Gross v. Sun Life Assurance Co. of Can.

• Decision Date: 18 January 2018
• Docket Number: 16-2002,Nos. 16-1958,s. 16-1958
• Citation: 880 F.3d 1
• Parties: Diahann L. GROSS, Plaintiff, Appellee/Cross-Appellant, v. SUN LIFE ASSURANCE COMPANY OF CANADA, Defendant, Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — First Circuit

880 F.3d 1

Diahann L. GROSS, Plaintiff, Appellee/Cross-Appellant,

v.SUN LIFE ASSURANCE COMPANY OF CANADA, Defendant, Appellant/Cross-Appellee.

Nos. 16-1958

16-2002

United States Court of Appeals, First Circuit.

January 18, 2018

Joshua Bachrach, Philadelphia, PA, with whom Wilson, Elser, Moskowitz, Edelman & Dicker LLP was on brief, for appellant/cross-appellee.

Jonathan M. Feigenbaum, Boston, MA, with whom Michael D. Grabhorn, Andrew M. Grabhorn, and Grabhorn Law Office, PLLC, Louisville, KY, were on brief, for appellee/cross-appellant.

Before Thompson, Lipez, and Kayatta, Circuit Judges.

LIPEZ, Circuit Judge.

More than four years ago, we remanded this case with the instruction that appellant Sun Life Assurance Co. reconsider its rejection of Diahann Gross's claim for disability benefits based on chronic and severe pain. See Gross v. Sun Life Assurance Co. of Can. (Gross I ), 734 F.3d 1, 4 (1st Cir. 2013). Although we found at that time that Gross's medical evidence supported a finding of total disability, we concluded that, "[a]s the record now stands, we are unable to resolve the debate between the parties on the significance of ... surveillance evidence" obtained by Sun Life. Id. at 27. After additional administrative proceedings, the company again denied her claim and Gross again challenged the denial in federal court. On cross-motions for summary judgment, the district court ruled in Gross's favor, finding that Sun Life should have awarded Gross benefits because the surveillance record as developed does not undermine this court's prior assessment of the medical evidence.

In this appellate sequel, Sun Life challenges the district court's view of the expanded administrative record. It argues that Gross failed to adduce medical evidence in the renewed proceedings to offset the contradictory surveillance—and thus did not meet her burden to prove that she is totally disabled. Sun Life also claims the district court abused its discretion in failing to impose sanctions on one of Gross's attorneys. In a cross-appeal, Gross assigns error to the district court's calculations of prejudgment interest and attorney's fees.

After careful review of the record and the law, we affirm the district court's rulings on the disability claim and sanctions. However, we vacate the prejudgment interest award and remand for consideration of the appropriate rate of interest. We affirm the district court's attorney's fee calculation in all but two respects, concluding that two components of the award must be increased.

I. Background

A. The First Appeal

Until she was placed on disability leave in August 2006, at age 34, Gross worked as an optician and office manager at Pinnacle Eye Care LLC in Lexington, Kentucky. In our prior decision, we described in great detail the facts then in the administrative record concerning Gross's condition and medical evaluations. See id. at 17–21. Here, we begin with a summary description of the original record and briefly review that prior decision to remand. We then describe the new evidence obtained in the second round of administrative proceedings. We elaborate below on both sets of facts where pertinent to our analysis.

1. The Original Medical Evidence

Multiple medical professionals who examined Gross between 2005 and 2007 reported that she was experiencing a variety of debilitating symptoms, including "chronic pain, inability to sit or stand for extended periods of time, severely diminished functional capacity in her right arm, and inability to bend, kneel, or crouch." Gross v. Sun Life Assurance Co. of Can. (Gross Remand Op. ), No. 09-11678-RWZ, slip op. at 2 (D. Mass. June 24, 2016). Gross's treating physician, Dr. Rita Egan, a rheumatologist, opined that Gross was incapable of performing even sedentary activity, and she concluded that Gross suffered from reflex sympathetic dystrophy ("RSD"), fibromyalgia, widespread pain, and chronic fatigue. Gross I, 734 F.3d at 17. In two reports completed in late 2006, Egan noted, with some variation between the statements, that Gross could not sit in one place for more than an hour to ninety minutes, drive for more than ninety minutes, use her right hand, or lift more than ten pounds. Id. at 17 & n.19.¹

Other practitioners echoed Egan's diagnoses, noting, inter alia, abnormalities in the appearance of, and the way Gross positioned, her right hand. See id. at 18, 21, 22.² A physical therapist who performed a functional capacity evaluation ("FCE") in early 2007 reported "a number of 'key limitations' in Gross's physical abilities, including lack of functional use of her right arm, poor standing balance, inability to perform sustained overhead activity, need for assistance or a handrail to negotiate stairs, and inability to crouch, kneel, squat or crawl." Id. at 18–19. The physical therapist, Chris Kaczmarek, suspected that she suffered from RSD or an equivalent condition known as complex regional pain syndrome ("CRPS"), or fibromyalgia. Id. at 18. The FCE concluded that Gross "does not present at a functional level that could maintain sustained work activity." Id. at 19.

Significantly, Kaczmarek stated that Gross was cooperative and "willing to work to maximum abilities" when performing tasks for the FCE. Id. at 23. Additional evidence of Gross's good-faith in describing her symptoms and limitations came from her co-workers and employers, who submitted letters "describing her persistence in continuing to work despite obvious pain and compromised physical capacity." Id. Her boss observed that "[s]he wasn't going to give in until she absolutely had to," id. at 23 n.29, and Pinnacle's owner, Paul Wedge, stated that "[w]e stopped her from working when we received her doctor orders that she was not fit to work," id. at 23 (alteration in original).

The medical evidence, however, did not uniformly support Gross's disability claim. All of her diagnostic tests were negative, and several doctors speculated that psychological factors might be contributing to the severity of her symptoms. Id. at 24. Despite recommendations from multiple physicians that she obtain counseling or behavioral treatment, she never did so. Id. Most puzzling was the evidence resulting from an investigator's surveillance of Gross on nine days between November 2006 and February 2007. On most of those days, the surveillance revealed little activity by Gross, including multiple days when she either did not leave the house or was out briefly in unremarkable circumstances. Our prior decision highlighted three exceptions:

[O]n November 9, 2006, shortly after dropping off a teenager believed to be her stepdaughter at school, Gross was observed driving for about an hour and a half to her mother's home, with a brief stop at a rest area along the way. Second, during the evening of January 11, 2007, Gross drove a short distance with her stepdaughter to a Kmart, where she was observed bending down toward lower-level shelves, extending her arms above her head to retrieve items, and kneeling to examine other items.^{[3 ]} Third, on February 21, after receiving a phone call that her mother had been admitted to the hospital with chest pain, Gross drove to a gas station, pumped gas using her right hand, and then drove for two hours to the hospital, with a brief stop halfway through the trip. About two hours later, she left the hospital and drove home.

Id. at 19.

In support of its original denial of benefits, Sun Life also had procured opinions from two medical consultants who conducted paper reviews of Gross's medical records. In the first records review, Dr. James Sarni noted that "the documentation does not strongly support a diagnosis of [RSD or CRPS]." Id. at 19 n.24. He suggested an evaluation by a neurologist, which Dr. Rukmaiah Bhupalam subsequently performed on February 22, 2007, the day after Gross had made the trip to the hospital. Although Bhupalam initially concluded that Gross was "totally disabled even for sedentary work on a part time basis," he changed his assessment after viewing the surveillance videotapes. Id. at 20. He observed that "she can function quite well and probably will be able to return to her previous occupation," although he also noted that "a re-evaluation might be beneficial." Id.

After Bhupalam's examination, the second non-examining consultant, Dr. William Hall, reviewed Gross's medical records and concluded that "the surveillance videos undermined [her] subjective reports of pain and functional limitations." Id. A third consultant performed a paper review after Gross appealed the initial benefits denial. That physician, Dr. Alan Neuren, noted the inconsistencies between Gross's condition as reported by healthcare providers and her appearance under surveillance, and he stated that " '[t]he only reasonable conclusion' to be drawn 'is that she has deliberately embellished her symptoms to her providers for secondary gain.' " Id. at 21.

2. The Remand Rationale and Directive

Given the well documented history of pain and other symptoms recorded by the medical professionals who examined her, and the buttressing observations of her co-workers, we had "no difficulty" concluding that Gross had submitted adequate medical evidence to prove her entitlement to disability benefits. Id. at 22.⁴ We pointed out that, even though many of Gross's complaints were not readily susceptible to objective confirmation, the record did contain some objective evidence, "as well as the recognition by Sun Life's own medical consultant, Dr. Hall, that Gross's 'musculoskeletal symptoms, as presented by her, are credible to treating and consulting physicians.' " Id.

We were concerned, however, about the "significant incompatibilities between Gross's reports and her observed functional capacity" while under surveillance, particularly during the three episodes described above. Id. at 26. Yet, even faced with those contradictions, Dr. Bhupalam had suggested that a reevaluation of Gross could be helpful that's—"an observation we ...