Wilkinson v. Sun Life & Health Ins. Co.
| Decision Date | 05 January 2017 |
| Docket Number | No. 15-2105,15-2105 |
| Parties | STEPHEN WILKINSON, Plaintiff - Appellee, v. SUN LIFE AND HEALTH INSURANCE COMPANY, d/b/a Sun Life Financial, Defendant - Appellant, and DOLAN & TRAYNOR, INC. EMPLOYEE HEALTH AND WELFARE BENEFIT PLAN, Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
UNPUBLISHED
Appeal from the United States District Court for the Western District of North Carolina, at Statesville. Richard L. Voorhees, District Judge. (5:13-cv-00087-RLV-DCK)
Before MOTZ and DIAZ, Circuit Judges, and Gerald Bruce LEE, United States District Judge for the Eastern District of Virginia, sitting by designation.
ARGUED: Joshua Bachrach, WILSON ELSER MOSKOWITZ EDELMAN & DICKER LLP, Philadelphia, Pennsylvania, for Appellant. Norris Arden Adams, II, ESSEX & RICHARDS, P.A., Charlotte, North Carolina, for Appellee. ON BRIEF: Hannah Gray Styron Symonds, WILSON ELSER MOSKOWITZ EDELMAN & DICKER LLP, Philadelphia, Pennsylvania, for Appellant. Frank N. Darras, Susan B. Grabarsky, Phillip S. Bather, DARRASLAW, Ontario, California, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
Stephen Wilkinson ("Wilkinson") brought this action against Sun Life and Health Insurance Company (U.S.) ("Sun Life") to seek long-term disability benefits pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq. After approving the benefits claim under a policy that Sun Life issued to Wilkinson's former employer, Sun Life terminated benefits on the grounds that Wilkinson was not an active full-time employee when the policy took effect.
On cross-motions for summary judgment, the district court granted judgment in favor of Wilkinson. The key issue presented is whether the district court erred in holding that Sun Life, the administrator of an employee welfare benefit plan governed by ERISA, abused its discretion when it terminated Wilkinson's benefits. We hold that Sun Life abused its discretion when it terminated Wilkinson's benefits because he provided sufficient evidence to support his eligibility for coverage, and because Sun Life's decision to terminate benefits was not the result of a principled reasoning process and not supported by substantial evidence. We therefore affirm the district court's decision.
The facts relevant to this appeal are those probative of whether Wilkinson worked at least 30 hours per week as an active employee on May 1, 2004, when the policy at issue took effect.
In 1973, Wilkinson began working as the vice president of sales, operations, and distribution for Dolan & Traynor, Inc. ("D&T"). J.A. 10, 23.1 D&T is a closely-held corporation based in New Jersey that distributes building products and plumbing specialties. J.A. 10, 23, 1110-15. Wilkinson earned an annual compensation of $434,300, and at some point prior to his disability, worked approximately 60 hours per week. J.A. 276, 1315-16. He also owned approximately 22% of D&T's stock. J.A. 91. Wilkinson has represented that his position at D&T was due to marrying the daughter of one of D&T's owners. J.A. 521. In August 2003, Wilkinson's wife passed away. J.A. 998. In the months that followed, Wilkinson began to struggle emotionally and physically, and he eventually developed a heart condition known as cardiomyopathy. Id.
At a D&T partner meeting in March 2004, Wilkinson and his business partners discussed his decline in health, his ongoingrole with the company, and the possibility of him taking leave. J.A. 372-74. Subsequent to this meeting, Wilkinson wrote an email to his partners stating that over the preceding seven months, he typically worked from 9 a.m. to 5 p.m., aside from six weeks of paid time off. J.A. 373. Wilkinson also wrote, J.A. 373.
A second partner meeting occurred on April 13, 2004. J.A. 375. The partners discussed how D&T was in the midst of a critical time and needed all the partners to work diligently. Id. The next day, Wilkinson summarized the meeting in an email as follows: Id.
A third partner meeting occurred on April 21, 2004. J.A. 999. Wilkinson and his partners again discussed the possibility of Wilkinson taking leave. Id. According to court filings that Wilkinson filed in a separate 2007 lawsuit, "Timothy Dolan asked that [Wilkinson] take the leave now and [D&T] would continue to pay [his] salary until a written agreement was reached laying out the terms of [his] leave." Id. Wilkinson further claimed, "[b]ased on [D&T's] promise to work out an agreement within afew weeks, I began a medical leave for an undetermined period of time, beginning May 7, 2004." Id.
On May 5, 2004, D&T's human resources department sent Wilkinson a document entitled "Response to Employee Request for Family or Medical Leave and Employee Acknowledgements of Obligations" (the "FMLA Form"). J.A. 201-03. The FMLA Form states, "[w]e are aware that you need this leave beginning on or about May 10, 2004 . . . ." J.A. 201. The record reflects that Wilkinson took unpaid FMLA leave from May 7, 2004 until August 2004. J.A. 1466. In July 2004, Wilkinson informed D&T that he would be unable to return to work. J.A. 376.
Eligible employees of D&T were covered under its Employee Health and Welfare Benefit Plan. J.A. 7, 22. Prior to May 1, 2004, the plan was insured by a different company, Unum. J.A. 1284-1312. Effective May 1, 2004, Sun Life issued a group benefits policy (the "Policy") to D&T to insure eligible participants and beneficiaries of its plan. J.A. 260, 1352-81. Sun Life served in the dual role of evaluating benefit claims and paying approved claims. J.A. 9, 23. Wilkinson submitted a benefits claim to Sun Life on August 18, 2004, which Sun Life approved. J.A. 927, 1449-53. Sun Life paid Wilkinson disability benefits for approximately four years from August2004 until July 2008. J.A. 248. Sun Life also performed periodic reviews to determine whether Wilkinson remained eligible for long-term disability benefits. J.A. 262.
In November 2007, Wilkinson filed an employment-related action in New Jersey state court against D&T, as well as his business partners Timothy Traynor, Michael Dolan, and Timothy Dolan (the "New Jersey Lawsuit"). J.A. 81-23. Wilkinson alleged that he was fraudulently induced into resigning as an officer of D&T and signing a modification of his buyout agreement. Id. The parties eventually settled the suit under a confidential agreement. J.A. 312. At the time, the New Jersey Lawsuit had nothing to do with Wilkinson's benefits claim. Id.
Sun Life sent Wilkinson the first denial letter on July 29, 2008, stating that he no longer qualified for long-term disability benefits. J.A. 125-29. This denial letter noted that Sun Life had recently learned of the New Jersey Lawsuit, and that Sun Life believed Wilkinson may have resigned from D&T because of disagreements with the partners, rather than medical reasons. J.A. 128. Regardless, Sun Life justified the first denial because it "concluded that there was no medical evidence to continue to support [Wilkinson's] claimed restrictions and limitations." Id. Importantly, Sun Life's "assessment of total disability [was] based on one's occupation [as a vice president] in the national economy, not by the job requirements of aparticular employer." J.A. 126. Sun Life claimed that although D&T described Wilkinson's "job as heavy duty," a vice president in the national economy fits "closer to the light physical demand level." Id. In January 2009, Wilkinson challenged the termination of benefits and provided evidence to rebut Sun Life's determination. J.A. 519-640. Wilkinson also challenged Sun Life's reliance on what duties a vice president performs in the national economy, as opposed to what duties he performed at D&T. See J.A. 521.
Sun Life sent Wilkinson a second denial letter on May 13, 2009. J.A. 61-69. This letter noted that a physician described Wilkinson's "cardiac status as causing only slight limitation in physical activity." J.A. 63. The letter also stated a functional capacity evaluation revealed that Wilkinson "had the capacity to perform his occupation as it is typically performed in the national economy." J.A. 63. Nevertheless, Sun Life expressly stated that it was "not addressing any question of Disability at this time," and that it was denying coverage on different grounds. J.A. 69. Sun Life found Wilkinson ineligible for coverage under the Policy because, in its view, two declarations filed in the New Jersey Lawsuit indicated Wilkinson "was not meeting the requirements of an Active Full-time Employee at the time coverage became effective . . . on May 1, 2004." J.A. 68. Thus, five years after Wilkinson left D&T,Sun Life asserted a new theory for why Wilkinson did not qualify for coverage.
In January 2010, Wilkinson appealed the termination of his disability benefits a second time. J.A. 346-64. As part of Wilkinson's administrative appeal, a physician hired by Sun Life provided medical findings indicating that "Wilkinson would be precluded from the duties of his 'Regular Occupation' and was 'Totally Disabled.'" J.A. 45. This finding essentially foreclosed Sun Life's denial of benefits based on medical grounds.
Sun Life sent Wilkinson a third denial letter on July 12, 2010. J.A. 39-50. The sole issue at that point involved whether Wilkinson was "[p]erforming all the duties of [his] job on a Full-time Basis and working on a regular work schedule of at least 30 hours per week" when the Policy took effect. See id. To prove that he was an active...
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