UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-2307
PAUL B. MITCHELL, JR.,
Plaintiff - Appellee,
versus
FORTIS BENEFITS INSURANCE COMPANY,
Defendant - Appellant,
and
ADVANCED POLYMER, INCORPORATED, Employee
Benefits Plan and Plan Administrator; KUNI
NAKAMURA,
Defendants.
Appeal from the United States District Court for the Western
District of North Carolina, at Statesville. Richard L. Voorhees,
District Judge. (CA-02-5-5-V)
Argued: May 26, 2005 Decided: July 29, 2005
Before WILKINS, Chief Judge, and WILKINSON and GREGORY, Circuit
Judges.
Affirmed in part, vacated in part, and remanded by unpublished per
curiam opinion.
Joshua Bachrach, RAWLE & HENDERSON, Philadelphia, Pennsylvania, for
Appellant. Bruce Merle Simpson, JAMES, MCELROY & DIEHL, P.A.,
Charlotte, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
2
PER CURIAM:
This lawsuit involves a claim for long-term disability
benefits under a group plan (“the Plan”) governed by the Employee
Retirement Income Security Act of 1974 (“ERISA”). Paul Mitchell
(“Mitchell”) claims that Fortis Benefits (“Fortis”) wrongfully
terminated his long-term disability benefits, thus abusing its
discretion, in violation of various procedures under ERISA and
North Carolina law. Fortis appeals from the district court’s
denial of its motion for summary judgment, the court’s judgment in
Mitchell’s favor on his claim for disability benefits, and the
awarding of attorney’s fees to Mitchell. After careful review, we
affirm in part, vacate in part, and remand for further proceedings
in accordance with this opinion.
I.
Mitchell began working for Advanced Polymer, Inc. (“Advanced
Polymer”)1 as a sales representative in the textile chemical
industry on September 1, 1997. Mitchell’s job involved a
substantial amount of travel, driving an average of five hours a
day, for a total of approximately 1500 to 2000 miles per week.
According to Mitchell, he began experiencing symptoms of back pain
in June 1998.
1
Advanced Polymer was originally named as a defendant along
with Fortis, however, in July 2002 Mitchell dismissed all claims
against Advanced Polymer.
3
In April 1999, Mitchell’s treating physician, Mark A. Goodson,
M.D.2 determined that Mitchell suffered from chronic lumbar
discogenic disease primarily due to degenerative changes in his
lower back. Dr. Goodson advised Mitchell against surgical
intervention. He did recommend a regular course of care with a
chiropractor, physical therapy, a low impact exercise regimen, and
anti-inflammatory medication. He further advised Mitchell “that
1500 miles per week in an automobile is certainly contraindicated
for his low back problem” and would likely “advance the progression
of his disease.” J.A. 897. Dr. Goodson suggested that Mitchell
obtain a “sit down job where he would be able to stand up and walk
around approximately every 20 minutes.” Id.
By November 1999, Mitchell’s condition had worsened. He
complained to Dr. Goodson that his back pain increased with
prolonged sitting or prolonged driving and that he found it
difficult to assume an erect posture after a long drive. Once
again, Dr. Goodson recommended that he discontinue the extensive
travel. On November 16, 1999, Mitchell submitted a long-term
disability claim based on complaints of chronic back pain. By
November 17, 1999 he was no longer reporting to work. Mitchell
2
Dr. Goodson is a physiatrist with the Rehabilitation Medicine
& Pain Center. A physiatrist is a physician specializing in
physical medicine and rehabilitation. Physiatrists treat acute and
chronic pain and musculoskeletal disorders that often result in
severe functional limitations.
4
underwent further testing on November 22, 1999 and radiology
reports revealed that he suffered from mild scoliosis of the lumbar
spine with slight retrolisthesis of L2 and L3. Later that month,
Mitchell requested a prescription for pain from Dr. Goodson and was
prescribed Darvocet-N 100.
On December 6, 1999, Mitchell reported to Dr. Goodson that his
pain, which he described as “a burning type pain with an occasional
‘numb’ type pain,” had improved since he had resumed physical
therapy and quit working. Record on Appeal, Doc. Entry #22 at 542.
On December 10, 1999, Mitchell saw T. Scott Ellison, M.D., an
orthopedic specialist. Dr. Ellison obtained x-rays of Mitchell’s
back, which revealed a degenerative collapsing lumbar scoliotic
pattern, apex to the left. He noted that Mitchell’s disc spaces
were fairly well preserved, with some narrowing of L4-5 with facet
joint arthrosis. After reviewing Mitchell’s MRI scan from February
16, 1999, Dr. Ellison indicated that there were degenerative disc
signal changes at multiple levels. Dr. Ellison advised Mitchell
that his symptoms could be caused by the degenerative disc in his
back, but that his lifestyle habits, namely extensive driving could
be the cause as well.
Mitchell’s claim was referred to Fortis’ Clinical Services
Department (“Clinical Services”) for review on March 6, 2000.
Based on medical and physical-therapy notes from December 22, 1999
through February 23, 2000, Mitchell’s condition had improved -- he
5
showed increased range of movement and his area of pain had
diminished. However, Dr. Goodson determined on February 22, 2000
that he “had suffered permanent partial impairment of his spine 5%
relative to his lower thoracic and lumbar spine injuries requiring
long-term pain management and likely long-term chiropractic
manipulative care.” J.A. 900. Nevertheless, Clinical Services
reviewed Mitchell’s medical records and concluded that no
compelling medical information supported limitations from a
primarily sedentary position that allowed for position changes.
However, Clinical Services noted it “appears pain would prevent
claimant from performing his occupation on a full-time basis.”
Record on Appeal, Doc. Entry #22 at 486.
On March 24, 2000, Clinical Services conducted a phone
interview of Mitchell. Its report indicates that Fortis was aware
that Mitchell’s therapy was being phased out and that he was able
to drive for 10-30 minutes at a time, but experienced significant
pain when driving 30-45 minutes. Mitchell informed Clinical
Services that he had discussed the possibility of another sedentary
job with his employer and that he did not know whether Advanced
Polymer would be willing to decrease the number of miles he had to
travel. Clinical Services concluded that the medical information
supported a finding that Mitchell’s physical limitations prevented
him from returning to work in his own occupation.
6
On March 28, 2000, Mitchell received notification of Fortis’
decision to grant his claim for long-term disability. Fortis
considered November 17, 1999 as his disability onset date,
commencing benefits on February 17, 2000 (following the three
months expiration of his qualifying period, as described in the
Plan). On May 11, 2000, Mitchell’s case manager from Concentra
Managed Care Services, Inc. (“Concentra”),3 Cordeila Bortner,
accompanied him to his appointment with Dr. Goodson.4 Ms. Bortner
asked about the feasibility of Mitchell returning to work with a
decreased route, given his improvement. Dr. Goodson prescribed a
Functional Capacity Evaluation (“FCE”) to determine what level of
activity Mitchell could tolerate. The following day, Fortis
deferred all activity pending clarification of issues surrounding
the worker’s compensation claim filed by Mitchell, the recent
medical records noting improvement, and their bearing on Mitchell’s
disability.5 In May 2000, Mitchell participated in the FCE. Both
Dr. Goodson, claimant’s treating physician, and Dr. Craig S.
3
Concentra provides vocational counseling services for Fortis.
4
Mitchell gave his authorization to Concentra to review,
share, discuss, and obtain copies of all his medical and vocational
records. Record on Appeal, Doc. Entry #22 at 378.
5
On May 29, 2000, Mitchell indicated on a Supplementary Report
for Benefits that he had applied for Social Security disability
benefits, that returning to work was not indicated by his doctor,
and that he would like to receive additional education or training.
7
Heligman, from Clinical Services, reviewed the results and
generally found that Mitchell would be able to do light work.
Although, Mitchell’s low back pain continued to improve, he
reported to Dr. Goodson that he had developed pain over his left
hip and buttocks. On January 19, 2001 Mitchell was diagnosed with
moderate degenerative joint disease of the hip. Dr. Goodson noted
that he remained active and was not taking Darvocet, but remained
on Neurontin. Dr. Goodson advised his patient to continue
chiropractic care, his home exercise program, and the Neurontin.
Mitchell continued to see Dr. Goodson on a regular basis.
In January 2001, a nurse with Clinical Services reviewed
Mitchell’s file and found that based upon the “available medical
records” and multi-discipline reviews, including the peer review
performed by Dr. Heligman, his condition had improved such that he
had the physical capacity to perform light work demands and could
return to his own occupation. Record on Appeal, Doc. Entry #22 at
275-76. In the latter part of February 2001, Mitchell reported to
Dr. Goodson that “his pain had significantly decreased since he
quit working, that he shifts positions frequently, that he never
sits for more than 20 minutes at a time, that he never drives for
more than 60 minutes at one time without having an extended rest,
. . . and that his hips were bothersome.” J.A. 908.
On March 9, 2001 Fortis advised Mitchell that he no longer met
the requirements for long-term disability benefits under the Plan
8
and that benefits would cease immediately. Fortis contended in its
letter denying further benefits that Mitchell was able to perform
at least light-duty work with recommendations to allow for position
changes every 25-30 minutes. Fortis stated that, “[p]er a
discussion with Kuni Nakamura, of Advanced Polymer, [Mitchell] was
allowed to take rest breaks at will.” Record on Appeal, Doc. Entry
#22 at 263. The letter also stated that Mitchell’s “employment as
a Salesman is defined as a LIGHT physical occupation by both the
Department of Occupational Titles and the Department of Labor
Standards, under the occupation of Network Control Operator.” Id.
at 264. Fortis’ letter concluded by stating that Mitchell’s
records did not indicate any medical conditions that would
physically limit him from performing his own occupation.
Mitchell appealed Fortis’ denial of further benefits, and on
July 11, 2001, Fortis arranged for an independent medical
examination before Robert Saltzman, M.D., an orthopaedic surgeon.
Based on his review of the medical records and his own examination,
Dr. Saltzman concluded that Mitchell was capable of medium duty
work, 8 hours per day in a 40 hour work week. The only limitation
placed on Mitchell was for him to alternate between sitting and
standing as he felt necessary.
On August 29, 2001, Fortis notified Mitchell that it had
completed review of his first appeal from the claim denial and
concluded that the decision to deny the claim was appropriate. The
9
letter referred to the updated medical records, the result of the
independent medical examination, and a labor market survey.
According to Fortis, the medical records revealed no abnormal
neurological findings, no muscle weakness or atrophy, and an
ability to work at a light-duty level, if not higher. The labor
market study, according to Fortis, identified sales positions --
classified as light duty, in Mitchell’s geographical area that
could accommodate his need to alternate positions, which Fortis
asserted confirmed Mitchell’s ability to perform the material
duties of his occupation. Therefore, Fortis affirmed the decision
to deny further benefits. Fortis concluded its letter by notifying
Mitchell that he had one further level of appeal prior to
exhausting his administrative reviews.
Mitchell appealed the second denial of his claim through his
attorney, who argued that his client was incapable of performing
the material duties of his prior job. On December 5, 2001, in its
response to Mitchell’s final appeal, Fortis notified him that his
disability claim must be based on an inability to perform the
material duties of his occupation and not his specific job with his
former employer. The letter further explained that the FCE and
independent medical examination confirmed Mitchell’s ability to
work at least at the light duty level. Based on this, Fortis
upheld its decision to deny further benefits and advised Mitchell
10
that he had exhausted all administrative reviews. Mitchell
responded by filing this lawsuit.
II.
Generally, we review a district court’s order granting summary
judgment de novo. Buzzard v. Holland, 367 F.3d 263, 268 (4th Cir.
2004). However, when a plan grants discretionary authority to the
decision maker, the deferential abuse of discretion standard of
review applies to our review of the eligibility decision. Id.
(citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115
(1989)). Under this deferential standard of review, a fiduciary’s
“discretionary decision will not be disturbed if reasonable, even
if the court itself would have reached a different conclusion.”
Smith v. Cont’l Cas. Co., 369 F.3d 412, 417 (4th Cir. 2004)
(quoting Booth v. Wal-Mart, Inc. Assocs. Health & Welfare Plan, 201
F.3d 335, 341 (4th Cir. 2001)).
In this case, the Plan contains the following language
explicitly granting discretionary authority to Fortis:
we have the sole discretionary authority to determine
eligibility for participation or benefits and to
interpret the terms of the Policy. All determinations
and interpretations made by us are conclusive and binding
on all parties.
J.A. 121. The Plan defines “we” and “us” as Fortis Benefits
Insurance Company. Id.
11
However, the deference owed to a plan fiduciary’s decision is
tempered when the fiduciary is operating under a conflict of
interest. Smith, 369 F.3d at 417. When the decision to deny
benefits impacts the fiduciary’s financial interests, as in the
case of a plan insurer, that conflict is weighed by the court as a
factor in deciding whether there was an abuse of discretion.
Bernstein v. Capitalcare Inc., 70 F.3d 783, 787 (1995). In other
words, if a plan administrator acts as both the fiduciary making
claim decisions and the insurer paying claims, an inherent conflict
of interest exists. Accordingly, deference to the plan
administrator will be lessened, but only “to the degree necessary
to neutralize any untoward influence resulting from the conflict.”
Doe v. Group Hospitalization and Med. Serv., 3 F.3d 80, 87 (4th
Cir. 1993). Under no circumstances may the court deviate entirely
from the abuse of discretion standard. Ellis v. Metro Life Ins.
Co., 126 F.3d 228, 233 (4th Cir. 1997). Instead, the “more
incentive for the administrator or fiduciary to benefit itself by
a certain interpretation of benefit eligibility or other plan
terms, the more objectively reasonable the administrator or
fiduciary’s decision must be and the more substantial the evidence
must be to support it.” Id. In this case it is undisputed that a
conflict exists, because Fortis functions as both the Plan
Administrator and the insurer, thus deference to Fortis must be
tempered.
12
III.
Fortis contends that the district court erred: (1) by
reviewing Fortis’ claim decision de novo rather than determining if
the decision to deny the claim was reasonable; (2) by disregarding
the language in the policy and Fourth Circuit precedent when
considering Mitchell’s specific job duties rather than the
“material duties” of his “regular occupation,” when concluding that
he was disabled; (3) as a matter of law, by accepting the
inconsistent opinion of Mitchell’s treating physician over other
substantial evidence, including the FCE, a peer review, and an
independent medical examination, which it argues supported the
denial of benefits; (4) by ignoring the language in the policy and
refusing to give Fortis a credit for an overpayment, as well as
calculating benefits to include amounts that are not allowed under
the policy; and (5) by granting attorney’s fees to Mitchell,
because he should not have prevailed on his claim.
A.
Fortis contends that the district court misapplied the abuse
of discretion standard discussed supra. Fortis alleges that the
district court substituted its own judgment for that of Fortis, the
Plan Administrator. Further, Fortis asserts that the court gave
little to no deference to Fortis’ conclusions based on the court’s
perception that Fortis’ conduct constituted “bad faith.” Fortis
13
disputes the court’s assertion that “failure to provide Plaintiff
with any notice that termination of his disability benefits was
being considered suggests bad faith.”6 J.A. 938.
The district court stated that it had “questions about
Defendant’s own financial interest as the insure[r] and
administrator [which] require this Court to hold Defendant to a
higher standard in terms of its objective medical evidence and give
less deference to Defendant’s discretionary acts.” J.A. 938-39.
Specifically, the district court discussed the standard of review
of a Plan Administrator’s decision when it functions as both the
insurer and the Plan Administrator. The court also noted that:
In determining the reasonableness of a fiduciary’s
discretionary decision, a court applying the modified
abuse of discretion standard may consider, but is not
limited to, the following factors:
(1) the language of the plan; (2) the purposes and goals
of the plan; (3) the adequacy of the materials considered
to make the decision and the degree to which they support
it; (4) whether the fiduciary's interpretation was
consistent with other provisions in the plan and with
earlier interpretations of the plan; (5) whether the
decision making process was reasoned and principled; (6)
whether the decision was consistent with the procedural
and substantive requirements of ERISA; (7) any external
standard relevant to the exercise of discretion; and (8)
the fiduciary's motives and any conflict of interest it
may have. Booth v. Wal-Mart Stores, Inc., 201 F.3d 335,
342-343 (4th Cir. 2000) (emphasis added).
J.A. 917.
6
According to Fortis, the Plan does not require prior notice
that the Plan is considering terminating benefits and Fortis
exceeds the review requirements of the ERISA statute. Further,
Fortis notes that it informed Mitchell that periodically he would
be required to update information to confirm his continued
eligibility.
14
Using the above criteria, the district court reviewed Fortis’
decision for reasonability -- determining whether the decisions and
interpretations made by Fortis were supported by the evidence. For
example, the district court found that it was reasonable, pursuant
to the Plan, for Fortis to review Mitchell’s eligibility on a
month-to-month basis.7 Therefore, Fortis was not bound to its
original determination that Mitchell was eligible for long-term
disability.
A thorough reading of the district court’s opinion
demonstrates that it reviewed Fortis’ decisions by looking at its
interpretations and finding them reasonable when Fortis’
interpretations were supported by other language in the Plan or was
consistent with other outside information upon which they purported
to rely.8 Therefore, we find that the district court did use the
proper modified abuse of discretion standard of review in this
case.
7
The district court noted that the Plan expressly states that
“[d]isability or disabled means that in a particular month, you
satisfy either the Occupation Test or the Earnings Test.” Record
on Appeal, Doc. Entry #22 at 10.
8
The district court’s comments that Fortis’ actions “suggested
bad faith” and “indicate bad faith” were made at the conclusion of
the court’s opinion and were not the standard upon which the court
reviewed Fortis’ decisions.
15
B.
To qualify for long-term disability benefits, Mitchell must
satisfy the Plan’s Occupation Test and demonstrate that:
during the first 36 months of a period of disability
(including the qualifying period), an injury, sickness,
or pregnancy requires that you be under the regular care
and attendance of a doctor, and prevents you from
performing at least one of the material duties of your
regular occupation.
Record on Appeal, Doc. Entry #22 at 10. Therefore, to cease paying
disability benefits, after initially finding Mitchell eligible,
there must be evidence in the record to support Fortis’
determination that Mitchell could now perform all the “material
duties” of his “regular occupation.”
We first consider the Plan’s language. The Plan does not
include a definition of “your regular occupation.” However, the
district court agreed with Fortis that “your regular occupation”
did not mean Mitchell’s specific job with Advanced Polymer, but
rather referred to a position more specific to Mitchell than
“gainful occupation”, which is the language used in the Plan to
test when a claimant qualifies for being disabled for more than
three years.9 J.A. 919. We also consider the Second Circuit’s
opinion in Kinstler v. First Reliance Standard Life Ins. Co., 181
9
The Plan provides in the Occupation Test definition that:
“after 36 months of disability, an injury, sickness, or
pregnancy prevents you from performing at least one of
the material duties of each gainful occupation for which
your education, training, and experience qualifies you.”
Record on Appeal, Doc. Entry #22 at 10.
16
F.3d 243 (2nd Cir. 1999), which interpreted “regular occupation” as
“a position of the same general character as the insured’s previous
job, requiring similar skills and training, and involving
comparable duties.” Id. at 252 (emphasis added). The court
explained that the “term is defined more narrowly than any means
for making a living, but it is not limited to the insured’s
particular job.” Id. In other words, a reasonable description of
a claimant’s regular occupation must also take into account the
specific nature of the claimant’s prior employment.
On appeal, Fortis argues that extensive driving is not a
material duty of Mitchell’s regular occupation and asserts that the
district court substituted its own judgment for the labor market
survey provided by Fortis.10 The Plan defines “material duties” as:
[T]he sets of tasks or skills required generally by
employers from those engaged in a particular occupation.
One material duty of your regular occupation is the
ability to work for an employer on a full-time basis as
defined in the policy.
Record on Appeal, Doc. Entry #22 at 11.
Fortis claims that because it provided a survey that
identified “numerous” sales positions in Mitchell’s geographical
area that were suitable to Mitchell’s background, which did not
require “extensive travel,” there was thus, substantial evidence
10
The survey was conducted in August 2001, five months after
Fortis determined and informed Mitchell that he no longer qualified
for long-term disability benefits.
17
that traveling approximately 1500 miles per week was not a material
duty of Mitchell’s occupation. Appellant’s Br. at 33.
Fortis’ attempt to use a labor market survey to demonstrate
that driving or traveling is not a material duty of Mitchell’s
regular occupation is insufficient. By using limiting criteria
applicable to Mitchell (light-duty, no lifting over twenty pounds,
and the ability to change positions every thirty minutes), Fortis
guaranteed that it would find at least a few jobs that Mitchell
could possibly engage in with his physical limitations.11 Thus, the
labor market survey does not support Fortis’ determination that
driving or extensive travel was not a general skill required by
12
employers in Mitchell’s occupation.
Consequently, we consider objective information to determine
if Fortis’ determination was reasonable. The United States
Department of Labor in its Dictionary of Occupational Titles
(“DOT”) defines a Chemical Sales Representative as “Light Work -
Exerting up to 20 pounds of force occasionally, and/or up to 10
pounds of force frequently, and/or a negligible amount of force
11
We note that Fortis listed fifteen jobs in the survey and
only two jobs involved anything remotely related to chemical sales.
J.A. 263-66.
12
Fortis also relies on a notation on a claim file
recommendation form that mentions the possibility that Advanced
Polymer may be willing to decrease Mitchell’s travel area and
indicated that he might be able to work out of his home. Neither
of these accommodations were officially offered to Mitchell, nor
were they determined to be reasonable or acceptable by any medical
professional.
18
constantly (Constantly: activity or condition exists 2/3 or more of
the time) to move objects. Physical demand requirements are in
excess of those for Sedentary Work.” Dictionary of Occupational
Titles 262.357-010. The Department of Labor, in its Occupational
Outlook Handbook, states that “Sales representatives spend much of
their time traveling to and visiting with prospective buyers and
current clients.” Bureau of Labor Statistics, U.S. Department of
Labor Occupational Handbook 412 (2004-05). The Department of Labor
continues, stating --
After the sale, representatives may make followup visits
to ensure that the equipment is functioning properly and
may even help train customers employees to operate and
maintain new equipment.
. . . .
Working Conditions
Some sales representatives have large territories and
travel considerably. A sales region may cover several
States, so they may be away from home for several days or
weeks at a time. Others work near their “home base” and
travel mostly by automobile. Due to the nature of the
work and the amount of travel, sales representatives may
work more than 40 hours per week.
Although the hours are long and often irregular, most
sales representatives have the freedom to determine their
own schedule. Sales representatives often are on their
feet for long periods and may carry heavy sample
products, which necessitates some physical stamina.
Id. at 413.
The Department of Labor’s in-depth explanation of the travel
required by a sales representative supports the district court’s
finding that driving was a material duty of Mitchell’s regular
19
occupation. The DOT’s description of a Chemical Sales
Representative requiring the exertion of at least “a negligible
amount of force constantly” -- like the force necessary to drive a
car -- further supports the district court’s finding that driving
was a material duty. Thus, we affirm the district court’s finding
and conclude that it was unreasonable and an abuse of discretion
for Fortis to find that extensive travel was not a material duty of
Mitchell’s regular occupation.
C.
We now review Fortis’ determination that Mitchell was able to
perform the material duties of his regular occupation, including
extensive travel. Our review, like the district court’s, is
limited to evidence that was in the administrative file when the
Plan Administrator rendered its decision to terminate Mitchell’s
benefits. Bernstein v. Capital Care, Inc., 70 F.3d 783, 788 (4th
Cir. 1995).
The information Fortis had prior to the March 9, 2001 decision
to cease disability benefits to Mitchell was: (1) the FCE, which
concluded that Mitchell was unable to sit still for any length of
time and suffered from a burning sensation in his lower back when
sitting and typing; (2) Dr. Heligman’s review of the FCE and his
opinion that the “claimant has the capacity for light work and
would be able to perform his occupation of sales representative,”
Record on Appeal, Doc. Entry #22 at 333; (3) Dr. Heligman’s
20
recommendation that Mitchell limit his lifting to between 10 and 25
pounds, and that he change his position frequently “every 30
minutes or so,” Id.; and (4) Dr. Goodson’s review of the FCE and
his finding that Mitchell was capable of light duty work with
restricting his lifting to 20 pounds, changing positions every 20-
30 minutes, and sitting no more than six hours in a 24 hour period,
and if driving is involved –- “limit driving to a max. of 2 hours
per 24 hours with a max. of 10 hours per. week. While driving he
should stop every 30 min. and walk around the car.” Id. at 248.
In addition, the record indicates that in January 2001, Dr.
Goodson scheduled Mitchell for x-rays to investigate his complaints
of hip pain. Mitchell was diagnosed with moderate left hip
degenerative joint disease. In February 2001, after the June 2000
FCE, but before the March 9, 2001 denial of benefits, Dr. Goodson
opined that Mitchell would not be able to “maintain gainful
employment without significant increase in pain symptoms making him
totally non-functional.” Id. at 255.
The medical evidence does not reasonably support Fortis’
finding that Mitchell was capable of doing all material duties of
his occupation. It was unreasonable for Fortis to find that
Mitchell could drive extensively every day if he could only drive
a maximum of 30 minutes at a time with a significant rest
afterward. It would be almost impossible, even given an extended
work day, for Mitchell to timely attend his appointments. Further,
21
the facts support the district court’s finding that “the record
demonstrates that there was never an official RTW [“return to
work”] proposal made or rejected.”13 Id. at 923. Finally, the
medical evidence is not in conflict, both Dr. Heligman and Dr.
Goodson limited Mitchell’s ability to sit or drive to 30 minutes or
less at a time. Therefore, we find that Mitchell was unable to
perform a material duty of his occupation, and that even giving
Fortis the appropriate deference it was unreasonable for Fortis to
find otherwise on March 9, 2001.
After the March 9, 2001 denial, Mitchell appealed and Fortis
gathered more medical evidence, presumably to re-evaluate the
decision denying Mitchell long-term disability benefits. In August
2001, Dr. Saltzman conducted a physical examination, reviewed “all
available medical records,” and found in his independent medical
evaluation that the “objective findings are not consistent with the
patient’s subjective symptoms. The objective findings are minimal
(i.e. his scoliosis compared to a subjective inability and there is
no muscle weakness nor atrophy).” J.A. 141. Dr. Saltzman opined
that Mitchell was capable of performing “medium category work level
for an 8-hour day, 40-hour week, with the ability to sit and stand,
13
While the record reflects that a conversation occurred
between Fortis and Advanced Polymer regarding possible
accommodations, Fortis clearly stated that it was “not affirmed
that the PH[“policyholder”] accommodations are reasonable. His
back is improving - he needs to think about accommodations and
consult AP [“Advanced Polymer”].” J.A. 554 (emphasis added).
22
alternating as he feels necessary.” Id. Dr. Saltzman was aware
that Mitchell’s prior position as a sales representative involved
driving and frequent sitting. Dr. Saltzman also estimated
Mitchell’s level of ability as “there were no tasks that I think
the claimant would be unable to perform, other than lifting more
than 40-lb on more-than-occasional basis.” Id.
Dr. Saltzman indicates that he reviewed Mitchell’s medical
records from 1998 until February 2001, however, it is also plain
that Dr. Saltzman had incomplete medical information, for example
“no x-rays were made available for review.” J.A. 140.
Nevertheless, Dr. Saltzman concludes that his objective findings
were inconsistent with Mitchell’s subjective complaints, Dr.
Saltzman did “recommend[], however, that updated MRI’s of the
thoracic and lumbar spine be obtained and x-rays, plain films of
the thoracic and lumbar spine be obtained. It may be advantageous
to get EMGs of the (L) lower extremity to detect and denervation to
the muscle since clinically none are noted.” J.A. 248.
In contrast, both Dr. Heligman and Dr. Goodson opined that
Mitchell had some limitations in his abilities and necessitated the
ability to change positions every 20-30 minutes. In addition, Dr.
Ellison recognized that Mitchell’s extensive driving may have
caused (or exacerbated) the degenerative disc in his back.
Further, the FCE supported the findings and recommendations made by
Dr. Ellison, Dr. Goodson, and Dr. Heligman. The only evidence in
23
the record that clearly supports Fortis’ determination is Dr.
Saltzman’s opinion. With an incomplete record and without any
further tests, Dr. Saltzman’s opinion -- that Mitchell was able to
perform all tasks except lifting in excess of 40 pounds –- does not
outweigh the medical opinions of Dr. Goodson, Dr. Ellison, and Dr.
Heligman who limited Mitchell’s abilities to sit and drive to 30
minutes. Thus, we find that Dr. Saltzman’s opinion cannot alone
provide enough reasonable support for Fortis’ decision, even
according Fortis tempered deference. Therefore, we affirm the
district court’s findings on this issue.
D.
Next, Fortis contends that the district court erred when the
court failed to offset for the Social Security benefits that
Mitchell received, when it added to the benefit calculation money
received by Mitchell as a “bonus”, and when the district court
granted Mitchell benefits beyond what was remaining in the first
thirty-six months.
First, despite Fortis’ assertion to the contrary, the court
did offset the benefits payment by the Social Security benefit
Mitchell received. The district court awarded Mitchell $108,241.00
for the total amount of past-due disability benefits owed under the
terms of the Plan.14 The district court determined that $3,820.00
14
This amount included monthly disability benefits, plus
$4,022.00 in costs associated with obtaining Social Security
disability benefits under the Plan, less the difference in the
24
was the initial monthly benefit for the period of May 2001 until
May 2002. In May 2002 Mitchell began receiving Social Security
disability benefits, thus the district court reduced the monthly
benefit owed by Fortis to Mitchell to $2,590 per month for the
period of May 2002 until February 16, 2004.15
Second, Fortis does not cite to any language in the district
court’s opinion to support its assertion that a “bonus” was
included in the court’s calculations of Mitchell’s benefits.
Further, the record shows that Fortis determined in an internal
memo, dated August 22, 2001, that $4,830 was commissions and should
be added to Mitchell’s income. Fortis originally calculated the
“adjusted pre-db [“pre-disability”] earnings $69,000/12 = $5,750 +
214.80 (2,577.63/12) = $5,964.80 - release underpayment to
claimant.” Record on Appeal, Doc. Entry #22 at 145. The district
court calculated Mitchell’s monthly disability benefits to be
considerably lower, as described above. Thus, the record does not
support Fortis’ contention that the district court included a
“bonus” in its calculation of benefits.
disability benefit actually paid from February 17, 2000 to February
16, 2001 and the disability benefit calculated following discovery
of the $4,830 in commissions, at 8% interest. J.A. 1039.
15
According to the record, Mitchell began receiving long-term
disability benefits on February 17, 2000, thus the end of the
initial thirty-six months would be February 16, 2003, not 2004 as
the district court states. If this error impacts the award, the
district court must recalculate the award using the appropriate end
date.
25
Finally, Fortis is correct in its contention that the district
court granted Mitchell “[r]einstatement of disability benefits
under the Plan, in the amount of $2,590 per month, from February
17, 2004, through the present,” J.A. 1040, in the amount of
$129,795.93” which is in direct conflict with the Plan. According
to Fortis’ Plan language, “after 36 months of disability, an
injury, sickness, or pregnancy prevents you from performing at
least one of the material duties of each gainful occupation for
which your education, training, and experience qualifies you.”
Record on Appeal, Doc. Entry #22 at 10. The district court did not
make a finding that Mitchell satisfied the Plan’s requirement that
he be unable to perform a material duty in his “gainful
occupation”, making him eligible for disability benefits after the
initial thirty-six months. In fact, the district court
specifically recognized the difference between qualifying for
disability for the first thirty-six months and qualifying later
after the initial thirty-six months. Therefore, we reverse the
district court’s grant of $129,795.93 for disability benefits after
February 17, 2003.16
16
We make no finding regarding whether Mitchell meets the
requirements for long-term disability under the Plan after the
initial 36 months period.
26
E.
Fortis argues that because Mitchell should not have prevailed
in his claim, the district court’s grant of attorney’s fees was in
error. We review the district court’s award for abuse of
discretion. Metropolitan Life Ins. Co. v. Pettit, 164 F.3d 857,
865 (4th Cir. 1998). In awarding attorney’s fees, a district
court should use the five factors articulated in Quesinberry v.
Life Ins. Co. of North Am., 987 F.2d 1017, 1029 (4th Cir. 1993) (en
banc), as a guide, keeping in mind the remedial purposes of ERISA.
The five factors are: (1) degree of the opposing parties’
culpability or bad faith, (2) the ability of opposing parties to
pay fees, (3) whether the fee award would deter others similarly
situated, (4) whether the parties requesting fees sought to benefit
other claimants or to resolve a significant ERISA-related legal
question, and (5) the relative merits of the parties’ positions.
Id.
Although the district court did not go into great detail about
the basis for granting Mitchell attorney’s fees we can surmise that
the court found that Fortis’ actions suggested bad faith and that
the evidence Fortis purported to rely on in making its claims
decision was not substantial and supportive of its decision to
terminate Mitchell’s disability insurance benefits as of March
2001. Accordingly, granting of attorney’s fees would likely deter
Fortis from making future hasty and unsupported decisions.
27
Therefore, we find that attorney’s fees were properly granted to
Mitchell.
Fortis also disputes the district court’s calculation of
$120,000 for attorney’s fees. Mitchell’s counsel asserts that he
spent approximately 542.10 hours on this case at a rate of $275 an
hour and requested $149,077.50 in attorney’s fees. A court may
award, in its discretion, reasonable attorneys’ fees and costs to
a prevailing plaintiff in a ERISA action. See 29 U. S. C. §
1132(g)(1) (2005). Thus, we review the amount of the award for
abuse of discretion. See Johnson v. Hugo’s Skateway, 974 F.2d
1408, 1418 (4th Cir. 1992).
In calculating an award of attorneys’ fees, a court should
usually “determine[] a ‘lodestar’ figure by multiplying the number
of reasonable hours expended times a reasonable rate.” Daly v.
Hill, 790 F.2d 1071, 1077 (4th Cir. 1986). The district court
should generally be guided by the particular factors articulated in
Barber v. Kimbrell’s, Inc., 577 F.2d 216, 226 n.28 (4th Cir. 1978),
when deciding what constitutes a “reasonable” number of hours and
rate. See also Brodziak v. Runyon, 145 F.3d 194, 196 (4th Cir.
1998). Because we have only affirmed the district court’s finding
that Fortis wrongly denied Mitchell benefits during the initial
thirty-six months period and the district court has given us little
information on how it determined the amount of fees, we find that
28
the district court must re-calculate the amount of the award of
attorney’s fees using the above cases as guidance.
IV.
Based on the foregoing, we affirm the district court’s finding
that Fortis abused its discretion when it terminated Mitchell’s
long-term disability benefits during the initial thirty-six months
of disability and its finding that Mitchell was eligible to receive
attorney’s fees in this case. We vacate the district court’s
decision that Mitchell was eligible to receive long-term disability
benefits after the initial thirty-six months period and we remand
for recalculation of the amount of attorney’s fees in accordance
with this opinion.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
29
Mitchell v. Fortis Benefits Insurance
Court: Court of Appeals for the Fourth Circuit
Date filed: 2005-07-29
Citations: 163 F. App'x 183
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