Walker v. American Home Shield Long Term Dis. Plan

• Decision Date: 15 June 1999
• Docket Number: No. 97-55503.,97-55503.
• Citation: 180 F.3d 1065
• Parties: Pamela WALKER, Plaintiff-Appellee, v. AMERICAN HOME SHIELD LONG TERM DISABILITY PLAN; Unum Life Insurance Company of America, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

180 F.3d 1065

Pamela WALKER, Plaintiff-Appellee, v. AMERICAN HOME SHIELD LONG TERM DISABILITY PLAN; Unum Life Insurance Company of America, Defendants-Appellants.

No. 97-55503.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 8, 1998.

Vacated December 22, 1998.

Resubmitted June 4, 1999.

Filed June 15, 1999.

Russell G. Petti, Stacey R. Turner, Bannan, Green, Smith, Frank & Rimac, Los Angeles, California, for the defendants-appellants.

Ronald Dean, Pacific Palisades, California, for the plaintiff-appellee.

Before: BRUNETTI, FERNANDEZ, and McKEOWN, Circuit Judges.

McKEOWN, Circuit Judge:

This case requires resolution of whether the de novo standard of review set out in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) for an insurance disability case brought under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a), encompasses both plan interpretations and factual determinations. More specifically, we review the district court's grant of summary judgment in favor of Pamela Walker, who claimed that she was unable to work due to stress, fatigue, and pain, all symptoms of the elusive disease of fibromyalgia. UNUM Life Insurance Company of America and American Home Shield Long Term Disability Plan (collectively "UNUM") appeal, arguing that the standard of review should be bifurcated and that, even if plan interpretations are reviewed de novo, an abuse of discretion standard should govern factual determinations. UNUM also claims that the district court erred in admitting additional expert medical evidence and granting judgment in favor of Walker rather than UNUM. We reverse the grant of summary judgment and remand for further proceedings in light of our en banc decision in Kearney v. Standard Ins. Co., 175 F.3d 1084 (9th Cir. 1999).

FACTUAL AND PROCEDURAL BACKGROUND

As an account executive for American Home Shield, Pamela Walker sold home warranty insurance to home buyers through real estate agents. Each day her job required her to drive to at least 12 different real estate offices throughout the Los Angeles area, make multiple telephone calls to customers and attend various meetings. In April 1990, Walker stopped working and applied for long-term disability benefits due to extreme pain, fatigue and stress arising from her job.

Virtually all of the seven doctors who examined Walker or her file agreed that Walker had fibromyalgia, but the doctors disputed the extent to which Walker's fibromyalgia affected her ability to work. Fibromyalgia is a form of rheumatic disease with no known cause or cure. The principal symptoms, which are entirely subjective, are pain and tenderness in muscles, joints and ligaments, but the disease is frequently accompanied by fatigue, sleep disturbances, anxiety, dizziness, irritable bowels and tension headaches. Arthritis Foundation Pamphlet, Fibromyalgia 6-8 (1989).¹ Stress is both a symptom of fibromyalgia and an exacerbating factor. Because proving the disease is difficult and no objective test exists, fibromyalgia presents a conundrum for insurers and courts evaluating disability claims:

It is difficult to determine the severity of a claimant's condition because of the unavailability of objective clinical tests. Some people may have such a severe case of fibromyalgia as to be totally disabled from working, but most do not and the question is whether the claimant is one of the minority.

Sarchet v. Chater, 78 F.3d 305, 307 (7th Cir. 1996) (internal citations omitted).

Walker was eligible for disability benefits under a UNUM disability policy that provides for disability benefits upon "proof that an insured is disabled due to sickness or injury and requires the regular attendance of a physician." Eligibility for disability requires proof that "the insured cannot perform each of the material duties of his regular occupation." To receive ongoing benefits, the insured must provide "proof of continued disability."

Before making its initial decision on Walker's claim, UNUM queried American Home Shield whether Walker could work part-time or work without the extensive traveling. After her employer rejected these options, UNUM granted Walker's claim for disability benefits. UNUM based its decision on Walker's application and reports from three examining doctors, but only her chiropractor concluded that Walker was totally disabled from performing her occupation.

UNUM later reconsidered its decision to award benefits after learning that Walker was pursuing a new career-modeling. In response to a request for supplemental information, Walker's doctor explained to UNUM that modeling once a week was much less stressful than working five days a week as a traveling account executive.

Although UNUM's claims review committee believed that Walker had "severe fibromyalgia," an internal UNUM memorandum shows that UNUM decided "to be aggressive with this claim." UNUM then referred Walker to another physician who issued an opinion that Walker should avoid her occupation due to stress but be physically active by returning to work in her occupation. Based largely on this report, UNUM informed Walker that her disability benefits would be terminated in 30 days if she did not provide proof of her disability. As proof of Walker's continuing disability, her doctor submitted letters to UNUM explaining Walker's "chronic fibromyalgia."

UNUM subsequently terminated Walker's continuing disability benefits, stating in the termination letter that Walker was not disabled because (1) she was physically capable of performing her job, (2) even if she were disabled, she failed to provide objective medical evidence of a disability, and (3) even if she were disabled due to stress, she was not receiving treatment for stress.

Walker appealed the termination of her benefits and UNUM referred Walker to another examining physician and appointed yet another doctor to review her file. Each of these physicians concluded that Walker could work full-time but with certain restrictions.

Based on UNUM's decision not to reinstate her benefits, Walker filed suit under ERISA for wrongful termination of disability benefits. The parties filed cross-motions for summary judgment. The district court determined that under Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the appropriate standard of review of the plan administrator's decision was de novo. Because of the difficulty of reviewing the administrator's decision de novo where the medical evidence was not "particularly clear," the district court appointed an independent expert, Dr. Daniel Wallace, the Clinical Chief of Rheumatology at Cedars-Sinai Medical Center in Los Angeles, a Clinical Professor at UCLA School of Medicine, former Chairman of the Fibromyalgia Subcommittee of the Arthritis Foundation and an author of numerous publications on fibromyalgia.

Dr. Wallace examined Walker and concluded that she had fibromyalgia and was totally disabled from performing her job. Based upon the entire record, including Dr. Wallace's report, the district court granted Walker's motion for summary judgment. UNUM appeals from this judgment.

DISCUSSION

I. STANDARD OF REVIEW

In an ERISA benefits case, the court of appeals must consider the standard of review at two levels: the district court's review of the plan administrator's decision and the court of appeals' review of the district court's determination.

At the first level, UNUM urges this Court to complicate further the standard of review issue by reviewing the plan administrator's factual determinations under a separate, more deferential standard from that applied to interpretations of plan language. We decline to do so. When, as here, the plan language requires de novo review, the district court's review encompasses both plan interpretation and factual determinations.

The plan language is the starting point for addressing the standard of review for denial of benefits under ERISA. In Firestone, the Supreme Court held that review is de novo unless the plan confers discretionary authority upon the plan administrator. 489 U.S. at 115, 109 S.Ct. 948. If discretionary authority is conferred, the administrator's decision is reviewed under the abuse of discretion standard. Id. at 111, 109 S.Ct. 948. Before the district court, UNUM conceded that the plan language at issue did not grant discretionary authority to the administrator, but on appeal UNUM now switches its position and argues that the plan granted discretionary authority to the administrator. Because UNUM waived this issue below, we need not consider it. Singleton v. Wulff, 428 U.S. 106, 120, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976).

UNUM also argues that, for policy reasons, a plan administrator's factual determinations should always be subject to the more deferential abuse of discretion review, regardless of whether the plan language confers discretion on the administrator. UNUM properly raised this argument in the district court and on appeal. Although this question was raised in a prior case, we declined to reach the issue because the parties did not contest any factual determinations. Cisneros v. UNUM Life Ins. Co. of Am., 134 F.3d 939, 942-43 n. 1 (9th Cir. 1998). Here, the denial of benefits included contested factual determinations. We reject UNUM's argument because it is incompatible with Firestone (and our decision in Kearney), it is not supported by UNUM's plan language and policy and practical concerns favor the application of a single standard of review for plan administrators' decisions.

Resolution of this issue rests first on the Supreme Court's holding in Firestone. In divining the Supreme Court's meaning, we start with the statement of its holding:

We hold that a denial of benefits under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to

...