Locher v. Unum Life Ins. Co. of America
| Decision Date | 12 November 2004 |
| Docket Number | Docket No. 03-9229. |
| Citation | 389 F.3d 288 |
| Court | U.S. Court of Appeals — Second Circuit |
| Parties | Marianne LOCHER, Plaintiff-Appellee, v. UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant-Appellant, Katten Muchin & Zavis, Defendant. |
Elizabeth L. Koob, Koob & Magoolaghan, New York, NY, for Plaintiff-Appellee.
Patrick W. Begos, Begos & Horgan LLP, Bronxville, NY, for Defendant-Appellant.
Before: MINER, CABRANES, and STRAUB, Circuit Judges.
Defendant-Appellant, UNUM Life Insurance Company of America, appeals from a judgment of the United States District Court for the Southern District of New York (Laura Taylor Swain, Judge) entered November 14, 2003, finding, after a three-day bench trial, that Plaintiff-Appellee Marianne Locher was entitled to disability benefits under a long-term disability plan provided by her employer through an insurance policy issued by Defendant-Appellant, and awarding benefits and attorneys' fees and costs. Defendant-Appellant argues that the District Court erred in considering evidence outside the administrative record, finding Plaintiff-Appellee eligible for disability benefits, awarding benefits through the date of judgment, and awarding attorneys' fees. We affirm the judgment of the District Court and write to clarify the standard to be applied by district courts in determining whether to consider evidence outside the administrative record upon a de novo review of factual issues bearing on an administrator's denial of ERISA benefits.
The following are facts that the District Court found, and that neither party contests as clearly erroneous on appeal.
Plaintiff-Appellee, Marianne Locher ("Locher"), was employed as a legal secretary at Katten Muchin & Zavis ("KMZ") from March 9, 1992, until April 8, 1993, when her resignation took effect. Locher was a "participant" within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., in a long-term disability plan (the "Plan") provided by KMZ through an insurance policy issued by UNUM Life Insurance Company of America ("UNUM"). The parties do not dispute that the Plan is an employee benefit welfare plan within the meaning of ERISA. The Plan provides for a monthly benefit for a period of disability, defined as an inability of the insured to "perform each of the material duties of his regular occupation" because of "injury or sickness."
In November 1990, Locher's regular physician, Dr. David Zimmerman, diagnosed Locher as suffering from Chronic Fatigue Syndrome ("CFS"). According to Locher, she did not disclose her condition to KMZ at the time she began working there in March 1992, because she was afraid that KMZ would not hire her if it was known that she had CFS. In or about September 1992, Locher's health began to decline. She began waking up exhausted. She began taking a taxi to work because she did not have the energy to walk to the corner for the bus. As her symptoms became more severe, Locher attempted to preserve her energy for work by stopping most activities outside of work. On January 29, 1993, Locher saw Dr. Zimmerman and discussed her symptoms and difficulties with day-to-day activities. Dr. Zimmerman advised her to reduce her work schedule.
In early 1993, Locher requested that her employee classification be changed from "full-time" to "part-time." By written memorandum on February 17, 1993, a KMZ administrator advised Locher that KMZ would consider her request if she provided a medical certificate attesting to her medical condition and her need for a reduced work schedule. Locher had not provided such documentation as of March 24, 1993, and, on that date, Locher was counseled for "excessive" unscheduled absences and for medical appointments scheduled during the work day. Locher's 1993 annual performance evaluation also indicated that absences and tardiness were an issue. Locher resigned from KMZ on March 29, 1993, effective April 8, 1993. Locher did not inform KMZ that she was leaving due to the escalation of her CFS but, rather, told her office manager, Barbara Oxnam, that her reason for resigning was to "move on." After Locher left KMZ, she worked as a temporary employee for fourteen days between April 16, 1993, and June 7, 1993. In June 1993, Locher consulted Dr. Susan Levine. After personally evaluating Locher during a June 8, 1993, visit and reviewing Dr. Zimmerman's records, Dr. Levine concluded that Locher's "history and laboratory data support the diagnosis of CFS and fibromyalgia" and that Locher had become disabled in April 1993.1
On July 28, 1993, Locher submitted an application for disability benefits to UNUM, claiming that CFS had rendered her unable to work at KMZ beginning April 8, 1993. At the time she filed her application, Locher submitted to UNUM an Attending Physician's Statement from Dr. Zimmerman and a letter from Dr. Levine, and KMZ submitted to UNUM an Employer's Report of Claim, as well as certain of Locher's employee records, including attendance records, an employee data form, and letters concerning her request for a reduced work schedule.
UNUM denied the claim on August 30, 1993, maintaining that Locher was ineligible for benefits because she "work[ed] up to the day which [she] resigned [sic]" and was only absent three days in the three months prior to her resignation. Locher submitted an administrative appeal on September 26, 1993, supported by additional evidence in the form of a letter report from Dr. Zimmerman dated September 1, 1993, and a case history report. Subsequently, upon UNUM's request, Dr. Zimmerman provided his office records to UNUM. UNUM upheld the denial of Locher's claim on March 4, 1994, stating that while the medical evidence suggested an inability to work as of July 1993, it did not suggest disability as of the date last worked, April 8, 1993. On March 17, 1995, Locher requested reconsideration of this decision and submitted a copy of the March 4, 1995, decision she received from the Social Security Administration granting her disability benefits. On reconsideration, UNUM reviewed Dr. Levine's office records and asked Dr. John Dodge, an "on-site" physician, to review all of the medical evidence in Locher's claim file. Based in part on Dr. Dodge's conclusions, UNUM denied Locher's second appeal on November 15, 1995, again on the basis of insufficient evidence to support a finding of inability to work as of April 8, 1993.
In May 1996, Locher commenced this action against UNUM and KMZ. The parties subsequently moved for summary judgment based on the administrative record. The District Court denied the motions. In May 2000, Locher voluntarily dismissed her claims against KMZ.
In August 2000, UNUM sought an in limine ruling to limit the evidence at trial to the administrative record. Among other things, UNUM objected to the proposed testimony of Dr. Richard Podell, whom Locher retained in February 2000 as an expert witness, and Cynthia M'Diaye, a former co-worker of Locher's at KMZ. The District Court denied UNUM's motion, finding that "all of the persons involved in the initial and appellate review of Locher's claim under the Disability Plan were UNUM employees," and thus UNUM was a "conflicted administrator within the meaning of DeFelice [v. American International Life Assurance Co. of New York, 112 F.3d 61 (2d Cir.1997)]," and that UNUM had insufficient written procedures for claims review. Based on those findings, the court found "good cause" for the admission of evidence outside the administrative record. The District Court also stated that UNUM's conflict of interest was "per se `good cause' for allowing additional evidence at trial."
The District Court thereafter conducted a three-day bench trial. Six witnesses testified, including Locher; Dr. Zimmerman, her regular physician; Dr. Dodge, UNUM's on-site physician; and Dr. Podell, whom Locher saw in 2000. Dr. Podell, who specializes in CFS, testified that he saw Locher in February 2000, confirmed the diagnosis of CFS and disability as of April 1993, and found credible Locher's account of the progress of her illness. The parties also introduced the claim file deposition transcripts, and various medical and employment records and reports.
On March 6, 2002, the District Court issued an Opinion and Order setting forth its finding that Locher was disabled within the meaning of the policy as of April 8, 1993. On November 7, 2003, following a motion for reconsideration by UNUM and submissions on the amount of benefits, attorneys' fees and costs, and prejudgment interest, the District Court directed that final judgment be entered in favor of Locher finding that she was disabled as of April 8, 1993, and was entitled to benefits under the Plan in the monthly amount of $2,129.40 for the months of July, August, and September 1993, and a monthly benefit of $1,355.70 for each month through June 2003, the month in which judgment was entered. The District Court also awarded Locher prejudgment interest and attorneys' fees and costs. Judgment was entered on November 14, 2003, and UNUM filed a notice of appeal on November 19, 2003.
The District Court's factual findings are reviewed for "clear error," and its legal conclusions are reviewed de novo. See Krizek v. Cigna Group Ins., 345 F.3d 91, 99 (2d Cir.2003). "A finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Id. (internal quotation marks omitted). Clear error review extends to a district court's factual findings based on inferences drawn from other facts, as well as findings based on documentary evidence. See id.
Where an ERISA plan does not accord an administrator "discretionary...
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