Marantz v. Permanente Med. Grp., Inc. Long Term Disability Plan

• Decision Date: 10 July 2012
• Docket Number: No. 10–1136.,10–1136.
• Citation: 687 F.3d 320
• Parties: Susan MARANTZ, Plaintiff–Appellant, v. PERMANENTE MEDICAL GROUP, INC. LONG TERM DISABILITY PLAN and Life Insurance Company of North America, Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

687 F.3d 320

Susan MARANTZ, Plaintiff–Appellant,

v.PERMANENTE MEDICAL GROUP, INC. LONG TERM DISABILITY PLAN and Life Insurance Company of North America, Defendants–Appellees.

No. 10–1136.

United States Court of Appeals,

Seventh Circuit.

Argued Jan. 6, 2011.

Decided July 10, 2012.

Mark D. Debofsky (argued), Attorney, Daley, Debofsky & Bryant, Chicago, IL, for Plaintiff–Appellant.

Stephen R. Swofford, Hinshaw & Culbertson, Chicago, IL, Daniel Ryan (argued), for Defendants–Appellees.

Before EASTERBROOK, Chief Judge, and CUDAHY and ROVNER, Circuit Judges.

ROVNER, Circuit Judge.

Susan Marantz sued her employer, the Permanente Medical Group, Inc. and the Life Insurance Company of North America (LINA), claiming that they violated the Employee Retirement Income Securities Act (ERISA) by refusing to provide her with long-term disability payments as required under the employer's disability insurance plan. LINA denied that Dr. Marantz qualified for the benefits and the district court held that Dr. Marantz did not satisfy her burden of proving that in April 2005 she was entitled to long-term disability benefits under the terms of the policy. On appeal, we affirm the holding of the district court.

I.

Before Susan Marantz became a patient visiting many back and pain specialists, she was herself the doctor. From 1996 to 1999, Dr. Marantz practiced pulmonary and critical care medicine at a Kaiser Permanente Hospital in California. Before she left that position in 1999, Dr. Marantz served as the chief of pulmonary and critical care medicine, and as assistant head of quality assurance and director of utilization. She performed procedures such as bronchoscopes and intubations, inserted arterial lines, and was standing for many hours at a time. In response to back pain, in 1997 Dr. Marantz underwent surgery to treat a herniated disc and degenerative disc disease, but the surgery did not eliminate her pain and, as of August 1999, she stopped working full time.

As a benefit of her employment with Kaiser Permanente, Dr. Marantz received disability insurance coverage from LINA. On October 13, 1999, Dr. Marantz filed a claim with LINA seeking long-term disability benefits, claiming that radiculopathy, pain, and paresthesia prevented her from performing her duties as chief of pulmonary care. The policy under which she made the claim stated as follows:

For purposes of coverage under the Policy, you are Disabled if, because of Injury or Sickness, you are unable to perform all the material duties of your regular occupation, or solely due to Injury or Sickness, you are unable to earn more than 80% of your Indexed Covered Earnings.

After Disability Benefits have been payable for 60 months, you are Disabled if your Injury or Sickness makes you unable to perform all the material duties of any occupation for which you may reasonably become qualified based on education, training or experience, or solely due to Injury or Sickness, you are unable to earn more than 80% of your Indexed Covered Earnings.

(R. 75 at L1421). LINA approved the claim under the first paragraph above, and began paying benefits as of February 9, 2000. In July of that year, Dr. Marantz had another spinal surgery but her low back and leg pain continued. MRIs taken in early 2000 revealed degenerative disc disease and spinal stenosis. In December 2000, upon Marantz's request, LINA provided $26,000 in funding for Marantz to enroll in Johns Hopkins University's online Masters of Public Health program, so that she might retrain for a medical career that was less physically demanding.

In June 2001, Marantz moved to Chicago and began working approximately twenty hours per week for the Illinois Department of Public Health as medical director of both the bureau of medical programs and the tuberculosis program. Her earnings allowed LINA to offset the disability benefits and reduce its monthly payment from $7,616 to approximately $5,000 per month. While working at the Department, Dr. Marantz completed eighty credit hours of course work and earned her master's degree in public health in 2004.

LINA paid Dr. Marantz's disability benefits for the sixty-month period beginning February 2000 under the definition of disability applicable to that period—that is, the first definition of disability recited above at page 322. During this period, LINA periodically asked Dr. Marantz's physicians to assess her condition. In March 2001, Kirk Pappas, M.D. stated that in an eight-hour day, Dr. Marantz could occasionally (up to 2.5 hours) sit, stand, walk, climb, and reach, and that she was a suitable candidate for rehabilitation. In September 2001, Joseph Skom, M.D. stated that Dr. Marantz could perform clerical, administrative, and sedentary work. In November 2003, Rochelle Parker, M.D. reported that Marantz's limitations were moderate and would not preclude sedentary work.

In August 2004, LINA began to investigate whether Dr. Marantz satisfied the policy's more stringent definition of disability which was to became relevant after the first sixty months of payments. That definition, set forth more fully in the second paragraph of the policy recited supra at page 322, states that a worker is disabled if he or she is unable to perform all the material duties of any occupation for which [that worker] may reasonably become qualified based on education, training or experience, as opposed to an inability to perform “all the duties of [the worker's] regular occupation ”—the definition of disability applicable in the first sixty months. To aid its inquiry, LINA obtained updated medical records from Dr. Marantz's treating physicians, and hired an investigative firm to perform video surveillance.

In January 2005, LINA asked Dr. Marantz to undergo a functional capacity evaluation to assess her current physical and functional abilities and her potential to return to work. Dr. Marantz's personal physician acknowledged at trial that she has ordered such evaluations and that they do indeed measure a person's strength, body mechanics, and cardiovascular function in relation to ability to work. (R. 134, Tr. 149:24–150:3).

Christie Burns, a licensed and registered occupational therapist at HealthSouth conducted the testing, which lasted approximately three to four hours over two consecutive days. During the tests, Dr. Marantz reported pain with certain movements and was unable to perform or complete certain tasks. For example, Dr. Marantz's lumbar extension was only three percent of normal. Ms. Burns testified that Dr. Marantz's complaints of pain and discomfort were consistent and not exaggerated. After completing the testing on April 4 and 5, 2005, Ms. Burns concluded that Dr. Marantz was capable of performing light work under the U.S. Department of Labor's classification system. Specifically, Ms. Burns concluded that Dr. Marantz was able to sit for 5.5 hours or more and stand and walk for 2.5–5.5 hours. The ability to perform “light work” also indicated that Dr. Marantz could perform jobs in the less demanding category of “sedentary work.”

Before and after the functional capacity evaluation testing, the investigative firm Photofax conducted surveillance of Dr. Marantz. The surveillance video shows Dr. Marantz running across a busy street in heeled boots; shopping at Home Depot, Neiman Marcus, Loehmann's, and Nordstrom Rack; lifting heavy items into her car; riding a stationary bike in a group exercise class at a health club; and, after the second day of the evaluation, shopping at a fur store and Petco. The investigators followed Dr. Marantz for five days, but only recorded activity on three of those days. Dr. Marantz testified that one of the surveillance days was unusual in that she was hosting a friend who was visiting Chicago from out-of-town.

Shortly after the functional capacity evaluation, LINA's medical director, Dr. Robert Manolakas, reviewed the results and agreed with the finding that Dr. Marantz could move from part-time work to full-time sedentary or light work. Dr. Manolakas never physically examined Dr. Marantz, but rather based his conclusions on the following factors: (1) Dr. Marantz was not, at that time, under the care of a physician for low back pain; (2) she was working part time; (3) she exercised extensively; (4) although an MRI showed stenosis and disc disease, her spine was stable and her neurological exam, strength reflexes, and sensation were normal; (5) there was no documentation of neuromuscular atrophy in her lower extremities; and (6) her claims of debilitating pain were inconsistent with her use of weak analgesics.

A few days later, on April 21, 2005, the case manager from LINA, John Buchanan, faxed the functional capacity evaluation to Dr. Marantz' treating internist, Elizabeth Anderson, and then called her to discuss the findings. That same day Mr. Buchanan also sent a letter to Dr. Anderson summarizing their conversation. According to the letter, Dr. Anderson purportedly informed Dr. Manolakas that Dr. Marantz was physically capable of performing light demand work, meaning she could sit and stand or walk for six hours cumulatively in an eight-hour day, she could lift and carry up to twenty pounds for a maximum of one third of the day, and lift and carry ten pounds for up to two thirds of the day. The letter also stated that Dr. Marantz had no other restrictions, either postural or manipulative. Dr. Manolakas asked Dr. Anderson to amend any statements which she believed to be inaccurate and fax him a corrected version of the letter.

On that same day, Margie Munoz, M.S., C.R.C., conducted a transferrable skills analysis. The analysis compared Dr. Marantz's skills, training, and physical abilities documented in the functional capacity evaluation with the job requirements for different occupations set forth in the Department of Labor's Enhanced Dictionary of Occupational Titles to determine what jobs Dr. Marantz could perform. The analysis indicated that Dr. Marantz...