Hackett v. Xerox Corp. Long-Term Disability Income
| Citation | 177 F.Supp.2d 803 |
| Decision Date | 13 December 2001 |
| Docket Number | No. 00 C 3140.,00 C 3140. |
| Parties | James J. HACKETT Plaintiff, v. XEROX CORPORATION LONG-TERM DISABILITY INCOME PLAN, Xerox Corporation, Xerox Corporate Review Disability Panel, Plan Administrator for the Xerox Corporation Long-Term Disability Income Plan, Health International, Inc., and Elliott Wolf, M.D. and Lance Holemon, M.D., as agents of Health International, Inc. Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Mark Elliott Furlane, Michael Joseph Condron, Gardner, Carton & Douglas, Chicago, IL, for plaintiff.
Joseph J. Hasman, David Faulkner Schmidt, Peterson & Ross, Chicago, IL, Richard J. Pautler, Thompson Coburn, St. Louis, MO, for defendants.
Bradford A. Burton, Michael John Charysh, Charysh & Schroeder, Ltd., Chicago, IL, for Health International, Inc.
Before the court are Defendants' motion for summary judgment and Plaintiff's cross-motion for summary judgment. For the following the reasons, Defendants' motion is granted and Plaintiff's motion is denied.
This case involves claimed violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., arising out of the termination of long-term disability benefits. In October of 1985, Plaintiff, James J. Hackett ("Hackett"), began employment with Defendant, Xerox ("Xerox"), as a sales representative. Hackett, within a year of his initial employment, experienced emotional problems and began to see a psychiatrist regularly. By March of 1987 Hackett's emotional problems began to interfere with his ability to work. Frank H. Brunstetter, M.D. ("Dr.Brunstetter"), the disability physician for the office of Clinical and Disability Services at Xerox, after consulting with Hackett's treating psychiatrist, John P. Gerber, M.D. ("Dr.Gerber"), advised Hackett that disability status was appropriate and encouraged him to apply for long-term disability benefits under the Xerox Long-Term Disability ("LTD") Plan. As part of the application for disability benefits, Hackett was reexamined by Dr. Gerber to ascertain a formal diagnosis. Dr. Gerber found that Hackett suffered a serious psychiatric condition, a personality disorder coupled with neurotic depression, which prevented him from doing any type of work. As of March 2, 1987, Hackett qualified for, and began receiving long-term disability benefits from Xerox. Over the next twelve years Hackett saw numerous different psychologists and psychiatrists who all performed evaluations. Each different psychologist or psychiatrist reached varying diagnoses of mental illness, but with the same conclusion that Hackett was unable to work. Hackett continued to qualify and receive full disability benefits under Xerox's LTD Plan.2
In 1989, Xerox advised Hackett that as a condition to his continuing to receive long-term disability benefits he was required to apply for social security disability benefits. After an unsuccessful application for disability benefits to the Social Security Administration, Hackett appealed and in May of 1996 was granted disability status and benefits, retroactive to March 2, 1987. Xerox provided legal counsel to Hackett in connection with the successful application for social security disability benefits. Additionally, the social security disability benefits retroactively awarded were paid to Xerox.
Hackett received LTD benefits and social security disability from May of 1996 until January of 1999. On January 2, 1999, Defendant, Health International ("HI")3, determined that Hackett was no longer eligible for long-term disability benefits. Hackett appealed this initial determination and on May 5, 1999 a final and binding determination denied disability benefits. The final determination relied upon: (1) medical evaluations from two psychiatrists stating that although Hackett suffered from a mental illness, it did not prohibit him from working; and (2) material contained in the administrative record.
Hackett alleges that the denial of long-term disability benefits is an arbitrary cessation. Hackett filed a six count complaint alleging violations of ERISA by the following actions: (1) failure to timely provide requested documents; (2) breaches of fiduciary duty; (3) failure to follow applicable plan requirements; (4) improper claim and appeal procedures; (5) denial of benefits; and (6) conflict of interest. Both parties now move for summary judgment, arguing that there are no disputed issues of fact, and they are entitled to judgment as a matter of law.
Initially, the court must address the question of judicial estoppel. The doctrine of judicial estoppel provides a party that has won a suit on one ground may not turn around and in another case obtain another judgment on an inconsistent ground. Bethesda Lutheran Homes and Services, Inc. v. Born, 238 F.3d 853, 857-58 (7th Cir.2001) (citing Saecker v. Thorie, 234 F.3d 1010, 1014-15 (7th Cir.2000); Moriarty v. Svec, 233 F.3d 955, 962 (7th Cir.2000); Lydon v. Boston Sand & Gravel Co., 175 F.3d 6, 12-13 (1st Cir.1999)). If such repudiation were permitted, the incentive to commit perjury and engage in other litigation fraud would be greater. McNamara v. City of Chicago, 138 F.3d 1219, 1225 (7th Cir.1998) (citing Chaveriat v. Williams Pipe Line Co., 11 F.3d 1420, 1428 (7th Cir.1993)). Judicial estoppel requires, however, that the party sought to be estopped have obtained a favorable judgment or settlement on the basis of a legal or factual contention that the party wants to repudiate in the current litigation. McNamara, 138 F.3d at 1225. The purpose behind judicial estoppel "is to protect the judicial system from being whipsawed with inconsistent arguments and to discourage the form of fraud that consists of withholding your best ground in the first of a series of suits because it is helpful to your opponent in that suit hoping to win that suit on a different ground and then spring your inconsistent best ground in a later suit in order to obtain additional relief." Bethesda Lutheran, 238 F.3d at 858.
Hackett argues that Xerox is judicially estopped from denying him long-term disability benefits based on the fact that Xerox agreed and aided Hackett in successfully applying for social security benefits. (Pl.'s Mem. In Opp'n to Defs.' Mot. for Summ. J. and Mem. in Supp. of Cross-Mot. for Summ. J., p. 11.) Hackett relies on Ladd v. ITT Corp., 148 F.3d 753 (7th Cir.1998), for the foundation of his argument. The Ladd case involves an ERISA suit brought by a plan participant who was denied disability benefits. See Ladd, 148 F.3d at 753-755. The plaintiff, Ladd, suffered nerve damage to her neck and both wrists when a shelving unit fell on her at work. Id. Ladd immediately began the process of applying for disability benefits. Id. As part of that process, the defendant, ITT Corporation, encouraged and aided Ladd in applying for social security disability benefits. Id. With legal aid from ITT, Ladd was able to demonstrate to the Social Security Administration she was totally disabled. Id. Within a short period of time after the Social Security Administration's decision, ITT turned around and determined Ladd was not totally disabled and denied her disability benefits. Id. The Seventh Circuit held the denial of disability benefits was arbitrary and "even irrational." Ladd, 148 F.3d at 755. The court stated "no one who examined Ladd, including the doctor selected by [ITT] to examine her, believed that she was capable of working ... the uncontradicted evidence is that Ladd's condition was worse when [ITT] denied her claim then it had been when the Social Security Administration granted it." Id. at 755-56. In terms of judicial estoppel the court held it was "technically not applicable," because ITT was not a party to a previous action involving Ladd's benefits; rather, it was the spirit of the doctrine that was worthy of consideration. See id. at 756. The court stated the aid of ITT and subsequent granting of social security disability benefits "has an additional significance," but was not the deciding factor. Id. Rather, ITT's actions of helping Ladd obtain social security benefits and then turning around and denying disability benefits "cast[] additional doubt on the adequacy of the evaluation of Ladd's claim even if it [did] not provide an independent basis for rejecting that evaluation." Ladd, 148 F.3d at 756.
A comparison between Ladd and the case at bar reveals several telling differences. First, it must be pointed out that in Ladd the Seventh Circuit did not rule that judicial estoppel applied. See id. Rather, it addressed Ladd considering the "spirit" of judicial estoppel. Id. Thus, when Hackett argues that judicial estoppel prevents Xerox from taking such inconsistent positions, there is no authoritative support for such an argument. Xerox was never a party to any previous action involving Hackett's benefits and even though Xerox supported Hackett in his application for disability benefits it is of only "additional significance." See id. Second, the position taken by Xerox is neither inconsistent nor "irrational" as it was in Ladd. Id. at 755. Hackett was determined disabled by the Social Security Administration in May of 1996, but it was not until January of 1999 that Hackett was denied disability benefits by Xerox. (Defs.' Rule 56.1 Statement, ¶ 14, p. 33; Pl.'s Rule 56.1 Statement, ¶ 14, p. 11; R. 52, 85, 108, 109.)4 In that intervening time, Hackett's situation changed. Two separate board certified psychiatrists determined that Hackett was able to work. (R. 002—010, 78, 080-081, 160-166, 193, 234.) Thus, Xerox should not be estopped from denying disability benefits, where circumstances have changed over several years and in light of the current medical evidence. Further, Xerox's position cannot be considered inconsistent, since at the time that Hackett...
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Hackett v. Xerox Corp. Long-Term Disability Income
...Procedural History This court granted Xerox's Motion for Summary Judgment, and denied Hackett's Motion for Summary Judgment. See Hackett, 177 F.Supp.2d at 803. However, the Seventh Circuit reversed and remanded. See Hackett v. Xerox Corp. Long-Term Disability Income Plan, 315 F.3d 771 (7th ......
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