesMichael MITCHELL, Plaintiff-Appellee,v.CB RICHARD ELLIS LONG TERM DISABILITY PLAN, Defendant-Appellant,Metropolitan Life Insurance Company, Defendant-cross-defendant-Appellant,Unum Life Insurance Company of America, Defendant-cross-claimant-Appellee.Michael Mitchell, Plaintiff-Appellee,v.CB Richard Ellis Long Term Disability Plan, Defendant-Appellant,Metropolitan Life Insurance Company, Defendant-cross-defendant-Appellant,andUnum Life Insurance Company of America, Defendant-cross-claimant.
CourtU.S. Court of Appeals — Ninth Circuit

COPYRIGHT MATERIAL OMITTED

Rebecca A. Hull, Esq., of Sedgwick, Detert, Moran & Arnold LLP, San Francisco, CA, for appellants Metropolitan Life Insurance Company and CB Richard Ellis Long Term Disability Plan.

Glenn R. Kantor, Esq., Peter S. Sessions, Esq. and Michael Ford, of Kantor & Kantor LLP, Northridge, CA, for appellee Michael Mitchell.

Michael B. Bernacchi and Keiko J. Kojima, of Burke, Williams & Sorensen, LLP, Los Angeles, CA, for appellee UNUM Life Insurance Company of America.

Appeal from the United States District Court for the Central District of California, Dean D. Pregerson, District Judge, Presiding. D.C. Nos. CV-05-00810-DDP, 2:05-cv-00810-DDP-RNB.

Before: STEPHEN REINHARDT, STEPHEN S. TROTT and KIM McLANE WARDLAW, Circuit Judges.

OPINION

WARDLAW, Circuit Judge:

The Metropolitan Life Insurance Company (MetLife) appeals from the district court's judgment awarding Michael Mitchell long-term disability (“LTD”) benefits and attorneys' fees, in an action arising under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. MetLife is the current insurer and administrator for the LTD benefits plan (“the Plan”) provided by Mitchell's employer, CB Richard Ellis, and it insured and administered the Plan at the time that Mitchell filed his claim for benefits. Unum Life Insurance Company of America (UNUM) was the insurer and administrator of the Plan at the time of onset of Mitchell's claimed disability in October 2003.

Because we conclude that the district court correctly held that Mitchell was eligible for benefits under MetLife's policy, and because MetLife failed to cross-claim for indemnification from UNUM in the district court action, we affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND
A. Mitchell's Employment and Disability

Since 1983, Mitchell has worked as a commercial real estate broker at CB Richard Ellis. In February 2001, Mitchell was first diagnosed with restless leg syndrome after he suffered symptoms of fatigue. Over time, Mitchell's condition grew more severe. In October 2003, he was diagnosed with major depression, chronic fatigue syndrome, restless leg syndrome, REM-related obstructive sleep apnea syndrome, and hemochromatosis. Although Mitchell continued to work full time hours, his physical condition deteriorated to the point where he could not effectively perform in his job by March 2004. Because Mitchell's disability reduced his capacity to produce sales, his compensation, based entirely on commissions and bonuses, decreased substantially over time as his disability grew more severe: he earned $179,678 in 2001 and $243,857 in 2002, but only $29,329 in 2003 and $12,585 in 2004.

B. The Plan

CB Richard Ellis provides LTD benefits to its employees under an employee benefit plan governed by ERISA. From January 1, 2000, until December 31, 2003, CB Richard Ellis funded the Plan by purchasing insurance from UNUM, which served as the insurer and administrator of the Plan. On January 1, 2004, MetLife replaced UNUM as the insurer and administrator of the Plan. At that time, MetLife issued a new insurance policy, which specified that it held discretionary authority to determine a participant's eligibility for benefits. The two insurers' coverage provisions differed, particularly in their definitions of “disability.”

1. UNUM's Policy

The UNUM long term disability policy provided coverage for disability when, in UNUM's determination:

you are limited from performing the material and substantial duties of your regular occupation due to your sickness or injury; and
you have a 20% or more loss in your indexed monthly earnings due to the same sickness or injury; and
during the elimination period, you are unable to perform any of the material and substantial duties of your regular occupation.

A beneficiary must be continuously disabled for an “elimination period” of 90 days before he becomes eligible for benefits from UNUM. Coverage extends to the date that the policy or plan is cancelled, but may end earlier if other eligibility criteria are not met. UNUM's insuring agreement includes payable claims that occur while the employee is covered under the policy or plan. UNUM acts as the claims administrator, and “has discretionary authority to determine eligibility for benefits and to interpret the terms and provisions of the policy.”

2. MetLife's Policy

On January 1, 2004, MetLife replaced UNUM as the insurer and administrator of the Plan. MetLife issued a new policy, comprised of a “Certificate of Insurance,” or master plan document, as well as a summary plan description. MetLife's policy defines the term “disability” differently in three places: once in the Certificate of Insurance, and twice in the summary plan description. The Certificate of Insurance defines “disabled or disability” as:

due to sickness or as a direct result of accidental injury:
• You are receiving Appropriate Care and Treatment and complying with the requirements of such treatment; and
• You are unable to earn:
• during the Elimination period and the next 24 months of Sickness or accidental injury, more than 80% of Your Predisability Earnings at Your Own Occupation from any employer in Your Local Economy; and
• after such period, more than 80% of your Predisability Earnings from any employer in Your Local Economy at any gainful occupation for which You are reasonably qualified taking into account Your training, education and experience.

MetLife's summary plan sets forth two additional definitions of disability. First, the summary plan's “Plan Benefits” description specifies that a participant is considered “disabled” when determined to be “unable to perform your regular job functions due to sickness, or as a direct result of accidental injury the employee [sic] is receiving appropriate care and treatment and complying with the requirements of such treatment.” The summary plan's “Definitions” section, however, defines “disability” as “a condition in which a person is unable to perform the material and substantial duties of his/her regular occupation due to illness or injury.”

MetLife's Certificate of Insurance includes a clause specifying “Rules for When Insurance Takes Effect if You were insured Under the Prior Plan on the Day Before the Replacement Date,” which states:

• If You are Actively at Work on the day before the Replacement Date, You will become insured for Disability Income Insurance under this certificate on the Replacement Date.
• If You are not Actively at Work on the day before the Replacement Date, You will become insured for Disability Income Insurance under this Certificate on the date You return to Active Work.

MetLife's policy, however, also includes two differing definitions of “Actively at Work.” The Certificate of Insurance defines “Actively at Work” or “Active Work” to mean “You are performing all of the usual and customary duties of Your job on a Full-Time basis.” The summary plan defines “Actively at Work” or “Active Work” to mean “Being on the job as required of an employee or Independent Contractor of CB Richard Ellis.”

C. Mitchell's Claims for LTD Benefits with MetLife

On April 15, 2004, Mitchell applied for LTD benefits by completing and submitting a long-term disability claim request form with MetLife. In Section 2: Claim Information,” the request form includes three boxes to be completed concerning the onset of disability. The first box asks for the “Date of first treatment for this condition”; Mitchell supplied “10/2003.” The second box seeks “Date last worked MUST ANSWER; Mitchell answered “still working.” The third box asks for “Date Disability Began”; Mitchell responded “10/2003.” On April 23, 2004, MetLife denied Mitchell's claim on the ground that he was ineligible for benefits because he did not meet the definition of “disability” or “disabled” under the Certificate of Insurance definition because he was capable of performing his work as “VP of Sales,” which is classified as sedentary. It based this conclusion on the Attending Physician's Statement, which indicated that Mitchell received treatment for osteoarthritis of the knee and that Mitchell was “working now.” The denial was also explicitly based on Mitchell's statement on the claim form that he was “still working.” The letter also advised Mitchell of his right to appeal this adverse determination. Mitchell then availed himself of MetLife's administrative review process as outlined in the April 23, 2004 letter. In December 2004, he filed an appeal and submitted additional medical records, supporting letters from examining physicians, and colleagues at CB Richard Ellis.

On January 18, 2005, MetLife upheld its original decision to deny LTD benefits to Mitchell, this time finding that he did not meet its summary plan definition of disability. Under this definition, a plan participant must be “unable to perform the material and substantial duties of his/her regular occupation.” MetLife further stated that an independent physician's review of the medical documentation did not support a finding that Mitchell's condition was severe enough to prevent him from performing his own occupation, and concluded that Mitchell did not meet the summary plan definition of disability. During the initial claim and the administrative review processes, MetLife never specified as a reason for denial that it was not the...

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