Walker v. Life Ins. Co. of N. Am.

Decision Date08 February 2023
Docket Number21-12493
PartiesCHERRI WALKER, Plaintiff-Appellant, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Appeal from the United States District Court for the Northern District of Alabama D.C. Docket No. 5:16-cv-00506-HNJ

Before LAGOA and BRASHER, Circuit Judges, and BOULEE, [*] District Judge.

LAGOA CIRCUIT JUDGE

This case arises from an insurance dispute between Cherri Walker and Life Insurance Company of North America ("LINA"). Between 2013 and 2015, LINA made multiple determinations that Walker did not qualify for disability benefits under her long-term disability insurance policy and her life insurance policy. In response, Walker sued LINA for breach of contract and bad-faith failure to provide insurance benefits.

The district court granted summary judgment for LINA on Walker's bad-faith claim based on the multiple medical opinions that supported LINA's determinations. At a pre-trial hearing, the district court held that, under Alabama law, Walker could not recover mental anguish damages for her breach of contract claim and excluded evidence of such damages. Finally, following a jury verdict in Walker's favor on the breach of contract claim related to the long-term disability insurance policy, the district court determined that Walker was entitled to simple pre-judgment interest at a rate of 1.5 percent under the policy and simple post-judgment interest at a rate of 0.08 percent pursuant to 28 U.S.C. § 1961. In determining that the long-term disability insurance policy provided for simple rather than compound interest, the district court struck a document produced by Walker because it was not properly authenticated.

Walker now argues that the district court erred at each of these steps. After careful review, and with the benefit of oral argument, we affirm all of the district court's rulings on appeal.

I. FACTUAL AND PROCEDURAL HISTORY

Walker is a citizen of Alabama. The Healthcare Authority of Athens Limestone Hospital (the "Authority") is a state entity that operates the Athens Limestone Hospital in Athens Alabama. The Authority employed Walker as a respiratory therapist and as a director.

The Authority held for the benefit of its employees two group insurance policies: (1) a long-term disability insurance policy and (2) a life insurance policy.[1] LINA, a citizen of Pennsylvania, issued both policies.

The disability policy provides for monthly disability payments if an employee becomes "disabled." The policy defines "disabled" as follows:

The Employee is considered Disabled if, solely because of Injury or Sickness, he or she is:

1. unable to perform the material duties of his or her Regular Occupation; and
2. unable to earn 80% or more of his or her Indexed Earnings from working in his or her Regular Occupation.

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

1. unable to perform the material duties of any occupation for which he or she is, or may reasonably become, qualified based on education, training or experience; and
2. unable to earn 60% or more of his or her Indexed Earnings.

Thus the disability policy defines "disabled" differently, using one definition for initial claims and a more stringent definition after benefits have been payable for twenty-four months.

Separately, for initial coverage purposes, the policy generally requires an elimination period of ninety days.[2] And as relevant to interest paid on claims, the disability policy provides:

Time of Payment
Disability Benefits will be paid within 45 days, upon receipt of due written proof of loss, at regular intervals of not more than one month. Disability Benefits not paid within 45 days of receipt of due written proof of loss shall be considered overdue. The Insurance Company will pay the insured one and one-half percent per month on the amount of any claim which is considered overdue until it is finally settled and adjudicated.
Any balance unpaid at the end of any period for which the Insurance Company is liable will be paid at that time.

On October 12, 2012, Walker ceased working at the Authority due to fibromyalgia, rheumatoid arthritis, and chronic pain. Walker subsequently submitted disability claims under both the disability policy and the life policy. On February 26, 2013, the Authority's Director of Human Resources, Sabrina Weaver, emailed LINA. At that point, LINA had not yet approved either of Walker's disability claims. In her email, Weaver stated: "The delay in finding resolution to Ms. Walker's request for [short-term disability] and LTD has caused her severe stress which has triggered an adrenal crash. She has an appointment with a lawyer today following her doctor's appointment." LINA approved Walker's claim under the disability policy the next day.

By doing so, LINA found that Walker was incapable of performing the material duties of her regular occupation and of earning at least 80 percent of her regular earnings and therefore determined that she was entitled to twenty-four months of disability benefits. For some reason, LINA designated August 12, 2012, as Walker's date of disability, making November 11, 2012, the effective start date for the disability benefits pursuant to the disability policy's ninety-day elimination period. LINA's long-term disability claims manager, Deborah Bacak, later acknowledged that it was a mistake to select August 12, 2012, as Walker's date of disability given that Walker continued to work through October 12, 2012. In light of its decision to approve Walker's claims for disability benefits under the disability policy, LINA also automatically provisionally approved Walker's claim for waiver of premium under the life policy.

On July 9, 2013, LINA sent Walker a letter indicating that it was reviewing her claim for waiver of premium under the life policy. The letter requested that Walker provide LINA with additional medical information from her physicians, including information about her diagnosis and functional abilities. The letter also warned Walker that failure to provide the requested information to LINA by August 22, 2013, "may result in an extension of the time period required [for LINA] to make a decision, or [LINA's] decision may be based on the available information on file." LINA followed up with Walker in a letter dated July 24, 2013, reiterating the need for additional information and reminding her of the August 22, 2013, deadline.

On August 29, 2013, based on a review of the then-available information, LINA decided not to approve Walker for continued waiver of premium under the life policy. In arriving at that decision, LINA considered, among other things, the opinion of Larry Featherston, a rehabilitation specialist who concluded that Walker could perform some occupations in her local labor market. Walker appealed LINA's August 29, 2013, decision three times over the next year and a half, and LINA affirmed that decision each time.

Meanwhile, separate from her claims for disability benefits under the two insurance policies, Walker applied for Social Security Disability Benefits. On April 8, 2014-after LINA had already twice affirmed its decision to deny Walker benefits under the life policy-the Social Security Administration (the "SSA") approved Walker for disability benefits and recognized a period of disability beginning on October 12, 2012. In making that decision, the SSA afforded "great weight" to the residual functional capacity questionnaires submitted by Dr. Nancy Neighbors, Walker's primary care physician, which showed that Walker suffered from intractable pain at multiple sites, experienced adrenal fatigue and fibromyalgia pain one to three times a week that confined her to bed, experienced a reduced range of motion, and could not return to work. The SSA afforded only "partial weight" to the functional capacity evaluation completed by Heidi Teague on January 7, 2013, which concluded that Walker could perform sedentary work.

On June 10, 2014, around two months after the favorable SSA decision, LINA informed Walker that it had reviewed her claim under the disability policy and determined that she would no longer qualify for disability benefits beyond November 2014-the end of the initial twenty-four-month benefits period. As part of its review, LINA considered a report completed by Dr. Matthew Lundquist on May 28, 2014. Dr. Lundquist's report agreed with Teague's determination that Walker could perform sedentary work and disagreed with some of Dr. Neighbors's findings. LINA also considered a Transferable Skills Analysis performed by Colin Loris, a rehabilitation specialist. Loris's analysis concluded that Walker could perform some occupations in her local labor market, specifically the positions of office manager and health care facility administrator. Based on these opinions, LINA determined that Walker did not qualify as "disabled" for purposes of continuing to receive benefits under the disability policy beyond the initial twenty-four-month coverage period. Walker appealed that decision.

In considering Walker's appeal, LINA retained Dr. David Knapp, an independent board-certified rheumatologist, to review Walker's medical record and physical condition. Dr. Knapp's review process included conferring by telephone with Walker's primary care physician, Dr. Neighbors, and Walker's rheumatologist, Dr. Kun Chen. Like Dr. Lundquist, Dr. Knapp prepared a comprehensive report detailing his analysis and findings. That report concluded that Walker "does not require any medically necessary work activity restrictions" and "is not physically functionally limited." In light of...

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