Graham v. Hartford Life and Accident Ins. Co.

• Decision Date: 24 August 2007
• Docket Number: No. 06-5054.,No. 06-5142.,06-5054.,06-5142.
• Citation: 501 F.3d 1153
• Parties: Shirley A. GRAHAM, Plaintiff-Appellant, v. HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

501 F.3d 1153

Shirley A. GRAHAM, Plaintiff-Appellant, v. HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, Defendant-Appellee.

No. 06-5054.

No. 06-5142.

United States Court of Appeals, Tenth Circuit.

August 24, 2007.

Joseph F. Clark Jr., Clark & Warzynski, P.A., Tulsa, OK, for Plaintiff-Appellant.

Timothy A. Carney, Gable & Gotwals, Tulsa, OK, for Defendant-Appellee.

Before KELLY and EBEL, Circuit Judges, and MURGUIA,^* District Judge.

EBEL, Circuit Judge.

Plaintiff-Appellant Shirley A. Graham brought suit after she was denied long-term disability benefits under a plan administered by Defendant-Appellee Hartford Life & Accident Insurance Company ("Hartford"). The District Court for the Northern District of Oklahoma concluded that Hartford's denial of Graham's claim violated the Employment Retirement Income Security Act (ERISA) because Hartford's decision was arbitrary and capricious. The court did not award Graham benefits, but instead remanded the claim to Hartford for a "full and fair redetermination." Graham appeals both the decision to remand and the court's earlier decision that ERISA preempted her state law claim. (No. 06-5054.) In companion case No. 06-5142, 2006 WL 1804551 Graham appeals the court's denial of her request for attorney's fees.

We conclude that the district court's order to remand Graham's claim for benefits to Hartford is not a final decision that gives rise to our jurisdiction under 28 U.S.C. § 1291. Because Graham will have the opportunity later to appeal the issues before us once a final judgment has been entered, we DISMISS this appeal for lack of jurisdiction. We further hold that Graham's related action for attorney's fees is not ripe, and therefore VACATE the district court's denial of her request for fees, and REMAND with directions to dismiss her motion without prejudice.

I. Background

Graham was employed by the United States Postal Service since 1976 as a mail carrier. She also was a member of the relevant collective-bargaining union, the National Rural Letter Carriers' Association ("NRLCA"). In 1994, while carrying mail, Graham encountered a small but aggressive dog. In stepping away from the dog, she backed off the sidewalk and twisted her knee. This injury required surgery and precipitated more problems in her knees and feet, including osteoarthritis. Despite her attempt to work in a sedentary position for the Postal Service from 1997 to 2000, she continued to have health problems.

NRLCA offered its members the opportunity to participate in a long-term disability insurance plan. Even though the collective bargaining agreement with the Postal Service did not provide for such a plan, the NRLCA arranged for the Postal Service to deduct premiums from its participating employees' paychecks. Graham applied to participate in the NRLCA's long-term disability benefits plan, and became insured on November 22, 1997.

Graham's last day of work was July 15, 2000. She applied for disability retirement with the Postal Service, which was approved on December 1, 2000. On October 27, 2000, Graham filed a claim for long-term disability benefits with Hartford, the administrator of NRLCA's long-term disability plan. Graham submitted a statement from her attending physician, Dr. Jeffrey Emel, that diagnosed ankle osteophytes and an ankle sprain. Hartford considered Graham's claim in early 2001, and sought a clarification from Dr. Emel regarding Graham's ankle and knee problems. Hartford then denied Graham's claim on the basis that she did not meet the plan's definition of "totally" disabled, defined as unable to perform the essential duties of one's occupation and as a result earn less than 20 percent of one's pre-disability earnings. Hartford specifically concluded that Graham's most recent occupation was classified as sedentary, and that she had not shown that she could not perform sedentary work. Graham appealed, submitting additional documentation from Dr. Emel in which he stated that Graham could not drive or sit for more than an hour at any one time. However, Hartford again rejected Graham's claim on the same basis as its previous denial. Graham made a second and final internal appeal to Hartford, which again denied her claim because it concluded a job that accommodated her disability was available to her.

Having exhausted her internal appeals, Graham filed suit in federal court on February 27, 2003, invoking the court's diversity jurisdiction. She alleged that Hartford had breached its duty of good faith and fair dealing — an Oklahoma state law claim — by failing to investigate, evaluate and pay Graham's claims properly. She further alleged that Hartford's "malicious" and "intentional" conduct had caused her extreme emotional distress and financial losses. As a remedy, she sought actual and punitive damages.

Graham's complaint did not mention ERISA. ERISA provides a private right of action to a beneficiary under an ERISA-covered plan, but limits a claimant's remedies to "recover[y of] benefits due to him" and "enforce[ment of] his rights under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). ERISA does not allow consequential or punitive damages. See Allison v. UNUM Life Ins. Co., 381 F.3d 1015, 1025 (10th Cir.2004).

The district court first decided that the NRLCA plan was governed by ERISA, and that ERISA preempted Graham's state law claim. Specifically, the court found that the NRLCA plan did not fall under the "governmental plan" exception to ERISA coverage, because the union-offered insurance lacked an adequate connection to governmental control, functional responsibilities and financial support. The district court accordingly dismissed Graham's state law claim against Hartford. The court then ordered the parties to submit an administrative record within 45 days so the court could review the merits of Graham's claim for benefits under the NRLCA plan. In so doing, the court apparently converted Graham's complaint to an ERISA action. There is no indication in the record that Graham objected at this time to the court's decision to substitute her state law claim with one brought under ERISA.

Eight months later, the district court ruled on the merits of Graham's claim for benefits.¹ Employing ERISA, the court concluded that Hartford's decision was arbitrary and capricious, specifically that it failed to prove that its denial of benefits was supported by substantial evidence under Sandoval v. Aetna Life & Cas. Ins. Co., 967 F.2d 377, 382 (10th Cir.1992). The court faulted Hartford for: relying on the fact that Graham had been able to work in a modified job for the Postal Service, even though the Postal Service established the accommodation three years prior to her disability benefits claim; giving undue weight to a single statement by her treating physician that was not consistent with the other medical evidence in the record; and not undertaking an independent medical review in the face of conflicting evidence. The court did not state that Graham was necessarily eligible for disability benefits, but instead found that, in "[v]iewing the record as a whole," Hartford did not meet its evidentiary burden to support the denial of benefits to Graham.

The district court did not award Graham benefits; instead, the court remanded her claim to Hartford "for a full and fair redetermination." The district court did not state whether or not it would retain jurisdiction over the matter. However, the docket entries administratively entered for this decision indicate that the court was "dismissing/terminating" the case.

Graham petitioned the district court for attorney's fees, which may be awarded at the court's discretion under ERISA. See 29 U.S.C. § 1132(g)(1). The court applied our five-factor standard from Gordon v. U.S. Steel Corp., 724 F.2d 106, 109 (10th Cir.1983), and determined that a fee award would be inappropriate. Specifically, the court said it had made no finding of bad faith on the part of Hartford, and noted that "the record does not suggest that plaintiff's claim for benefits is particularly meritorious."

On appeal, Graham: (1) seeks to revive her state law claim, contending that NRLCA's disability insurance is a governmental plan exempt from ERISA because the Postal Service recognizes the NRLCA as a collective-bargaining union; (2) argues that the court should have awarded her disability benefits rather than remanding the claim to Hartford; and (3) asserts that an award of attorney's fees is appropriate, alleging that Hartford engaged in "bad faith" conduct.

Hartford does not appeal the district court's conclusion that its decision was arbitrary and capricious. Instead, Hartford argues that we have no jurisdiction over this appeal, on the theory that a district court's decision to remand a claim to a plan administrator is not a final appealable decision under the meaning of 28 U.S.C. § 1291.

II. Jurisdiction and Finality

We have jurisdiction "of appeals from all final decisions of the district courts of the United States." 28 U.S.C. § 1291. "It is well settled that we can only address the underlying merits of a lawsuit if it meets the requirements for appellate jurisdiction outlined in 28 U.S.C. § 1291." Albright v. UNUM Life Ins. Co., 59 F.3d 1089, 1092 (10th Cir.1995). "A final decision is one that `ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.'" Rekstad v. First Bank Sys., 238 F.3d 1259, 1261 (10th Cir. 2001) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945)). "In considering whether the judgment constitutes a `final decision' under § 1291, the label used to describe the judicial demand is not controlling — that is, we must analyze the substance of the district court's decision, not its label or form." Albright, 59 F.3d at 1092 (quotation, citation omitted).

Thus, we must determine if the district court's order to remand, which is the decision giving rise to this appeal,...