Cook v. Liberty Life Assur. Co. of Boston
| Decision Date | 05 February 2003 |
| Docket Number | No. 02-1656.,02-1656. |
| Citation | 320 F.3d 11 |
| Parties | KATHLEEN COOK, Plaintiff, Appellee, v. LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Defendant, Appellant. |
| Court | U.S. Court of Appeals — First Circuit |
William D. Pandolph, with whom Sulloway & Hollis, P.L.L.C. was on brief for appellant.
Glenn R. Milner, with whom Cook & Molan, P.A. was on brief for appellee.
Before BOUDIN, Chief Judge, TORRUELLA and LIPEZ, Circuit Judges.
Liberty Life Assurance Company ("Liberty") appeals from the district court's entry of summary judgment for Kathleen Cook, a former participant in one of its long-term disability insurance plans governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. (2002). Cook had been receiving disability benefits for more than three years when Liberty terminated her benefits on the ground that she no longer met the plan's definition of "disabled." The district court found that Liberty's decision was "arbitrary and capricious." Agreeing with that conclusion, we affirm the court's grant of summary judgment to Cook. We also affirm the district court's award of back benefits and accompanying relief, finding that such an award was within its discretion.
Kathleen Cook had been employed with Lockheed Sanders, Inc. ("Sanders") since 1983. Sanders provides its employees with short and long-term disability benefits under policies provided and administered by Liberty. Cook filed a claim for short-term disability benefits in February 1995, having been out of work since November 1994 with symptoms of Chronic Fatigue Syndrome ("CFS"), as diagnosed by her treating physician, Dr. W. Stewart Blackwood.1 Dr. Blackwood's notes from that period report that Cook was complaining of fatigue, loss of appetite, a constant cough, and depression. Diagnostic tests revealed an elevated level of the Epstein Barr virus. As recorded in the Physician's Statement of Disability accompanying Cook's claim, Dr. Blackwood stated that he was seeing Cook on a monthly basis, that she was totally disabled from both her regular occupation and any other occupation, and that he did not know when she would be able to return to work.
After her short-term benefits expired in April 1995, Cook filed another claim with Liberty for benefits under the long-term disability policy. At this point, she was still unable to return to work. Attached to her claim form was a note from Dr. Blackwood. He stated that her diagnosis continued to be CFS; her symptoms were "severe fatigue, cough, nasal congestion, malaise, a[s]thma, sleep disturbance and depression"; and her treatment plan included homeopathic medications, vitamin supplements, acupuncture, continued counseling and Zoloft. He classified her physical capacity as "severe[ly] limited: incapable of minimum activity." Liberty approved Cook's claim on May 8, 1995.
Under the terms of Liberty's long-term disability benefits policy, a claimant must be "disabled" and require the regular attendance of a physician in order to be eligible for benefits. "Disabled" is defined by the policy:
1. "Disability" or "Disabled" means during the Elimination Period and the next 24 months of Disability the Covered Person is unable to perform all of the material and substantial duties of his occupation on an Active Employment basis because of an Injury or Sickness; and
2. After 24 months of benefits have been paid, the Covered Person is unable to perform, with reasonable continuity, all of the material and substantial duties of his own or any other occupation for which he is or becomes reasonably fitted by training, education, experience, age and physical and mental capacity.
These definitions of disability are referred to throughout this litigation as the "own occupation" (first 24 months) and "any occupation" (after 24 months has expired) definitions of disability. Liberty paid Cook long-term disability benefits from April 1995 to April 1997 because it found she met the "own occupation" definition of "disabled." In March 1997, as her first 24 months of benefits came to an end, Liberty informed Cook that it would be reviewing the status of her disability to determine whether she met the "any occupation" definition of "disabled." In April of that year, Dr. Blackwood returned a Physical Capacities Form to Liberty in which he reported that Cook was still suffering from CFS, but that her only limitations were "to avoid getting over-tired or working in excess of 40 hours a week." Around the same time, Dr. Blackwood issued Cook a medical certificate2 saying she could return to work on April 14, 1997, on a "trial basis," so long as she was working no more than 40 hours per week and could take regular breaks.3 The administrative record indicates that Cook presented this certificate to Sanders which forwarded it to Liberty. Cook returned to work on that day and Liberty temporarily suspended her benefits.
Her return to work was brief. On May 5, 1997, Dr. Blackwood pulled Cook out of work again after she had a severe reaction to an infected tooth. Her medical records indicate that she complained about muscle aches and difficulty with sleeping. Also, she told Dr. Blackwood that she was feeling stress because she could not complete the work Sanders had assigned her without working more than 40 hours per week. The combination of her infection and the stress she experienced during her return to work led Dr. Blackwood to conclude that she had suffered a recurrence of CFS. His chart notes from that day also reflect his decision to "put her back out of work on an indefinite basis, noting that the note we gave her previously was for a trial return to work." On May 9, 1997, Liberty renewed Cook's disability benefits and updated her status to "approved" under the "any occupation" definition of "disabled."
Between May 1997 and July 1998, Cook remained out of work and regularly saw Dr. Blackwood. In December 1997 and August 1998, she and Dr. Blackwood responded to Liberty's requests for updated medical information, and Liberty continued to pay her disability benefits. The most recent set of Cook's medical records included in the administrative record reveals that in June 1998, Cook reported that her fatigue had recently worsened and she was suffering generalized aches and pains, but that she was not experiencing any stress. Dr. Blackwood renewed his diagnoses of asthma, CFS, and fibromyalgia.4
During this time, Liberty learned that Cook had been working part-time with a real estate agency. When asked about it, Cook told the analyst handling her claim that she had worked two Sundays showing houses for the agency. Liberty wrote to the agency asking for Cook's work and earnings history. They responded that her duties included "occasional open houses, showings, [and] customer phone calls," and that she had earned $175.02 between April and July of 1997. Liberty informed Cook that her long-term disability benefits would be offset by the amount of money she was earning from her part-time job, but if she earned less than 20 percent of her pre-disability salary, there would be no offset.
In late July 1998, a Liberty analyst conducting a regular review of Cook's file wrote to Dr. Blackwood asking for Cook's updated medical information. In August, Dr. Blackwood returned to Liberty copies of Cook's chart notes from October 1996 to June 1998 along with a medical certificate dated March 24, 1997, and signed by Dr. Blackwood. This certificate stated that Cook could work no more than 40 hours per week and needed to have regular breaks. After receiving this information, Liberty wrote to Dr. Blackwood on August 18, 1998, and asked whether the restrictions and limitations listed in the March 24, 1997, certificate were still applicable to Cook. Liberty attached the certificate in question to the letter it sent to Dr. Blackwood. Dr. Blackwood responded by sending back the letter with the word "Yes" written on it and circled. As later became clear, Dr. Blackwood had misunderstood the medical certificate at issue. He thought he was saying "Yes" to a medical certificate he had issued on May 5, 1997, which stated that Cook was "out of work indefinitely." The conclusion listed on this medical certificate was also recorded in Cook's chart notes from May 5, 1997, a copy of which had been presented to Liberty the last time it had reviewed Cook's claim in December 1997.
Shortly after receiving Dr. Blackwood's response, Liberty forwarded Cook's file to Carol S. Vroman, a Vocational and Rehabilitation Consultant. Reviewing Cook's work restrictions and limitations as listed in the March 24, 1997, medical certificate, and taking into consideration her education and work history, Vroman concluded that Cook was "not disabled from either her own or any other occupation." On October 16, 1998, Liberty informed Cook that she was no longer eligible for long-term disability benefits. The denial letter explained the contents of the March 1997 medical certificate Dr. Blackwood had provided Liberty and the fact that he had affirmed that those restrictions and limitations were still applicable. It then stated that
Cook responded to this letter by asking Liberty to review its decision to terminate her eligibility. She forwarded to Liberty letters written by Dr. Blackwood stating that she was totally disabled due to stress, fatigue, and "severe, chronic asthma." Dr. Blackwood explained to Liberty that "he mistakenly...
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