Radford Trust v. First Unum Life Ins. Co. of Am.

• Decision Date: 15 June 2004
• Docket Number: No. CIV.A.02-12477-WGY.,CIV.A.02-12477-WGY.
• Citation: 321 F.Supp.2d 226
• Parties: RADFORD TRUST, Plaintiff, v. FIRST UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — District of Massachusetts

321 F.Supp.2d 226

RADFORD TRUST, Plaintiff, v. FIRST UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant.

No. CIV.A.02-12477-WGY.

United States District Court, D. Massachusetts.

June 15, 2004.

COPYRIGHT MATERIAL OMITTED

Mark E. Porada, Christopher T. Roach, Geraldine G. Sanchez, Pierce Atwood, Portland, ME, for Defendant.

Warren H. Pyle, Pyle, Rome & Lichten, & Ehrenberg, P.C., Boston, MA, for Plaintiff.

MEMORANDUM AND ORDER

YOUNG, Chief Judge.

This is an action under the Employment Retirement Security Act of 1974, codified as amended at 29 U.S.C. §§ 1001-1461 (ERISA).¹ The plaintiff, Radford Trust ("Radford"), alleged that the defendant, First Unum Life Insurance Company of America ("First Unum"), had wrongfully denied benefits owed to Radford's beneficiary, John Doe ("Doe") (who assigned his claim to Radford), under a group long term disability policy (the "Policy") that First Unum managed for Doe's former employer, New York City law firm Hawkins, Delafield & Wood ("Hawkins"). Radford's action sought damages, costs, and attorney's fees. First Unum maintained that its denial of benefits was proper, arguing that Doe had failed to establish that he was disabled before his coverage under the Policy was terminated. The company further argued that when Doe released all claims against Hawkins, he also released any claims against First Unum. Because Radford could only recover to the extent of Doe's rights, First Unum's arguments would require summary judgment in its favor. Finally, First Unum urged that should the Court hold that First Unum reached its decision incorrectly, the proper course would be remand to First Unum for further proceedings. The parties filed cross motions for summary judgment, and then stipulated that this case might be treated as a case stated. See Pl.'s Stip. [Doc. No. 34]; Def.'s Stip. [Doc. No. 33].² This is a helpful procedure wherein the parties agree that the summary judgment record constitutes the entire case and the Court may draw such inferences therefrom as are reasonable. Where facts are in dispute, the Court notes each party's contentions, and when necessary makes a determination as would an ordinary factfinder, without presumptively drawing inferences in either party's favor. See Boston Five Cents Sav. Bank v. Secretary of Dep't Hous. & Urban Dev., 768 F.2d 5, 11-12 (1st Cir.1985). This Court has used the technique to good effect.³

The Court issued an order and judgment on March 31, 2004, finding facts, declaring the respective rights of the parties in light of these findings, and entering judgment for Radford. The Court further held that Radford was entitled to costs, attorney's fees, and prejudgment and postjudgment interest. This opinion explains the Court's reasoning, amends its holding with regard to the date of accrual for prejudgment interest, and addresses Radford's Motion to Amend Judgment [Doc. No. 39].

I. INTRODUCTION

A. Factual Background

The facts in this case can be found in several documents: (i) First Unum's Statement of Undisputed Material Facts of Record [Doc. No. 14] ("Def.'s 56.1 Stmt."); (ii) Doe's response thereto [Doc. No. 19] ("Pl.'s 56.1 Stmt."); (iii) First Unum's Response to Doe's Undisputed Statement of Material Facts [Doc. No. 22] ("Def.'s Resp."); and (iv) written documents that speak for themselves, as compiled in First Unum's administrative record [Doc. No. 14] ("R."). Because Doe, not Radford, is the real party in interest here, the Court does not distinguish between Doe's contentions and Radford's, and refers to all contentions made by either as Doe's contentions.

1. The Policy

The Policy provided benefits for "disabled" employees. Def.'s 56.1 Stmt. ¶ 1; R. at FULCL00687-63 (copy of the Policy). The Policy stated:

"Disability" and "disabled" mean that because of injury or sickness:

1. the insured cannot perform each of the material duties of his regular occupation; or

2. the insured, while unable to perform all of the material duties of his regular occupation on a full-time basis, is:

a. performing at least one of the material duties of his regular occupation or another occupation on a part-time or full-time basis; and

b. earning currently at least 20% less per month than his indexed pre-disability earnings due to that same injury or sickness.

Note: For attorneys, "regular occupation" means the specialty in the practice of law which the insured was practicing just prior to the date disability started.

R. at FULCL00677.⁴

With respect to payments made for disability, the Policy provided:

When [First Unum] receives proof that an insured is disabled due to sickness or injury and requires the regular attendance of a physician, [First Unum] will pay the insured a monthly benefit after the end of the elimination period. The benefit will be paid for the period of disability if the insured gives to [First Unum] proof of continued:

1. disability; and

2. regular attendance of a physician.

Id. at FULCL00675.

The "elimination period" was "a period of [180] consecutive days of disability for which no benefit is payable ... and begins on the first day of disability." Id. at FULCL00681; id. at FULCL00685 (specifying 180 days). "If disability stops during the elimination period for any 14 (or less) days, then the disability will be treated as continuous." Id. at FULCL00681. "Benefits for disability due to mental illness will not exceed 24 months of monthly benefit payments," except in circumstances not relevant here. See id. at FULCL00670." `Mental illness' means mental, nervous or emotional diseases or disorders of any type." Id.

The Policy provided that an "employee will cease to be insured on the earliest of the following dates" (other possible cessation events are not relevant here):

2. the date the employee is no longer in an eligible class;

...

5. the date employment terminates. Cessation of active employment will be deemed termination of employment, except:

a. the insurance will be continued for a disabled employee during:

i. the elimination period; and

ii. while benefits are being paid.

Id. at FULCL00669. "Active employment" was defined to mean that "the employee must be working ... for the employer on a full-time basis and paid regular earnings (temporary or seasonal employees are excluded) [and] at least [30] hours [per week]." Id. at FULCL00681; id. at FULCL00685 (specifying 30 hours per week).

2. Doe's Schizophrenia

In 1993 and 1994, Doe was under treatment for schizophrenia, and was hospitalized twice for that condition. Pl.'s 56.1 Stmt. ¶ 115. In 1995, after his schizophrenia was no longer acute, he took the Law School Aptitude Test, with accommodations based on his mental illness. See R. at FULCL00354.⁵ Doe began working as a full-time associate for Hawkins on September 8, 1998, and First Unum's coverage of Doe under the Policy became effective on October 1, 1998. Pl.'s 56.1 Stmt. ¶ 117.⁶

According to Doe, his symptoms returned over the course of the next year, eventually making him unable to perform his work duties satisfactorily. Both parties acknowledged the content of the progress notes written by Dr. Sarita Singh (whom Doe saw on June 22, 1999), which stated:

During the year [Doe] worked, he gradually became increasingly fearful of being sexually assaulted. It got to the point that he feared getting on the elevator to get to his office. His concentration worsened. His sleep became irregular, his appetite worsened to the point that all he could eat was bread. He has auditory hallucinations about 1x/wk.... He says he has no contact with his family and has very few friends.

R. at FULCL00129.⁷ First Unum claimed that the medical records attached to Dr. Singh's report, which showed that Doe had received no treatment since 1994, demonstrated that Doe "apparently had been treatment free and fully functioning in society since that time." Def.'s Resp. ¶ 124. On his First Unum claim form, dated October 1, 1999, Doe listed April 20, 1999 as the "[l]ast day [he] worked before [his] disability," and listed April 21, 1999 as the "date [he] was first unable to work." Pl.'s 56.1 Stmt. ¶ 20.⁸

3. Hawkins's Termination of Doe

The parties disagreed as to the nature and significance of the facts surrounding the precise timing and circumstances of Doe's termination. According to the Record, Hawkins and Pettina Plevan ("Plevan"), outside counsel for Hawkins, reported to First Unum on several occasions that Doe's last day of work was April 26, 1999. See R. at FULCL00047 (Long Term Disability Claim Employer's Statement); id. at FULCL00277 (First Unum's log of a call from Plevan to First Unum, which has her stating that "[Doe] was told on 4/26/99 that his services were no longer required and that he should look for another position"); id. at FULCL00283 (First Unum's log of a phone call from Plevan to First Unum, which has her reconfirming that April 26, 1999 was Doe's last day of work).

The Record also contained evidence that Doe's employment continued beyond that date, however. Both parties agreed that Doe continued to receive weekly paychecks until June 30, 1999. See Pl.'s 56.1 Stmt. ¶ 122; Def.'s Resp. ¶ 122. Doe interpreted this as meaning that he was actively employed through June 30, 1999, an understanding he affirmed in a release he signed with Hawkins after settling a disability discrimination suit he brought against the firm. Def.'s 56.1 Stmt. ¶ 52; R. at FULCL00237. First Unum pointed to statements by Plevan that payment after April 26, 1999 was part of a "severance package." Def.'s Resp. at 122 (citing R. at FULCL00277 and FULCL00283). Doe noted, however, that Hawkins continued to pay First Unum premiums for long term disability coverage though June 30, 1999, premiums were based on "total covered payroll" (defined as "basic monthly earnings"), Doe received weekly paychecks through June 30, 1999, the pay stubs (except one check for unused vacation) showed Hawkins as deducting SUI/SDI taxes through that date, and...