Treman v. ELL Industries, Inc. et al
| Decision Date | 23 July 1999 |
| Docket Number | No. 98-15252,98-15252 |
| Citation | 196 F.3d 970 |
| Parties | (9th Cir. 1999) STEFFANY TREMAIN,Plaintiff-Appellant, v. BELL INDUSTRIES, INC., a California corporation; BELL INDUSTRIES, INC. LONG TERM DISABILITY INSURANCE PLAN; METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation, Defendants-Appellees |
| Court | U.S. Court of Appeals — Ninth Circuit |
Stephen A. Dennis, Palo Alto, California, for the plaintiff-appellant.
Lawrence Wolff, New York, New York, and Lawrence Butler, San Francisco, California, for the defendants-appellees.
Appeal from the United States District Court for the Northern District of California; James Ware, District Judge, Presiding. D.C. No. CV-96-20927-JW
Before: Myron H. Bright,1 Betty B. Fletcher, and David R. Thompson, Circuit Judges.
OVERVIEW
Petitioner Steffany Tremain ("Tremain") brought suit against Bell Industries, Inc. ("Bell Industries"); Bell Indus tries, Inc. Long Term Disability Plan ("the Bell Plan"); and Metropolitan Life Insurance Company ("MetLife") (collectively, "the Defendants"). Tremain claimed the Defendants wrongfully terminated her long-term disability payments under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. S 1001, et seq. In addition, Tremain asserted claims for breach of fiduciary duty under 29 U.S.C. SS 1105, 1109(a) and 1132(a)(2) and claims for current and retroactive benefits under 29 U.S.C. S 1132(a)(1)(B). The district court granted the Defendants' motion for summary judgment as to all of Tremain's claims. Tremain appeals the district court's judgment only as to her claims under 29 U.S.C. S 1132(a)(1)(B)2.
Tremain contends the district court erred in applying the arbitrary and capricious standard to review MetLife's decision to terminate her long-term disability benefits. Tremain also contends the district court erred in refusing to consider evidence outside the administrative record. We have jurisdiction under 28 U.S.C. S 1291. We reverse the district court's summary judgment, and remand for a trial in which the district court is directed to review de novo the termination of Tremain's benefits under the Bell Plan, and determine the amount of any unpaid benefits that might be due to her.
Tremain was a General Sales Manager for Bell Industries. As of March 1, 1990, chronic and severe pain caused her to become unable to work. She filed a claim for disability benefits with MetLife, the insurer and claims administrator of the Bell Plan. On August 28, 1990, she began receiving benefit payments in the amount of $4,250 per month. Over the next four-and-one-half years, Tremain remained under the care of several treating physicians, each of whom confirmed her ongoing disability.
In January 1995, MetLife requested a medical case management review of Tremain's medical records by Susan Yager, R.N., a Rehabilitation Nurse and Medical Management Specialist. Based on Ms. Yager's recommendations, Tremain entered the Stanford University In-Patient Pain Management and Chemical Dependency Program. After Tremain's discharge from the Stanford Pain Clinic, one of its physicians, Dr. John Massey, continued to treat her on an outpatient basis.
In September 1995, Dr. Massey submitted a "Physical Capacities Evaluation" to MetLife stating that in an eighthour workday Tremain was able to sit for five hours, stand for two hours and walk for one hour. On September 8, 1995, Dr. Perlroth, another of Tremain's treating physicians, submitted a Physical Capacities Evaluation to MetLife with conclusions almost identical to Dr. Massey's.
Based on these findings, MetLife ordered a vocational assessment analysis of Tremain. After considering the analysis, MetLife determined that Tremain could work in a capacity similar to her previous employment. In November 1995, MetLife employed Dr. Robert Petrie, a specialist in occupational medicine, to review Tremain's medical records. After reviewing Tremain's file, Dr. Petrie concluded that Tremain was not totally disabled.
On December 6, 1995, MetLife requested an additional vocational review. The review concluded that suitable jobs involving work Tremain could perform had median annual salaries of $36,908 to $49,072. In addition, the analysis found that such annual wages varied between $25,000 and $250,000 "depending on the manager's level of education, experience, industry, and the number of employees he or she supervises."
On January 31, 1996, MetLife notified Tremain that it would terminate her disability benefits effective February 29, 1996, based on its finding that she no longer met the plan's definition of "Total Disability." Further, the letter reiterated the findings in the vocational assessment, stating that annual wage estimates for occupations in her field ranged from $36,908 to $49,072.
Tremain appealed MetLife's termination of her disability benefits, and asked for a review and reversal of its decision. Tremain informed MetLife that the definition of "Total Disability" listed in MetLife's termination letter was the definition in the Bell & Howell Long Term Disability Plan ("Bell & Howell Plan"), not the Bell Plan in which she was a participant. The Bell Plan's definition of "Total Disability" had more generous provisions.3 While both plans provided for long term total disability if, after 24 months of benefit payments, the participant could not perform the duties of any work for which she was qualified, the Bell Plan also provided that if a participant's earning capacity decreased by fifty percent, then she was considered "Totally Disabled."
Besides informing MetLife that it had applied the wrong definition, Tremain informed MetLife that her 1989 W-2 Form listed her annual earnings as $108,731. She contended that because the highest wage indicated in MetLife's termination letter was $49,072, her earning capacity had decreased by at least fifty percent, which meant she was totally disabled according to the Bell Plan's alternative method for determining total disability.
In addition to appealing the termination of her benefits, Tremain sought a review of the benefits she had already received from MetLife. Tremain contended that MetLife used the Bell & Howell Plan to calculate her monthly benefits instead of the Bell Plan, which granted greater monthly benefits for salespersons.4 As a result, Tremain claimed MetLife underpaid her $2,640 per month for each of the five-and-one-half years she received disability benefits.
Tremain supplemented her appeal with additional documentation from her treating physicians. Two of her physicians, Dr. Perlroth and Dr. Margoles, certified to MetLife that Tremain was unable to work. MetLife forwarded to Dr. Petrie Tremain's supplemental medical record, which included Dr. Perlroth's and Dr. Margoles's most recent diagnoses, and in which Dr. Margoles stated that "[a]t the present time, I rate [Tremain's] disability as permanent." Dr. Petrie nevertheless concluded that Tremain's record demonstrated that her medical condition had improved and she was able to return to work. MetLife refused to reinstate Tremain's disability benefits or recalculate the monthly benefits already paid.
Tremain then filed suit in the district court against Bell Industries, the Bell Plan, and MetLife, asserting claims for breach of fiduciary duty under 29 U.S.C. SS 1105, 1109(a) and 1132(a)(2) and claims for current and retroactive benefits under 29 U.S.C. S 1132(a)(1)(B). The district court granted summary judgment in favor of the Defendants as to Tremain's breach of fiduciary duty claims, holding that ERISA precluded relief under sections 1109(a) and 1132, which only allow recovery for the benefit of the plan as a whole, not for individual participants. Regarding Tremain's claims for current and retroactive benefits under 29 U.S.C. S 1132(a)(1)(B), the district court granted summary judgment in favor of MetLife and Bell Industries, determining that under S 1132(a)(1)(B) a plaintiff may only recover benefits against a plan.
As to the Bell Plan, the district court held that it would review MetLife's decision to terminate Tremain's benefits by an arbitrary and capricious standard5 because the Bell Plan's provision that benefits would be paid upon evidence "satisfactory to us" gave MetLife discretion to determine eligibility and to interpret the terms of the plan. The district court declined to apply a de novo standard of review to MetLife's benefits decision even though MetLife had a conflict of interest, because it concluded Tremain had failed to present material evidence that MetLife's conflict affected its decision to deny her benefits. In making its decision as to what standard of review to apply, the district court refused to consider any evidence that was not part of the administrative record, such as W-2 statements, Tremain's employment agreement, and the deposition testimony of a Bell employee, Louis Weis. The district court also refused to consider such evidence when it reviewed MetLife's decisions to terminate Tremain's benefits and to deny her claim that she had been underpaid. Applying an abuse of discretion standard, the district court granted summary judgment, upholding MetLife's benefits decisions and dismissing Tremain's claims under 29 U.S.C. S 1132(a)(1)(B). This appeal followed.
We review de novo a district court's grant of summary judgment. See Lang v. Long-Term Disability Plan of Sponsor Applied Remote Technology, Inc., 125 F.3d 794, 797 (9th Cir. 1997). We also "review de novo the district court's choice and application of the standard of review applicable to decisions by fiduciaries in the ERISA context." Id. (citing Taft v. Equitable Life Assurance Soc'y, 9 F.3d 1469, 1471 (9th Cir. 1993)). We must determine, viewing the evidence in the light most favorable to the nonmoving party, here Tremain,...
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