Semien v. Life Ins. Co. of North America

• Decision Date: 06 February 2006
• Docket Number: No. 04-3664.,04-3664.
• Citation: 436 F.3d 805
• Parties: Kathleen SEMIEN, Plaintiff-Appellant, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, a Cigna Company, and BP Long Term Disability (Ltd) Plan, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

436 F.3d 805

Kathleen SEMIEN, Plaintiff-Appellant, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, a Cigna Company, and BP Long Term Disability (Ltd) Plan, Defendants-Appellees.

No. 04-3664.

United States Court of Appeals, Seventh Circuit.

Argued December 1, 2005.

Decided February 6, 2006.

COPYRIGHT MATERIAL OMITTED

Mark D. Debofsky (argued), Daley, Debofsky & Bryant, Chicago, IL, for Plaintiff-Appellant.

Daniel K. Ryan, Stephen R. Swofford (argued), Christine Olson McTigue, Peter E. Pederson, Hinshaw & Culbertson, LLP, Chicago, IL, for Defendants-Appellees.

Before FLAUM, Chief Judge, and BAUER and EVANS, Circuit Judges.

FLAUM, Chief Judge.

The defendant, Life Insurance Company of North America ("LINA"), terminated the payment of long term disability benefits to the plaintiff, Kathleen Semien. In response, Semien filed suit against her benefit plan, BP Long Term Disability Plan, and LINA seeking an order compelling LINA to continue payment of her disability benefits.

Additionally, Semien sought to compel discovery in order to gather evidence about the relationship between the physicians LINA consulted and the insurer. The district court denied Semien's motion to compel discovery and granted summary judgment in favor of the defendants. Semien appeals the district court's denial of her discovery requests as well as the district court's grant of summary judgment to LINA.

For the following reasons, we now affirm the judgment of the district court.

I. Background

Kathleen Semien is a 54-year old woman who began working for BP-Amoco in February 1989 as an environmental remediation manager. On May 15, 2000, when Semien left BP-Amoco, she was employed as a chemical engineer. Her occupation required significant travel, concentration, teamwork, and quick reactions. Upon leaving her job, Semien filed a disability claim with BP's Long Term Disability Plan.

BP established its Consolidated Welfare Benefit Plan ("Plan") to provide long-term disability benefits to eligible employees. BP adopted a Plan Governance Amendment on January 31, 2000. The Amendment defined an "Administrative Named Fiduciary" as any entity that entered into an Administrative Services Agreement with the Plan Administrator. Administrative Named Fiduciaries were granted the authority to "Exercise such discretion as may be required to construe and apply the provisions of the Plan, subject only to the terms and conditions of the Plan." On April 1, 2000, LINA entered into an Administrative Services Agreement with Semien's employer covering long-term disability claims arising out of the Plan. As part of this Administrative Services Agreement, LINA would screen benefits and determine whether claims were payable under the Plan. In addition, LINA insured the benefits of employees under the Plan.

Semien asserts that she suffers from a variety of medical conditions: back pain, a herniated lumbar disk, bone spurs in her neck, carpal tunnel syndrome, other problems in her joints and extremities, fibromyalgia (a disease with no known causes or cure, but with symptoms including chronic pain "all over," fatigue, disturbed sleep, and other problems), and past sickness as a result of Hepatitis C. In addition to her alleged physical ailments, Semien also claims to suffer from chronic depression and mental confusion. She has been described as having suicidal thoughts and "masochistic, schizoid, and narcissistic features." Semien is currently taking several medications for pain, sleeping problems, and depressive disorders.

LINA received Semien's initial claim on September 15, 2000. This initial claim was approved on November 15, 2000. The bases for LINA's approval of benefits were side effects from Hepatitis C, medication, fatigue, and pain. In its initial approval, LINA stated its intent to monitor Semien's condition and reserved the right to request additional records. To receive benefits for the first 24 months of disability insurance, Semien only needed to show that she could not perform her "Regular Occupation or a Qualified Alternative" at BP. After the initial 24-month period, a more stringent standard applied.

During the two-year initial disability period, Semien submitted many medical records to LINA. Semien's physicians also completed assessments on her behalf. Some of these assessments indicated that Semien was capable of performing moderate work, but cautioned that her abilities were limited. Semien received fusion surgery on her back in January 2002.

On May 8, 2002, LINA sent Semien a letter stating that she would remain eligible for benefits only if illness prevented her from performing any qualified work or earning 80% or more of pre-disability earnings. Additionally, during this time period, Semien's disability payments were reduced in part to offset the money she received from social security disability payments.

In a letter dated November 22, 2002, LINA notified Semien that "the information we have on file to date does not establish that you meet the Policy definition of Disabled. Accordingly, [long term disability] benefits are not payable beyond November 14, 2002, under this policy." LINA further explained, "[Y]our file was . . . reviewed by a Nurse Care Manager and a Behavior Care Specialist. It was noted that the medical documentation does not support your inability to perform your occupation as an Environmental Business Manager[.] ... Accordingly no additional benefits are payable under the policy."

The language of the long-term disability plan states:

After Disability Benefits have been payable for 24 months, the Employee is considered Disabled if, solely because of Injury or Sickness, he or she is either:

1. unable to perform all the material duties of any occupation for which he or she is, or may reasonably become, qualified based on education, training or experience; or

2. unable to earn 80% or more of his or her Indexed Covered Earnings.

On March 25, 2003, Semien appealed LINA's termination decision. She submitted a great deal of medical evidence to support her appeal. LINA hired an independent psychiatric consultant, Dr. Jack Greener, to review the medical history in Semien's file. Dr. Greener did not personally examine Semien.

Dr. Greener's report concluded that Semien's depression was severe enough to prevent her from functioning in a work setting from January 24, 2003, to February 21, 2003. He stated that, "The psychiatric documentation demonstrates a degree of depression of moderate severity and then of severe degree, which would preclude the client from performing her regular job according to the job description supplied." In an addendum to his original report, Dr. Greener wrote, "After careful review it is evident that the client is capable of performing a sedentary to light job, which does not require irregular and unplanned hours, evening meetings, responses 24 hours a day, [and] emergency responses, which would require immediate attention and travel."

Dr. Eddie Sassoon, a physician retained by LINA, also concluded from a review of Semien's medical records that she was capable of performing a sedentary or light duty occupation. Semien contends that Dr. Sassoon did not assess her psychiatric impairments or consider records from Dr. Liu or Dr. Nagle. It is unclear from Dr. Sassoon's evaluation, which consisted of only two pages, exactly what information he reviewed. Dr. Sassoon stated that "the report was completed in the interest of time constraints, based on the documentation provided, which was extensive in nature."

Lynne Lonberg, an independent senior rehabilitation counselor and vocational expert retained by LINA, conducted a Transferable Skills Analysis based on the physicians' appraisals. In this analysis, Lonberg listed several "potential occupations Ms. Semien could perform within her skills, education, physical/mental abilities and wage requirement [of 80% of Indexed Covered Earnings.]" Potential suitable occupations included employment as a chemical engineer, chemical research engineer, or absorption and adsorption engineer.

In a letter dated June 27, 2003, LINA affirmed its determination that Semien was not disabled under the terms of the plan and therefore did not qualify for benefits after November 14, 2002. On July 11, 2003, Semien filed suit under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), seeking an order forcing LINA to award her disability benefits under the Plan.

During the course of this litigation, LINA refused to comply with five discovery requests: one interrogatory and four document production requests related to the relationship between LINA and the physicians consulted. Semien filed a motion to compel discovery with the district court. This motion to compel discovery was denied in an opinion dated April 21, 2004.

On October 7, 2004, the district court entered summary judgment for LINA, holding that LINA's decision on Semien's claim for benefits was not arbitrary and capricious. The district court also added in a footnote that "the denial of benefits would survive even if we applied the de novo standard."

II. Discussion

We review a district court's grant of summary judgment using a de novo standard. See, e.g., Grun v. Pneumo Abex Corp., 163 F.3d 411, 419 (7th Cir.1998). "That is, we review `without deference for the view of the district judge and hence almost as if the motion had been made to us directly.'" Id. (quoting Tobey v. Extel/JWP, Inc., 985 F.2d 330, 332 (7th Cir.1993)).

A. Appropriate Standard of Review Under ERISA

The initial question in this appeal is whether the district court used the proper standard of review when evaluating the plan administrator's denial of benefits. The standard of judicial review in civil actions under 29 U.S.C. § 1132(a)(1)(B) depends upon the discretion granted to the plan administrator in the plan documents. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) (...