Perlman v. Swiss Bank Corp.

• Decision Date: 06 January 2000
• Docket Number: Nos. 98-1338,98-1407,98-1339,98-1408,s. 98-1338
• Citation: 195 F.3d 975
• Parties: (7th Cir. 1999) Judith Perlman, Plaintiff-Appellee, Cross-Appellant, v. Swiss Bank Corporation Comprehensive Disability Protection Plan, et al., Defendants-Appellants, Cross-Appellees
• Court: U.S. Court of Appeals — Seventh Circuit

Page 975

195 F.3d 975 (7th Cir. 1999)

Judith Perlman, Plaintiff-Appellee, Cross-Appellant, v. Swiss Bank Corporation Comprehensive Disability Protection Plan, et al., Defendants-Appellants, Cross-Appellees.

Nos. 98-1338, 98-1339, 98-1407, 98-1408

United States Court of Appeals, Seventh Circuit

Argued April 12, 1999

Decided November 2, 1999

Rehearing and Rehearing En Banc Denied January 6, 2000

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 95 C 6610--Elaine E. Bucklo, Judge.

Before Posner, Chief Judge, and Easterbrook and Diane P. Wood, Circuit Judges.

Easterbrook, Circuit Judge.

Swiss Bank Corporation employed Judith Perlman in Chicago as a lawyer until September 1994, when she quit. Ever since, Perlman and Swiss Bank have been contesting whether she is entitled to disability benefits. Perlman has serious medical problems. An automobile accident in 1988 caused trauma to her digestive system and led to some additional problems, such as migraine headaches. Perlman did not work for a year after the accident and received disability benefits during that period. She took shorter leaves in 1991 and 1992, again receiving disability benefits. Perlman regularly sees a psychiatrist for assistance in coping with the stress caused by the accident and her medical conditions. But between September 1992 and September 1994 she worked full time. Swiss Bank was satisfied with her work, believes that she is physically and mentally able to continue, and contends that she quit for personal rather than medical reasons, seizing an opportunity to leave the labor force and move to the Wisconsin countryside.

UNUM Life Insurance Company administers Swiss Bank's disability plan, a "welfare benefit plan" covered by ERISA. For short-term disability UNUM acts solely as an administrator; payment comes from Swiss Bank's accounts. For disability after the first 26 weeks UNUM is both administrator and insurer; it pays any award. Immediately after quitting, Perlman applied for short-term benefits. After seeking and obtaining additional medical records, UNUM said no: its letter states that the medical conditions documented in the information Perlman had provided "do not prevent you from performing the material duties of your occupation." Perlman appealed to a higher level of UNUM's staff but was unsuccessful. A letter in July 1995 explained: "We do not see a change in your medical condition which necessitated you to stop work. The records do not show a level of impairment which would restrict or limit you from performing the duties of your regular job given that you have worked with these conditions in the past."

Section 502(a)(1)(B) of ERISA, 29 U.S.C. sec.1132(a)(1)(B), makes decisions of this kind reviewable in federal court, and Perlman asked the district judge to direct UNUM to pay both short- and long-term disability benefits. The court concluded that it was authorized to consider both short- and long-term claims, even though Perlman had sought only short-term benefits from UNUM, because an award of short-term benefits is a condition to receipt of long-term benefits; the parties disagree about whether Perlman is disabled, not the duration of any disability. 979 F. Supp. 726, 731 n.6 (N.D. Ill. 1997).

After stating that UNUM's decision was "arbitrary and capricious" because it failed to obtain the assistance of any outside experts, and did not perform a detailed study of Perlman's job duties, the judge directed UNUM to reconsider Perlman's application in light of the analysis in its opinion. Both sides have appealed--UNUM because it believes that its decision should have been sustained, Perlman because she believes that the court should have ordered UNUM to pay benefits without giving it an opportunity to compile a better record. A second set of cross-appeals concerns attorneys' fees. The district court held that Perlman is the prevailing party and ordered UNUM to pay $44,020 under 29 U.S.C. sec.1132(g)(1). 990 F. Supp. 1039 (N.D. Ill. 1998). UNUM now contends that an award of fees is impermissible until after the court has directed the ERISA plan to pay benefits; Perlman contends that $44,000 is too low (it is only a third of her request).

Appellate jurisdiction is the first, and potentially the last, issue we need to consider. The district court entered a judgment that reads in full: "IT IS ORDERED AND ADJUDGED that both parties's motions for summary judgment are denied. The case is remanded to UNUM for a new determination in accordance with the Memorandum Opinion and Order, and judgment is, therefore, entered accordingly." "IT IS ORDERED AND ADJUDGED . . . [that] judgment is . . . entered" is not helpful. A judgment must be self-contained (which this is not) and specify the relief to which the prevailing party is entitled (which this does not). See Massey Ferguson Division of Varity Corp. v. Gurley, 51 F.3d 102 (7th Cir. 1995); American Interinsurance Exchange v. Occidental Fire & Casualty Co., 835 F.2d 157 (7th Cir. 1987). What is more, it is impossible to see how a "case" (as opposed to a "claim for benefits") may be returned to UNUM. Litigants should flag such shortcomings for the district judge, so that they can be corrected and jurisdictional issues avoided. Like the parties to other recent cases, these litigants ignored the jurisdictional problems rather than helping to avoid or cure them. See Continental Casualty Co. v. Anderson Excavating & Wrecking Co., 189 F.3d 512, 515-16 (7th Cir.1999), Health Cost Controls, Inc. v. Washington, 187 F.3d 703, 706 (7th Cir. 1999).

Neither side contends that the judgment is too uncertain to be enforced, however, and it is easy enough to see from the opinion what the judge had in mind. Because the district court obviously does not plan to enter any further orders, here as in Continental Casualty and Health Cost Controls the formal defects do not prevent appellate review. Compare Otis v. Chicago, 29 F.3d 1159 (7th Cir. 1994) (en banc), with Buck v. U.S. Digital Communications, Inc., 141 F.3d 710, 711 (7th Cir. 1998). But the nature of the relief, a remand to UNUM, may do so. Although it is doubtful as an original matter that a district court may "remand" ERISA claims, as if to administrative agencies, we have held that courts may treat welfare benefit plans just like administrative law judges implementing the Social Security disability-benefits program. Quinn v. Blue Cross & Blue Shield Ass'n, 161 F.3d 472, 476-78 (7th Cir. 1998); Schleibaum v. Kmart, 153 F.3d 496, 503 (7th Cir. 1998). That makes it necessary to determine whether a remand is appealable as a final decision under 28 U.S.C. sec.1291.

One court of appeals has answered "yes" without analysis. Snow v. Standard Insurance Co., 87 F.3d 327, 332 (9th Cir. 1996). Two courts have answered "no," analogizing the remand to a district court's order setting the case for a new trial. Petralia v. AT&T Global Information Solutions Co., 114 F.3d 352 (1st Cir. 1997); Shannon v. Jack Eckerd Corp., 55 F.3d 561 (11th Cir. 1995). Petralia thought it implicit in a remand that the parties may return to the district court without filing a new complaint following the plan's fresh decision, and if so then the district court's decision cannot be called final. A more recent decision of the ninth circuit called Petralia's assessment persuasive, Williamson v. UNUM Life Insurance Co., 160 F.3d 1247, 1252 (9th Cir. 1998), though because the judgment in Williamson was not final by any standard (the district court had resolved a few disputed issues but had not awarded any relief) Snow was not overruled. A fourth court of appeals has noticed the conflict without taking a stand. Crocco v. Xerox Corp., 137 F.3d 105, 108 (2d Cir. 1998). Now it is our turn.

If the justification for a remand to an ERISA plan's administrator is that the plan makes the same kind of decisions as the Social Security Administration, then it is important to know the jurisdictional consequences of a remand in a Social Security case. Two sentences of 42 U.S.C. sec.405(g) authorize remand in different situations. Sentence four authorizes the district court to enter "a judgment affirming, modifying, or reversing the decision of the Commissioner of Social Security, with or without remanding the cause for a rehearing." Sentence six allows the court to remand for the receipt of new evidence, but without entering a judgment determining the propriety of the decision previously rendered. Sullivan v. Finkelstein, 496 U.S. 617 (1990), holds that a sentence-four remand, which depends on a finding of error in the Commissioner's decision, is appealable under sec.1291 as a final decision, while a sentence-six remand is not final or appealable because no adjudication has taken place. See also Forney v. Apfel, 524 U.S. 266 (1998). A sentence-four remand concludes the litigation in the district court; any protest about the Commissioner's decision on remand requires a new suit. But a sentence-six remand works like a yo-yo; once the record has been enlarged, the district court finally decides whether the administrative decision is tenable.

Remands to plan administrators serve the same functions as remands to the Commissioner, which implies the same jurisdictional treatment for purposes of sec.1291. If the district court finds that the decision was erroneous and enters a judgment wrapping up the litigation, that decision is appealable even if extra-judicial proceedings lie ahead; but if the court postpones adjudication until after additional evidence has been analyzed, then it has not made a final decision. The Supreme Court drew this line in Finkelstein in part because it was concerned that it would otherwise be impossible for the Commissioner to obtain review of an adverse decision by a district court. If the court directs the Commissioner to apply a specific rule, or accept specific evidence, and the Commissioner carries out that...