Demer v. IBM Corp. LTD Plan

• Decision Date: 26 August 2016
• Docket Number: No. 13-17196,13-17196
• Parties: Daniel G. Demer, Plaintiff-Appellant, v. IBM Corporation LTD Plan; Metropolitan Life Insurance Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

835 F.3d 893

Daniel G. Demer, Plaintiff-Appellant,

v.IBM Corporation LTD Plan; Metropolitan Life Insurance Company, Defendants-Appellees.

No. 13-17196

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 11, 2015, San Francisco, California

Filed August 26, 2016

Michelle L. Roberts (argued), Roberts Bartolic LLP, Alameda, California; Barry Kirschner, Waterfall, Economidis, Caldwell, Hanshaw & Villamana, P.C., Tucson, Arizona; for Plaintiff-Appellant.

Michelle McAloon Constandse (argued), Metropolitan Life Insurance Company, Irvine, California; James K. Mackie, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Tucson, Arizona, for Defendants-Appellees.

Before: Jay S. Bybee and Morgan Christen, Circuit Judges, and Edward M. Chen, District Judge.^*

Partial Concurrence and Partial Dissent by Judge Bybee

OPINION

CHEN, District Judge:

Plaintiff-Appellant Daniel G. Demer filed suit, pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), against Defendants-Appellees IBM Corporation LTD Plan (the “Plan”) and Metropolitan Life Insurance Company (“MetLife”). Mr. Demer claimed that MetLife, the claim administrator and insurer for the Plan, improperly denied his claim for long-term disability (“LTD”) benefits. See 29 U.S.C. § 1132(a)(1)(B) (providing that “[a] civil action may be brought ... by a participant or beneficiary ... to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan”). The district court denied Mr. Demer's motion for summary judgment, granted Defendants' cross-motion, and entered judgment in favor of Defendants.

We reverse the district court's entry of judgment in Defendants' favor and remand to the district court with instructions to remand this case to MetLife to re-evaluate the merits of Mr. Demer's LTD claim.

I.

A. Mr. Demer's Claim for LTD Benefits

Mr. Demer was an employee of IBM Corporation and a participant in the Plan. MetLife is the claim administrator for and insurer of the Plan. The parties agree that the Plan gives MetLife, as the administrator, discretionary authority to interpret the Plan and determine benefits eligibility. Where, as here, an ERISA plan confers discretionary authority on the plan administrator as a matter of contractual agreement, then the standard of review is abuse of discretion rather than de novo. See Tapley v. Locals 302 & 612 of the Int'l Union of Operating Eng'rs – Employers Constr. Indus. Ret. Plan , 728 F.3d 1134, 1139 (9th Cir. 2013) (“Where an ERISA Plan grants ‘discretionary authority to determine eligibility for benefits or to construe the terms of the plan,’ ‘a plan administrator's interpretation of a plan’ is reviewed for abuse of discretion. We review the district court's application of this standard de novo .”); Abatie v. Alta Health & Life Ins. Co. , 458 F.3d 955, 963 (9th Cir. 2006) (en banc) (“[I]f the plan does confer discretionary authority as a matter of contractual agreement, then the standard of review shifts [from de novo] to abuse of discretion.”) (emphasis omitted).

The Plan provides that a participant is disabled and eligible for LTD benefits if,

during the elimination period and the first 12 months after you complete the elimination period, you cannot perform the important duties of your regular job [i.e. , your own occupation] with IBM because of a sickness or injury. After expiration of that 12 month period, disabled means that, because of a sickness or injury, you cannot perform the important duties of any other gainful occupation for which you are reasonably fit by your education, training or experience.

“[G]ainful occupation” means “occupations [for which] you are reasonably qualified based on your education, training, experience, and functional ability” and further, in Mr. Demer's case, “provides gainful wages of $4,240.48 per month or $24.46 hourly,” i.e. , the equivalent of a yearly salary of approximately $50,000.

Mr. Demer stopped working at IBM on January 9, 2009, because of a disability. At the time, he was a Lead Internal Auditor at IBM. He began receiving short term disability (“STD”) benefits. In March 2009, he filed a claim for LTD benefits pursuant to the Plan (because his STD benefits were due to expire soon). In his application for LTD benefits, Mr. Demer stated: “I am unable to do my job duties due to severe recurrent depression and spinal stenosis, chronic headaches.” Symptoms included “chronic headaches, chronic back and neck pain, myalgia, severe depression, [and] sciatica.”

On July 28, 2009, MetLife approved Mr. Demer's claim for LTD benefits under the “own occupation” test for disability articulated in the Plan. MetLife noted that the test for disability would eventually switch to the “any occupation” test on July 11, 2010. MetLife further noted that it was limiting Mr. Demer's benefits to a period of twenty-four months because his primary diagnosis was a mental or nervous disorder.

Subsequently, in November 2009, MetLife sent a letter to Mr. Demer, reminding him that, for his benefits to continue (beyond July 11, 2010), he would have to be disabled under the “any occupation” test for disability.

Mr. Demer thereafter submitted statements and medical records from numerous treating physicians, including but not limited to his primary care doctor, Dr. Stephen Moore; a treating neurologist, Dr. David Weidman; and a treating pain management physician, Dr. Robert Osborne. These doctors discussed not only mental impairments suffered by Mr. Demer but also physical impairments. For example:

• In a statement from February 2010, Dr. Weidman referred to “chronic osteoarthritic pain and depression interact[ing] with each other.” Dr. Weidman also indicated that Mr. Demer's physical condition had deteriorated since April 2009—e.g. , in April 2009, Dr. Weidman had concluded that Mr. Demer could intermittently sit for 4–5 hours, intermittently stand for 4–5 hours, and occasionally lift 11–20 pounds; but, in February 2010, Dr. Weidman determined that Mr. Demer could only intermittently stand for 1–2 hours and never lift 11–20 pounds.

• In a medical record dated February 2010, Dr. Osborne referred to severe cervical and lumbosacral spine disease with radiculopathy and chronic depression. Notably, Dr. Osborne found that Mr. Demer had severe limitations as a result of his physical impairments—e.g. , able to intermittently sit for 1 hour, intermittently stand for 0–1 hour, and intermittently walk for 0–1 hour and never able to lift up to 10 pounds.

• Dr. Moore, Mr. Demer's primary care physician, had a similar, albeit slightly more positive, view with respect to Mr. Demer's physical limitations, opining, e.g. , that Mr. Demer could continuously sit for 1 hour and continuously stand and walk for 0–1 hour and could occasionally lift 21–50 pounds.

On October 1, 2010, MetLife denied Mr. Demer's claim for LTD benefits under the “any occupation” test for disability. In its denial, MetLife relied in large part on the opinion of an independent physician consultant (“IPC”), Dr. Elyssa Del Valle, internal medicine, who conducted only a paper review of Mr. Demer's file—i.e. , she did not personally perform a physical or mental examination of Mr. Demer. Dr. Del Valle concluded that “[t]he medical information does support functional limitations ... due to severe degenerative disc disease, degenerative vertebral disease with numerous levels of the cervical, thoracic and lumbar spine associated with neural foraminal narrowing as well as spinal stenosis.” She also stated that “[t]he condition is associated with chronic pain necessitating narcotic analgesics despite trigger point injections, cervical and lumbar epidural injections and physical therapy.” But Dr. Del Valle disagreed with the physical capacity assessments of Dr. Moore and Dr. Osborne because they “would indicate that [Mr. Demer] is bedridden for more than 20 hours a day.” Dr. Del Valle also indicated that she agreed with an older assessment made by Dr. Weidman (from April 2009),¹ noting that, although it was more than a year old, “there are no clinical data/findings to indicate any change in his overall condition” (opining, inter alia , that Mr. Demer could walk 3–4 hours intermittently and that he “should avoid any prolonged periods of sitting, standing or walking more than 30 minutes”). In its decision, MetLife determined that, even with the limitations identified by Dr. Del Valle, Mr. Demer “should be able to perform at the sedentary to light level of physical exertion as defined by the U.S. Department of Labor” and therefore denied Mr. Demer LTD benefits.

B. The Appeal

In March 2011, Mr. Demer appealed MetLife's denial of LTD benefits. In his appeal, Mr. Demer asserted that he “has severe degenerative disc disease (‘DDD’) of the cervical and lumbar spine,” for which there was “further progression [as] reflected in the cervical MRI performed June 21, 2010.” He also claimed that he “suffers radiculopathy,” “has a history of significant headaches,” and has “ongoing nerve compression.” Finally, he pointed out that he “takes powerful narcotic and other medications” which “have known side effects causing fatigue and reduced ability to concentrate.” As noted above, MetLife's own IPC, Dr. Del Valle, acknowledged that Mr. Demer had chronic pain that necessitated narcotic analgesics.

In support of his appeal, Mr. Demer provided, e.g. , additional information from Dr. Osborne. Dr. Osborne stated, inter alia , that

the overall picture is one of a gentleman with severe spinal deterioration at all components of the spine as well as neurophysiological evidence of a delayed conduction (spine cord problem) of the bilateral Posterior Tibial Nerves to the cerebral cortex as well as a separate focal left L5 nerve root lesion (diagnostic SSEP and diagnostic L5 radiculopathy ).

Dr. Osborne further stated that “[t]he overall treatment plan has included chronic narcotic...