Donaho v. FMC Corp.

• Decision Date: 31 January 1996
• Docket Number: No. 95-1280,95-1280
• Citation: 74 F.3d 894
• Parties: 19 Employee Benefits Cas. 2537 Jane DONAHO, Appellant, v. FMC CORPORATION, a Delaware corporation, as Plan Administrator of the FMC Long-Term Disability Plan, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 894

74 F.3d 894

19 Employee Benefits Cas. 2537

Jane DONAHO, Appellant, v. FMC CORPORATION, a Delaware corporation, as Plan

Administrator of the FMC Long-Term Disability

Plan, Appellee.

No. 95-1280.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 18, 1995.

Decided Jan. 31, 1996.

Daniel Zeddies, Minneapolis, Minnesota, argued, for appellant.

Catherine Ann McEnroe, Minneapolis, Minnesota, argued (Robert Zeglovitch, on the brief) for appellee.

Before BOWMAN, FLOYD R. GIBSON, and BRIGHT, Circuit Judges.

BRIGHT, Circuit Judge.

Jane Donaho appeals a district court order granting summary judgment in favor of her employer, FMC Corporation (FMC), in this suit to enforce her rights under an ERISA health benefits plan. See 29 U.S.C. Sec. 1132(a)(1)(B). Under a deferential standard of review, the district court upheld FMC's decision to deny Donaho's application for long-term disability benefits under FMC's employee-funded disability plan. Donaho contends that the denial of benefits is unreasonable and not supported by substantial evidence. Because we conclude that FMC's denial of benefits to Donaho, at least until October 1993, was an abuse of discretion, we reverse and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

Jane Donaho was hired as a full-time employee of FMC Corporation in 1990. She held the position of senior software engineer at FMC's Naval Systems Division, where her duties included planning, designing and writing computer software with military applications. Donaho's position at FMC was demanding, requiring that she possess a very high level of analytical ability and communication skills to enable her to design complex software, solve difficult technical problems and provide assistance to project leaders.

Donaho continued working full time at FMC until July 14, 1992, when she collapsed at work. Recurrent depression caused her collapse and subsequent inability to work. Donaho underwent psychological treatment with her psychotherapist, Dr. Patricia Aletky, and saw a psychiatrist, Dr. Deanna Bass, who prescribed Prozac for the illness. In November 1992, Dr. Aletky approved Donaho for part-time work at FMC; however, Donaho's condition worsened after two weeks and she could not continue working.

FMC maintains an employee-funded benefits plan which includes both short-term and long-term disability benefits. During the initial period of her illness, Donaho collected short-term disability benefits. ¹ On January 12, 1993, when these benefits expired, Donaho applied for long-term disability (LTD) benefits. Under FMC's LTD plan, employees are entitled to LTD benefits if they are totally disabled, providing that they have satisfied a six-month qualifying period. For the first two years of disability, an employee is considered totally disabled when she is "wholly and continuously unable to perform every duty of [her] own job with FMC." Appellant's App. at A-150.

To evaluate Donaho's initial application for LTD benefits, and pursuant to standard policy, the plan administrator retrieved Donaho's personal, vocational and medical records. Dr. Richard Zaloudek, the plan administrator's medical director and consulting psychiatrist, reviewed Donaho's entire record and determined that she was not totally disabled. Specifically, Dr. Zaloudek reviewed Dr. Aletky's patient notes and determined that Donaho had shown overall improvement since February 1993 and that her depression had improved in late 1992. Further, Dr. Zaloudek found no evidence of "cognitive deficits or psychomotor abnormalities." Dr. Zaloudek approved of this "not totally disabled" evaluation prior to April 2, 1993.

In addition to the medical review, FMC director of employee benefits Kenneth J. Morrissey discovered that Donaho had been assisting in the preparation of, and actively participating in, professional meetings and volunteer projects since late 1992 (although Donaho spent only a few hours per month on these activities). On the basis of this information, plus the medical review, Morrissey rejected Donaho's application for LTD benefits on April 2, 1993.

On May 27, 1993, Donaho filed an appeal with the plan administrator. In support of her appeal, Donaho included a letter from Dr. Aletky (dated May 25, 1993) that stated that Donaho was not currently able to perform every duty of her own job and that a return to full-time employment would create a "serious likelihood of relapse." ² Appellant's App. at A-111. Donaho later sent to the plan administrator a letter from Dr. Bass (dated June 23, 1993) which stated that Donaho's symptoms of impaired concentration and fatigue would "make it extremely difficult to attend consistently to the details that are involved in [Donaho's] work." Appellant's App. at A-104. Bass further noted that Donaho's depression would "most certainly interfere" with her ability to perform every duty of her job on a regular, sustained basis. Id. Finally, Donaho submitted an evaluation performed by Dr. Bass on April 26, 1993. In this evaluation, Dr. Bass concluded that "the patient has not returned to normal baseline mood and in fact would not be considered in partial remission since mood would plummet ... if stress increased...." ³ Appellant's App. at A-123.

Dr. Zaloudek, having reviewed the letters of Drs. Bass and Aletky, concluded on July 1, 1993 that "[s]ince the new evidence from Dr. Bass and Dr. Aletky are in close agreement, I would accept their conclusions. It appears now that the client did not have sufficient improvement to function appropriately as a computer software engineer." Appellant's App. at A-106.

However, after Dr. Zaloudek was contacted by the plan administrator, he reversed course and stated that Dr. Bass and Dr. Aletky did not provide "sufficient objective measurement of attention span, memory and concentration ..." (Appellant's App. at A-101), and he recommended that a complete independent medical examination (IME) be performed.

Donaho's IME was conducted on September 1, 1993 by Dr. Abuzzahab. He determined that Donaho suffered from a mild but recurrent depression that would be amenable to drug treatment. Dr. Abuzzahab concluded that, while Donaho had only a limited ability to complete assigned tasks and to function independently, she "should respond to the suggested pharmacologic approaches, and thus she will be able to resume working" (emphasis added). Appellant's App. at A-51. Dr. Abuzzahab did not state that Donaho had already recovered; rather, his conclusions indicate that Donaho was still disabled but could recover in the future. His report was forwarded to the plan administrator on October 1, 1993.

Dr. Zaloudek reviewed Dr. Abuzzahab's findings. Dr. Zaloudek noted that "Dr. Abuzzahab did not find any significant cognitive problems. [Donaho's] memory was fine." He concluded that "while [Donaho] has not completely recovered, there is no objective evidence to show marked impairment in attention, memory, and concentration.... [She is] not totally prevent[ed] from carrying out her software engineer duties as routinely expected." (Emphasis added). Appellant's App. at A-49. This report was dated October 20, 1993.

In addition to these medical reports, Donaho was requested to execute a release of information permitting FMC to obtain and review her application files from the Social Security disability program. While Donaho's file revealed that she had been denied Social Security benefits, ⁴ one finding is instructive: Donaho was able to "understand, remember, and follow through with moderately difficult instructions." Appellant's App. at A-96.

Morrissey reviewed all of the materials received and prepared a report for the Employee Benefits Welfare Committee. The Committee met on January 6, 1994, and it determined that Donaho was not "totally disabled" within the meaning of the plan. Specifically, the Committee found that "by late 1992 Ms. Donaho could perform all of the duties of her job as a senior software engineer on a full-time basis." Appellant's App. at A-118. Accordingly, Donaho was denied all LTD benefits.

After the Committee rejected Donaho's application for LTD benefits, Donaho filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1132(a)(1)(B), claiming that LTD benefits were wrongfully denied her. The district court granted summary judgment in favor of the defendants, determining that the Committee's decision to withhold LTD benefits was neither "extraordinarily imprudent" nor "extremely unreasonable." This appeal followed.

II. STANDARD OF REVIEW

We review a grant of summary judgment de novo. LeBus v. Northwestern Mut. Life Ins. Co., 55 F.3d 1374, 1376 (8th Cir.1995). A court considering a motion for summary judgment must view all facts in the light most favorable to the non-moving party and give to the non-moving party the benefit of all reasonable inferences that can be drawn from the facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). While a party is entitled to summary judgment if "there is no genuine issue as to any material fact and if the moving party is entitled to judgment as a matter of law," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986), summary judgment is inappropriate when the record permits reasonable minds to draw conflicting inferences about a material fact. Id. at 250-51, 106 S.Ct. at 2511-12; Ozark Interiors, Inc. v. Local 978 Carpenters, 957 F.2d 566, 569 (8th Cir.1992).

While ERISA itself does not specify the standard of review, see 29 U.S.C. Sec. 1132(a)(1)(B), the Supreme Court has held that a reviewing court should apply a de novo standard of review unless the plan gives the "administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103...