McKenzie v. General Telephone Co. of California
| Citation | 41 F.3d 1310 |
| Decision Date | 05 December 1994 |
| Docket Number | No. 93-15532,93-15532 |
| Parties | 18 Employee Benefits Cas. 2631 John P. McKENZIE, Plaintiff-Appellant, v. GENERAL TELEPHONE COMPANY OF CALIFORNIA, dba GTEL, et al., Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Andrew H. Lange, Lange & Lange, San Francisco, CA for plaintiff-appellant.
Michael W. Melendez, Sonnenschein, Nath & Rosenthal, San Francisco, CA, for defendants-appellees.
Appeal from the United States District Court for the Northern District of California.
Before: FERNANDEZ, RYMER, and T.G. NELSON, Circuit Judges.
OVERVIEW
John P. McKenzie (McKenzie) brought suit against The Travelers Insurance Company (Travelers), GTEL, GTE Corporation, and GTE Long Term Disability Plan (Plan) pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Secs. 1001-1461, to recover long-term disability benefits. 1 Specifically, McKenzie relies on 29 U.S.C. Sec. 1132(a)(1)(B) which provides a cause of action for benefits due under the Plan. McKenzie challenges Travelers' reevaluation of his disability pursuant to a more strict standard after eighteen months of disability. We affirm the district court's grant of summary judgment in favor of the appellees, but hold that the district court's consideration of vocational evidence, which was not in the administrative record, was improper and unnecessary.
In September 1987, McKenzie was hired by GTEL, an affiliate of GTE, to fill the position of Regional Service Manager. As a management level employee of GTEL, McKenzie qualified to participate in the Plan. The Plan is a contributory plan which provides for both short-term and long-term disability benefits and is underwritten by Travelers.
Eligibility for long-term disability benefits requires an employee to be "totally disabled" as defined by the Plan. During the first eighteen months of disability, an employee is According to McKenzie, he received an overview of the Plan during the GTEL interview process and an enrollment sheet during GTEL orientation after he was hired. McKenzie does not believe he was given a Summary Plan Description (SPD) as required by 29 U.S.C. Secs. 1021 and 1024(b). Instead, he claims that he did not receive an SPD until he became disabled. Travelers did provide McKenzie with a copy of the Plan upon his request when he applied for long-term disability benefits. Also, when it initially approved his disability benefits, Travelers sent him a letter setting forth the applicable standards for total disability. Finally, when Travelers terminated his long-term disability benefits, it sent McKenzie a letter setting forth and relying on the "any occupation" standard. McKenzie concedes the terms of the Plan were not intentionally concealed.
totally disabled if he cannot perform his own or a similar occupation. After the first eighteen months of disability, the "any occupation" standard applies. Under this standard, an employee must be incapable of performing any occupation in order to be totally disabled. 2
Approximately sixteen months after he was hired, McKenzie began experiencing acute back pain and sought medical attention from Dr. Gerald Keane (Keane). In January 1989, Keane placed McKenzie on temporary disability, providing the necessary medical authorization for disability leave. During this period of temporary disability, McKenzie received short-term disability benefits under the Plan. He resumed work at GTEL in mid-April 1989. Again, on May 22, 1989, Keane placed McKenzie on temporary disability, and McKenzie received short-term disability benefits until May 25, 1989, when GTEL terminated his employment due in part to his absences from work. After his termination, McKenzie applied for long-term disability benefits. In October 1989, Travelers approved McKenzie's request with benefits beginning retroactively on August 26, 1989.
Travelers undertook further review of McKenzie's disability, as its eighteen-month anniversary approached, to determine whether McKenzie was totally disabled under the "any occupation" standard. In response to this review, Keane opined that McKenzie remained disabled. On two occasions, Travelers requested McKenzie submit to an independent medical examination, and McKenzie declined to be examined by the doctor selected by Travelers. However, he was examined by a doctor of his own choosing, Dr. E.A. Baciocco (Baciocco), a board-certified orthopedic surgeon. Baciocco noted "evidence of some lateral recess stenosis, along with foraminal stenosis at L4-5 and a small central disc herniation at C4-55 in the neck." However, despite this evidence, Baciocco opined that there were "very few objective signs and evidence of neurological disease." Further, Baciocco noted he was "somewhat nervous" by the inconsistency between McKenzie's physical condition and his inability to work for two years given that his previous occupation did not involve heavy physical exercise. Baciocco further noted this inconsistency was difficult to explain.
In response to Baciocco's report, Travelers terminated McKenzie's benefits because objective medical documentation did not support a conclusion of total disability under the "any occupation" standard. After Travelers terminated benefits, McKenzie provided Travelers with the medical opinion of Dr. David L. Kneapler (Kneapler), a specialist in rheumatology. Kneapler noted stiffness of the back in the supine position, some degenerative disk disease, and the effects of McKenzie's prior laminectomy in his lumbosacral McKenzie filed suit in state court seeking benefits under the Plan, and the case was removed to federal district court. The parties brought cross-motions for summary judgment, and the district court held that Travelers was not estopped from applying the "any occupation" standard. However, applying an arbitrary and capricious standard, it further held that Travelers' withdrawal of disability benefits pursuant to the "any occupation" standard was not supported by substantial evidence because Travelers had failed to consider vocational evidence. To remedy this error, the district court remanded the case to Travelers for a vocational assessment.
spine. However, Kneapler noted that "[p]hysical examination revealed a healthy-appearing man with a normal general exam." Travelers found Kneapler's report to be "unremarkable" and reaffirmed its decision that McKenzie was not totally disabled
On remand, Cherie King (King), Travelers' in-house rehabilitation counselor, performed a vocational assessment and transferable skills analysis and concluded that McKenzie was qualified for ten different categories of jobs listed in the Dictionary of Occupational Titles, including several managerial positions. Travelers also hired Dr. Lawrence Deneen (Deneen) to perform a vocational assessment and labor market survey. Deneen concluded that, in light of McKenzie's educational background, he was qualified for 848 job openings listed in two area counties.
In response to Travelers' vocational evidence, McKenzie requested that discovery be reopened so he could depose Travelers' vocational experts. This request was denied. However, McKenzie did obtain the declaration of a vocational counselor, Yanela Burke (Burke), which challenged Deneen and King's reports.
All of the vocational evidence obtained on remand, including the reports of Deneen, King and Burke, were submitted directly to the district court. Based on this evidence, the district court granted summary judgment for Travelers, holding that Travelers' vocational assessment was supported by substantial evidence.
McKenzie appeals the district court's judgment for Travelers challenging the application of the "any occupation" standard; the remand for new evidence and review of that evidence; and the district court's grant of summary judgment for Travelers.
"[A] denial of benefits challenged under Sec. 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989). When a plan fiduciary has discretionary authority, the proper standard of review for ERISA claims brought under Sec. 1132(a)(1)(B) is arbitrary and capricious. See Madden v. ITT Long Term Disability Plan, 914 F.2d 1279, 1283-84 (9th Cir.1990), cert. denied, 498 U.S. 1087, 111 S.Ct. 964, 112 L.Ed.2d 1051 (1991). McKenzie concedes that the Plan gives Travelers discretionary authority to determine his eligibility for benefits. Thus, Travelers' decision to terminate McKenzie's benefits is reviewed pursuant to an arbitrary and capricious standard or for abuse of discretion. 3 We review the district court's application of this standard and its grant of summary judgment de novo. See id. at 1283.
McKenzie argues that Travelers should be estopped from reevaluating his disability and denying benefits under the "any occupation" standard because it failed to provide him with an SPD. Addressing this claim, the McKenzie argues that we should find substantive harm "automatically follows when the procedural violation results in a failure to disclose[ ] provisions that go[ ] to the very essence of coverage." Apparently, McKenzie is requesting that we presume substantive harm when benefits are denied pursuant to provisions of the Plan which were not properly disclosed. Alternatively, he argues there is a triable issue of fact that he suffered substantive harm as a result of the procedural violation.
district court held that McKenzie had failed to demonstrate Travelers' procedural violation caused him substantive harm. We agree and hold that the "any occupation"...
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