Ellis v. Liberty Life Assurance Co. of Bos.

• Decision Date: 13 May 2020
• Docket Number: No. 19-1074,19-1074
• Citation: 958 F.3d 1271
• Parties: Michael D. ELLIS, Plaintiff - Appellee, v. LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, a New Hampshire corporation, Defendant - Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

958 F.3d 1271

Michael D. ELLIS, Plaintiff - Appellee,

v.LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, a New Hampshire corporation, Defendant - Appellant.

No. 19-1074

United States Court of Appeals, Tenth Circuit.

FILED May 13, 2020

Byrne J. Decker, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Portland, Maine (Kristina N. Holmstrom, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Phoenix, AZ on the briefs) for Defendant-Appellant.

Shawn McDermott, McDermott Law, LLC, Denver, Colorado (Timothy Garvey, McDermott Law, LLC, Denver, Colorado on the briefs) for Plaintiff-Appellee.

Before HARTZ and EID, Circuit Judges.^*

HARTZ, Circuit Judge.

In 2014, Liberty Life Assurance Company of Boston rejected the claim for long-term disability benefits by Michael Ellis. As part of its employee-benefit plan, Comcast Corporation, for whom Ellis worked in Colorado from 1994 until 2012, had obtained from Liberty in 2005 a Group Disability Income Policy (the Policy). Ellis sought review of Liberty's denial of benefits in the United States District Court for the District of Colorado under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. The district court, reviewing the denial de novo, ruled that Liberty's denial was not supported by a preponderance of the evidence. Liberty appeals. It contends that the court should have reviewed its decision under an abuse-of-discretion standard but that it should prevail even under a de novo standard. Ellis defends the district court's choice of a de novo standard but argues he should prevail under either standard of review.

The central issue on appeal is what standard of review the district court should have applied. A plan administrator's denial of benefits is ordinarily reviewed by the court de novo; but if the policy gives the administrator discretion to interpret the plan and award benefits, judicial review is for abuse of discretion. See Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The Policy provided that it was governed by the law of Pennsylvania, which is where Comcast is incorporated and has its principal place of business. Among its terms was one that gave Liberty discretion in resolving claims for benefits. A Colorado statute enacted in 2008, however, forbids such grants of discretion in insurance policies. The parties dispute both whether the statute applies to the Policy under Colorado law and whether Colorado law governs. We hold that in this dispute the law of Pennsylvania, rather than that of Colorado, is controlling. The uniformity and administrative-efficiency objectives of ERISA counsel us to adhere to the Policy's choice of law. Liberty's denial of benefits is therefore properly reviewed for abuse of discretion. Under that standard the denial must be upheld. Exercising jurisdiction under 28 U.S.C. § 1291, we reverse the decision of the district court.

I. BACKGROUND

A. The Policy

Under the Policy, employees of Comcast are eligible for long-term disability benefits upon providing proof of disability due to injury or sickness and the expiration of an elimination period of at least six months, subject to proof of continuing disability and the need for regular attendance of a physician.¹ As relevant to the dispute before us, disability or disabled means that the employee "is unable to perform, with reasonable continuity, the Material and Substantial Duties of Any Occupation." Aplt. App., Vol. II at 296.

B. Ellis's Medical History

On February 1, 2012, while undergoing treatment for pneumonia

, Ellis experienced severe chest pain as a result of a pulmonary embolism (blood clot in the lungs). He was administered nitroglycerin, but soon afterwards he had an abnormally slow heartbeat, followed by an approximately 24-second heart stoppage. He briefly returned to work after this incident, but his last day of employment with Comcast was February 29, 2012.

Ellis submitted a claim for short-term disability benefits, which Liberty approved in March 2012. He reported "poor concentration, dizziness, slowing of physical and mental skills" and was referred to a neurologist in June 2012. Aplt. App., Vol. I at 268. The neurologist who began treating Ellis, Dr. Alan Zacharias, recommended physical and cognitive therapy

but also noted that Ellis had an "[u]nremarkable brain MRI," had no evidence of a primary neuromuscular disease, and was alert and attentive. Id . at 269. Based on this report and documentation from two other providers, Liberty terminated short-term benefits in July 2012.

In October 2012, Ellis's lawyer sent a letter to Liberty asking it to reinstate benefits without a formal appeal. Part of this submission was a neuropsychological evaluation by Dr. Dennis Helffenstein, whom the lawyer had asked to evaluate Ellis. He opined that Ellis's testing "identified significant cognitive deficits

suggesting bilateral frontal and bilateral temporal involvement. The pattern is consistent with cerebral hypoxia^[2

^]. There is absolutely no way Michael could do his job at this time from a cognitive standpoint." Aplee. Supp. App., Vol. II at 578. Liberty reinstated short-term disability benefits through the maximum duration and advanced the claim for long-term-disability consideration.

To assess Ellis's eligibility for long-term benefits, Liberty's claim consultant asked Dr. John Crouch and Dr. Gilbert Wager (Liberty's consulting neuropsychologist and internal-medicine specialist, respectively) to review Ellis's records. The reports from both doctors expressed doubt that a 24-second heart stoppage could cause cerebral hypoxia

or neurological injury. Dr. Wager explained that "[t]his scenario is unlikely, as permanent neurological injury is not a feature of an episode of cardiogenic syncope. In general, it takes about 4 minutes or longer of cerebral anoxia to cause neuronal cell death and permanent neurological damage upon loss of spontaneous circulation." Aplt. App., Vol. I at 246.

Dr. Crouch requested Dr. Helffenstein's raw data to assess the validity and reliability of Ellis's claimed cognitive and psychiatric deficits. After receiving the raw data, Dr. Crouch stated in an addendum to his report that "multiple measures of response bias were administered and yield[ed] Normal findings, suggesting that [Ellis's] impairments [were] valid/reliable." Id . at 187. Liberty also placed Ellis under surveillance in December 2012; the only video captured of Ellis revealed him "walking in a slow pace while utilizing a cane." Aplee. Supp. App., Vol. II at 482. Liberty approved long-term benefits in April 2013 but noted that the cause of Ellis's cognitive impairments was still unclear.

In May 2013 Liberty requested updated information from Dr. Dan Hadley, Ellis's primary-care physician, and Dr. Zacharias, his neurologist. Dr. Hadley completed a restrictions form stating that Ellis could not work in a situation requiring more than 10-20 minutes of minimal concentration. Dr. Zacharias did not specify a work-related restriction and instead signed a restrictions form directing Liberty to "see neuropsych testing that supports his impairment." Aplt. App., Vol. I at 239.

Liberty completed a vocational report in July 2013 that identified several alternative occupations fitting Ellis's training, education, experience, and physical capacities. The case manager who completed the report indicated that she was asked to "presume[ ] sedentary work capacity, and not to include any cognitive and/or mental restrictions and limitations." Aplee. Supp. App., Vol. II at 455. Liberty also had a three-day surveillance conducted in August 2013, but no clear video of Ellis was obtained.

When Liberty asked Dr. Crouch for an updated clinical review of Ellis's records, he reported in September 2013 that "based on available information, it is unlikely that the claimant could perform the job duties of alternate occupations comparable to his prior job." Aplt. App., Vol. I at 189. But he said that an independent neuropsychological reevaluation was warranted if one had not been recently performed. Dr. Bob Gant, a neuropsychologist, was retained by an outside vendor at Liberty's request and evaluated Ellis in October 2013. He determined that Ellis's neuropsychological test results were invalid because of "[c]lear evidence of symptom exaggeration and suboptimal effort." Id . at 202. He said:

Mr. Ellis reported an unusual and elevated degree of neurological complaints which are likely to be vague and illogical. This was confirmed by other tests utilized during this examination which indicated that the degree of neurologic impairment reported by Mr. Ellis was highly atypical and illogical. Such a presentation includes symptoms that are illogical or inconsistent with symptoms of a bona fide neurologic disorder

or they occur very rarely in neurologically impaired patients.

Id . at 203–04. Dr. Gant questioned whether Ellis even had cognitive impairment:

[W]ithin reasonable medical probability [Ellis] has not suffered cognitive impairment related to the asystole

event which lasted 24 seconds on February 1, 2012. In fact, I am not certain that the patient suffers from cognitive impairment. It is likely that elements of secondary gain and/or impairment related to somatic exaggeration is responsible for [his] presentation.

Id . at 196.

In November 2013, Dr. Crouch reviewed Dr. Gant's report and stated that the results from Dr. Gant's evaluation "are insufficient to support the presence of valid/reliable" cognitive impairment. Id . at 194. Dr. Crouch also agreed that it was "medically impossible for a 24 second asystole

event to cause cerebral hypoxia." Id . at 194. Liberty terminated Ellis's disability benefits in December 2013.

Ellis appealed the denial in June 2014. He included as additional evidence in support of his appeal a March 2014 letter from his speech therapist, letters from the Social Security Administration from December 2013 declaring him eligible for disability benefits, and...