Tsoulas v. Liberty Life Assur. Co. of Boston

• Decision Date: 11 July 2006
• Docket Number: No. 05-2668.,05-2668.
• Citation: 454 F.3d 69
• Parties: Katherine L. TSOULAS, Plaintiff, Appellant, v. LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

454 F.3d 69

Katherine L. TSOULAS, Plaintiff, Appellant, v. LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Defendant, Appellee.

No. 05-2668.

United States Court of Appeals, First Circuit.

Heard April 5, 2006.

Decided July 11, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Arthur J. Greif, with whom Julie D. Farr and Gilbert & Greif, P.A. were on brief, for appellant.

Eric J. Uhl, with whom Moon, Moss & Shapiro, P.A. was on brief, for appellee.

Before TORRUELLA, Circuit Judge, HUG,^* Senior Circuit Judge, and LYNCH, Circuit Judge.

TORRUELLA, Circuit Judge.

In February 1998, Plaintiff Katherine L. Tsoulas ("Tsoulas") became an employee of Medaphis Corporation ("Medaphis") as a Manager of Educational Services. A benefit of her employment was insurance coverage under a group disability policy ("the Plan") provided by Liberty Life Assurance Company of Boston ("Liberty"). Liberty is both the insurer for the Plan and the claims fiduciary.¹ Tsoulas applied for and received short-term disability benefits beginning on September 15, 1998 because symptoms of Multiple Sclerosis ("MS") had rendered her unable to work. In March 1999, she applied for and received long-term disability benefits until Liberty discontinued them on March 31, 2004.

Tsoulas filed this action in Maine Superior Court against defendant Liberty, alleging the wrongful termination of her benefits under 29 U.S.C. § 1132, the civil enforcement section of the Employee Retirement Income Security Act ("ERISA"). Liberty removed the action to federal court on November 8, 2004. The United States District Court for the District of Maine granted Liberty's Motion for Judgment on the Stipulated Record on October 27, 2005. Tsoulas now appeals.

I. Facts

We describe the stipulated facts of record. In April 1998, Dr. Kathryn Isaac ("Dr. Isaac"), a staff physician in the Department of Neurosciences at the Stanford University Medical Center, performed the first neurological evaluation of Tsoulas. Dr. Isaac's evaluation revealed that Tsoulas was experiencing "worsening tremors" and blackouts. Other symptoms included "numbness down the right leg and arm" and "fatigue." Dr. Isaac reported that Tsoulas's tremor "appears to be psychogenic" and opined that she would "clearly need psychiatric consultation as well." Magnetic Resonance Imaging (MRI) scans from 1995 and 1997 exhibited two to three brain lesions of unclear etiology. Dr. Isaac reviewed them with a neuro-radiologist, who concluded that the lesions were "not completely typical for multiple sclerosis." Dr. Isaac concluded that she did not believe Tsoulas's symptoms were consistent with a diagnosis of MS.

Dr. Leslie Dorfman ("Dr. Dorfman"), Professor of Neurology and Director of the MS Clinic at the Stanford University Medical Center, examined Tsoulas in May of 1998 and concluded that "[a]lthough the diagnosis is not completely certain, I think it is likely on the basis of the clinical history and the MRI findings that this woman has relatively mild multiple sclerosis, relapsing-remitting form." In addition, Dr. Dorfman determined that Tsoulas was "suffering from an anxiety disorder, and that some of the symptoms which are currently most troublesome to her are related to this, rather than to her MS." Dr. Dorfman recommended follow-up by a neurologist for MS, potential use of corticosteroids for MS exacerbations, and "ongoing concurrent treatment for her anxiety disorder."

In September of 1998, Tsoulas saw Dr. Annette Langer-Gould ("Dr. Langer-Gould"), Acting Director of Stanford University Medical Center's MS Clinic. Dr. Langer-Gould concluded that "although she clearly has multiple sclerosis, she also has a psychiatric condition for which she needs to continue seeking treatment. Initially she refused to do this and . . . vehemently denied that she had any psychological problems." One month later in a follow-up visit, Dr. Langer-Gould wrote that Tsoulas was suffering from MS and a conversion disorder.² Although Tsoulas was "clearly . . . under tremendous psychological stress," Dr. Langer-Gould told her it was appropriate for her to return to work on a part-time basis. Tsoulas responded that she had discussed the possibility of part-time work with her employer and that it was not an option.

Based on her physicians' recommendations, Tsoulas saw Joyce Brothers Kart, M.F.C.C. ("Ms. Kart") for psychotherapy on four occasions beginning in January 1999 and ending in March 1999. Ms. Kart observed that "[i]t has been extremely difficult for her to function normally . . . . It is very unclear when she will be able to resume active employment due to her symptoms." There is no evidence that Ms. Kart or any other mental health professional has evaluated Tsoulas since March 5, 1999.

In July 1999, Dr. Cathleen Miller ("Dr. Miller") examined Tsoulas and concluded that Tsoulas had "relapsing/remitting multiple sclerosis," but that Tsoulas was "alert and attentive with normal speech and language, and no gross cognitive deficits." Her self-reported symptoms included "episodic worsening of her tremulousness associated with heightened anxiety and bowel incontinence as well as fatigue and impaired balance." Dr. Miller observed that "her current tremor is difficult to characterize, and there is a degree of embellishment noted on examination today." Nevertheless, Dr. Miller wrote to Tsoulas's primary care physician, Dr. Leslie Finder ("Dr. Finder"), that Tsoulas was "greatly disabled at this time of our first meeting."

In October 1999, Liberty sent a questionnaire to Dr. Finder seeking information about Tsoulas's disability. Dr. Finder reported that Tsoulas's primary diagnosis was MS, and that he expected that she would "never" regain either full or modified function. In February 2001, Liberty sent a nurse, Christine Entrekin ("Nurse Entrekin"), to conduct a home visit with Tsoulas to assess her ongoing disability. Nurse Entrekin observed that Tsoulas was "significantly impaired due to physical limitations as well as [Tsoulas's] own assertions of deteriorating mental status. Prognosis for recovery does not appear favorable."

In August 2001, Tsoulas began to receive chiropractic care from Dr. Deborah Baker ("Dr. Baker"). Dr. Baker placed some restrictions on Tsoulas's ability to reach, grasp, pull, push, climb, kneel, bend, squat, walk, stand, conduct repetitive motions, and lift between ten and forty pounds. The only complete restriction she imposed was against lifting forty or more pounds.

In October 2001, Dr. Susan O'Connor ("Dr.O'Connor"), a surgeon, examined Tsoulas in connection with a palpable abnormality of her left breast. Dr. O'Connor removed the abnormality on October 26, 2001, and the diagnosis of breast cancer was confirmed. After the third and final post-operative checkup on August 21, 2002, Dr. O'Connor reported that Tsoulas no longer had any physical restrictions in connection with her breast cancer diagnosis.

As part of its ongoing review of Tsoulas's claim for continued long-term disability benefits, Liberty began planning to conduct surveillance in January 2004. Byers Confidential Investigations ("BCI") conducted the first surveillance on five consecutive days from February 10 through February 14, 2004. On February 12, while the BCI surveillance was ongoing, Tsoulas submitted responses to a routine activities questionnaire indicating the following: 1) she was completely unable to walk or stand without the assistance of a cane, a wheelchair, or a scooter; 2) she spent fourteen to eighteen hours in bed each day; 3) she was able to drive a car only "very little"; 4) she left the house "zero to one" times per week; 5) she never left the house on weekends; 6) she never went shopping at the mall; and 7) she accomplished grocery shopping only with the aid of her son.

The surveillance videos revealed that between February 10 and 14, Tsoulas 1) drove her car unassisted; 2) walked without the aid of a cane, wheelchair, or scooter; 3) completed errands by herself and without any assistive devices; 4) walked down a few steps; 5) conducted banking activities without any assistance; 6) shopped at the mall and the video store; and 7) went grocery shopping, pushed a grocery cart, and loaded and unloaded groceries.

Because there appeared to be significant discrepancies between Tsoulas's self-reported limitations and the video footage, Liberty determined that additional surveillance was necessary. Omega Insurance Services ("Omega") conducted surveillance from March 10 to March 14, 2004. Omega's report revealed Tsoulas: 1) traveling to a tanning salon, a bank, a donut shop, a nail salon, and back to her residence in a single day; 2) walking, driving, entering and exiting a car, and entering and exiting various establishments without the assistance of any braces, supports, or other devices; 3) traveling to a hotel, a parking garage, a restaurant, a comedy club, a night club, and back to the hotel on a single day; 4) traveling to a restaurant, a furniture store, various gift shops, a coffee shop, and a residence in a single day.

After Omega's surveillance was completed, Liberty referred Tsoulas's file to independent consulting physician Dr. John Holbrook ("Dr. Holbrook"), who concluded, based on his examination of her clinical file and the surveillance information, that the diagnosis of MS had "not been conclusively established" and that the majority of Tsoulas's symptoms were "either self-reported, unwitnessed, or unable to be objectively validated." He stated that although she might have undergone a period of psychological stress between 1998 and 1999, recent evidence suggested that she had recovered sufficient functional capacity to be "capable of at least full-time light work."

In March of 2004, Liberty wrote a letter to Tsoulas, terminating her long-term disability benefits, effective March 31. The letter detailed the discrepancies between Tsoulas's self-reported limitations and her actual abilities, as...