F I L E D
United States Court of Appeals
Tenth Circuit
SEP 1 2004
PUBLISH
UNITED STATES COURT OF APPEALS PATRICK FISHER
Clerk
TENTH CIRCUIT
KATHY A. WELCH,
Plaintiff-Appellee,
v. No. 02-3220
UNUM LIFE INSURANCE
COMPANY OF AMERICA,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Kansas
(D.C. No. 00-1439-DWB)
Lynn D. Preheim (Geron J. Bird with him on the brief), Stinson Morrison Hecker
LLP, Wichita, Kansas, for Defendant-Appellant.
Kurt A. Harper, Sherwood & Harper, Wichita, Kansas, for Plaintiff-Appellee.
Before HENRY, BRISCOE, and McCONNELL, Circuit Judges.
HENRY, Circuit Judge.
Plaintiff-appellee Kathy A. Welch was an employee of the Coleman
Company and was eligible for coverage under Coleman’s long-term disability
(“LTD”) insurance plan. Coleman’s plan was issued and administered by
defendant-appellant UNUM. Ms. Welch suffers from fibromyalgia and went on
disability leave on January 31, 1998. At the time she submitted her claim, the
LTD plan provided for benefits until Ms. Welch turned sixty-five, and in no case
less than sixty months. In August 1998, UNUM and Coleman amended the LTD
plan through “Amendment 23,” which replaced the old plan with a new plan and
which contained a 24-month limitation period for payments on “disabilities, due
to sickness or injury, which are primarily based on self-reported symptoms.”
Aplt’s App. vol. I, at 143. The effective date of Amendment 23 was retroactive to
January 1, 1998, and it stated that “[c]laims for disabilities that occur prior to
January 1, 1998 [would] be determined according to the policy(ies) in effect prior
to this amendment.” Id. at 118. Subsequent to the enactment of Amendment 23,
UNUM notified Ms. Welch that her long-term disability benefits would only be
paid through July 29, 2000, because her disability qualified under the amended
plan’s “self-reported symptoms” limitation.
In September 2000, Ms. Welch filed suit against UNUM, seeking a
declaration that she is entitled to LTD benefits under the pre-amendment plan
(“the initial plan”), not the post-amendment plan (“the new plan”). She also
argued that even if the court should decide that the new plan controls, her
condition of fibromyalgia does not fall within the self-reported symptoms
2
limitation.
Ms. Welch and UNUM both filed motions for summary judgment, and the
magistrate judge granted Ms. Welch’s motion and denied UNUM’s. The
magistrate judge found that the LTD plan provided that benefits would vest upon
the plan’s termination and that Amendment 23 caused the initial plan to terminate.
Therefore, the magistrate judge found that UNUM could not retroactively apply
Amendment 23 to deprive Ms. Welch of vested benefits, and he ordered that
UNUM pay her benefits in accordance with the initial plan. UNUM now appeals.
Because we disagree with the lower court that Amendment 23 caused the plan to
terminate, we reverse and remand.
I. BACKGROUND
At all pertinent times, Ms. Welch was an employee of the Coleman
Company. On March 1, 1979, Coleman entered into an agreement with UNUM to
provide LTD insurance for all full-time employees. Ms. Welch became eligible
for this insurance on September 11, 1980.
Prior to the enactment of Amendment 23 in August 1998, the LTD plan
provided that for an employee who became disabled before the age of sixty, the
maximum benefit period was until age sixty-five, but not less than sixty months.
Aplt’s App. vol. I, at 49. This initial plan contained a termination provision
3
which stated, “[t]ermination of this policy under any conditions will not prejudice
any payable claim which occurs while this policy is in force.” Id. at 63. It also
contained a provision stating that the “policy may be changed in whole or in
part.” Id. at 65.
On January 31, 1998, Ms. Welch became disabled, claiming that she was no
longer able to work due to fatigue, joint pain, and headaches. On or about July
23, 1998, UNUM received Ms. Welch’s claim for LTD benefits. She reported
that she was unable to work due to chronic pain and extreme fatigue. Ms. Welch
was diagnosed with fibromyalgia, which is a “chronic pain disorder”
characterized by “[w]idespread musculoskeletal pain and excess tenderness” and
fatigue. Id. at 317-18.
In a letter dated September 25, 1998, UNUM notified Ms. Welch that her
claim for disability benefits had been approved retroactive to July 30, 1998. Id. at
161. The LTD plan provides for a 180-day elimination period, which is a “period
of consecutive days of disability for which no benefit is payable. The elimination
period . . . begins on the first day of disability.” Id. at 52. Because Ms. Welch
became disabled on January 31, 1998, her elimination period did not conclude
until July 29, 1998. The letter also gave an explanation of how Ms. Welch’s
benefits were calculated and when to expect monthly benefits checks, as well as
notice that ongoing benefits were conditioned upon her ability to meet the
4
definition of disability and that the maximum period of payment was to age sixty-
five. Id. at 161-62.
On August 6, 1998, the LTD plan was amended by UNUM and Coleman.
The amendment, referred to as Amendment 23, stated that “[t]he entire policy is
replaced by the policy attached to this amendment.” Id. at 118. Amendment 23
contained a twenty-four-month limitation period for payments on “disabilities,
due to sickness or injury, which are primarily based on self-reported symptoms.”
Id. at 143. Amendment 23 defined “self-reported symptoms” as
the manifestations of your condition which you tell your doctor, that are
not verifiable using tests, procedures, or clinical examinations
standardly accepted in the practice of medicine. Examples of self-
reported symptoms include, but are not limited to headaches, pain,
fatigue, stiffness, soreness, ringing in ears, dizziness, numbness and
loss of energy.
Id. at 144. Amendment 23 provided that “[t]he effective date of these changes is
January 1, 1998.” Id. at 118. Claims for disabilities which occurred prior to that
date were to be determined according to the initial plan, while claims for
disabilities which occurred after that date were to be determined with reference to
Amendment 23. Id.
On April 23, 1999, UNUM wrote to Ms. Welch about the status of her LTD
claim. Id. at 170-71. The letter informed her that her benefits, assuming her
condition remained the same, would only be paid through July 29, 2000. Id. The
letter explained that the plan under which UNUM would be providing benefits
5
had a twenty-four-month limitation for disabilities based on self-reported
symptoms and that the medical information contained in Ms. Welch’s file with
UNUM indicated that her disability fell within the limitation. Id.
On September 17, 1999, Ms. Welch requested UNUM to reconsider its
decision to limit her benefits pursuant to the “self-reported symptoms” limitation.
Id. at 328-331. She asserted that this limitation was not included in the plan
summary available to Coleman or to her at the time she left Coleman and thus
should not be applied to her. Id. Ms. Welch also disputed UNUM’s position that
her illness was not verifiable, and she enclosed copies of medical records from
November 1992, January 1995, July 1997, and June 1999, as well as copies of
letters from her doctor. Id.
In a letter dated November 12, 1999, UNUM advised Ms. Welch that it had
reviewed the information she had provided, along with the medical records
previously contained in her file. Id. at 337-38. However, UNUM stated that Ms.
Welch’s claim would continue to be paid under the self-reported symptoms
limitation since “an organic etiology for [her] symptoms ha[d] not been
determined.” Id. at 337. While acknowledging that Ms. Welch was diagnosed
with fibromyalgia, UNUM asserted that “the severity of your Fibromyalgia is
based solely on your self reported symptoms.” Id. After several more such
exchanges, UNUM sent Ms. Welch a letter dated September 6, 2000, stating that
6
after completing its review, UNUM’s original decision to deny Ms. Welch’s
continued benefits was appropriate. Id. at 364-65. The letter also stated that
“because Ms. Welch is claiming disability as of January 31, 1998, she is subject
to the provisions of the policy dated January 1, 1998.” Id. at 365.
On September 22, 2000, Ms. Welch filed suit in the District Court of
Sedgwick County, Kansas, seeking a declaratory judgment that UNUM had
improperly discontinued her LTD benefits. UNUM removed to the federal district
court for the District of Kansas pursuant to 28 U.S.C. § 1441 on the undisputed
ground that the suit implicates the Employee Retirement and Income Security Act
(ERISA), 29 U.S.C. §§ 1001-1461. Both parties submitted motions for summary
judgment to the magistrate judge hearing the case. The magistrate judge ruled in
favor of Ms. Welch and against UNUM.
The magistrate judge found that UNUM had the power to retroactively
amend the LTD plan. However, he found that “[c]ourts, in a variety of contexts,
have rejected retroactive application of modifications if it affects benefits that
have vested or already become due.” Aplt’s App. vol. II, at 566 (Magistrate
Judge’s Mem. & Order, filed Mar. 13, 2002) (citing Chiles v. Ceridian Corp.,
Inc., 95 F.3d 1505 (10th Cir. 1996)). The magistrate judge found that the
termination provision of the initial LTD plan provided that benefits would vest if
and when the plan was terminated. Additionally, the court found that “[w]hen
7
Amendment 23 was enacted on August 6, 1998, the [initial] policy was replaced
in its entirety and was therefore terminated.” Id. at 576. Therefore, the
magistrate judge ruled that Ms. Welch’s benefits had vested and that UNUM’s
retroactive application of Amendment 23 improperly deprived her of her vested
benefits. He declared that Ms. Welch’s LTD “benefits cannot be limited to 24
months under the self-reported symptom provision of the new 1998 plan,” and
that she was “entitled to receive [benefit payments] each month until she reaches
age 65, but not less than 60 months, as long as she continues to be disabled as
defined by the provisions of the pre-1998 plan.” Id. at 579. UNUM filed a
motion to alter or amend judgment, which the magistrate judge denied.
UNUM now appeals, asserting that (1) the magistrate judge improperly held
that Ms. Welch’s benefits under the initial plan vested upon termination, (2) the
magistrate judge improperly held that the initial plan was terminated by the
enactment of Amendment 23, and (3) the magistrate judge, as a matter of law,
should have entered summary judgment for UNUM. Because we agree that the
initial plan did not terminate, we reverse the grant of summary judgment in favor
of Ms. Welch. However, because the magistrate judge did not determine whether
it was arbitrary and capricious for UNUM to apply Amendment 23’s self-reported
symptoms limitation to Ms. Welch’s claim for benefits based on her condition of
fibromyalgia, we also remand to the district court for further proceedings
8
consistent with this opinion.
II. DISCUSSION
A. Standard of review
“We review de novo the district court’s grant of summary judgment,
considering the evidence in the light most favorable to the appellant.” Meiners v.
University of Kansas, 359 F.3d 1222, 1229 (10th Cir. 2004). “In interpreting the
terms of an ERISA plan[,] we examine the plan documents as a whole and, if
unambiguous, we construe them as a matter of law.” Chiles v. Ceridian Corp., 95
F.3d 1505, 1511 (10th Cir. 1996). We “apply the de novo standard of review to
interpret the terms of a plan, giving the language its common and ordinary
meaning as a reasonable person in the position of the [plan] participant, not the
actual participant, would have understood the words to mean.” Id. (internal
quotation marks and citations omitted).
B. Vesting Under A Welfare Benefit Plan
“ERISA regulates two types of benefit plans, pension benefit plans that
create vested rights and welfare benefit plans that need not create vested rights.”
Member Servs. Life Ins. Co. v. Am. Nat’l Bank & Trust Co. of Sapulpa, 130 F.3d
950, 954 (10th Cir. 1997). The Coleman LTD Plan is a welfare benefit plan
“because disability insurance plans are considered welfare, not pension, benefits.”
9
Chiles, 95 F.3d at 1510. Welfare benefit plans are
exempt from the statutory vesting requirements that ERISA imposes on
pension benefits. Accordingly, an employer may amend the terms of a
welfare benefit plan or terminate it entirely. However, benefits under
a welfare benefit plan may vest under the terms of the plan itself. . . .
[and] an amendment to any ERISA plan may not operate retroactively
if that amendment deprives a beneficiary of a vested benefit.
Member Services, 130 F.3d at 954 (citations and quotation marks omitted)
(emphasis added). See also Chiles, 95 F.3d at 1510 (“Benefits provided under a
welfare benefit plan need never vest. . . . An employer or plan sponsor may
unilaterally modify or terminate welfare benefits, unless it contractually agrees to
grant vested benefits.”). “[P]laintiffs carry the burden of showing an agreement
or other demonstration of employer intent to have company-paid [benefits] vest
under the plan.” Chiles, 95 F.3d at 1511.
Because UNUM retroactively applied Amendment 23 (which was enacted
August 6, 1998) to limit benefits for Ms. Welch’s disability (which began January
31, 1998), we must determine whether the Coleman/UNUM LTD plan included a
contractual promise that benefits would vest upon the occurrence of some
condition. “Because an employee benefit plan must be established by a written
instrument, a promise to provide vested benefits must be incorporated, in some
fashion, into the formal written ERISA plan.” Id. (internal quotation marks
omitted). We interpret the terms of the LTD plan de novo to determine whether
the plan included a promise to vest benefits. Id. If it did, and if Ms. Welch’s
10
benefits had indeed vested under it, then it was inappropriate for UNUM to
retroactively apply Amendment 23 to Ms. Welch’s claim.
UNUM contests (1) the magistrate judge’s finding that the LTD plan vested
benefits upon the termination of the plan; as well as Ms. Welch’s arguments that
the LTD plan vested benefits upon (2) the conclusion of the elimination period,
and (3) the attainment of her disability. We address each contention in turn.
Because we conclude that Ms. Welch’s benefits were not vested under the LTD
plan, we hold that it was not improper for UNUM to retroactively apply
Amendment 23 to Ms. Welch’s claim for benefits.
1. Vesting Upon Plan Termination
a. Did the Plan Provide for Vesting Upon Plan Termination?
The initial LTD plan contained a provision which stated, “[t]ermination of
this policy under any conditions will not prejudice any payable claim which
occurs while this policy is in force.” Aplt’s App. vol. I, at 63. The magistrate
judge found that this provision constituted a contractual promise to vest benefits
in the event of the plan’s termination. See Aplt’s App. vol. II, at 574 (reasoning
that “a reasonable person in the position of [Ms. Welch] would read the
termination provision in the [initial] plan . . . as allowing UNUM/Coleman to
change the terms of the plan, but if the plan terminates, her disability benefits
may not be prejudiced, e.g., reduced or withdrawn, if she had a ‘payable claim’
11
before the plan was terminated”). Subsequently, the magistrate found that the
enactment of Amendment 23 caused the plan to terminate, triggering the vesting
of Ms. Welch’s benefits, such that it was improper for UNUM to retroactively
apply Amendment 23 to limit Ms. Welch’s disability benefits. Id. at 576-77.
Because we hold, as discussed below, that the initial LTD plan did not terminate,
it is unnecessary for us to decide whether or not the plan’s termination clause
included the “clear and express language” necessary to guarantee the contractual
vesting of a welfare benefit. Chiles, 95 F.3d at 1513 (internal quotation marks
omitted).
b. Was the Initial Plan Terminated by Amendment 23?
The magistrate judge found that Amendment 23 effectively terminated the
initial LTD plan and replaced it with a new plan. To reach this conclusion, the
court relied on (1) the language of Amendment 23, which stated that “[t]he entire
policy is replaced by the policy attached to this amendment,” Aplt’s App. vol. I,
at 118, and (2) a review of the history of the Coleman/UNUM long-term disability
plan, which showed that
[i]n the past, some ‘amendments’ purported to simply modify portions
of the plan by changing only specific sections of the plan and
substituting a few new pages in the policy. . . . However, other
‘amendments’ – including Amendment 23 which is relevant here –
purported by their own terms to entirely replace the old plan, with a
completely new policy attached to the amendment.
Aplt’s App. vol. II, at 576-77.
12
As the magistrate judge noted, “there is a scarcity of guidance on questions
of welfare plan termination.” Chiles, 95 F.3d at 1516. Thus, we must evaluate all
of the circumstances surrounding the enactment of Amendment 23 to determine
whether it actually effected a termination of the initial plan. We conclude that the
factors considered by the magistrate are not dispositive of a plan termination.
Rather, we hold that the facts of this case show that the LTD plan was modified,
not terminated.
First we observe that UNUM did not undertake any administrative steps
that would indicate that Amendment 23 terminated the initial plan and created a
new plan. UNUM did not follow the guidelines set forth in the plan documents
for terminating the plan. “With respect to termination of a welfare plan, ERISA
only requires that ‘[t]he assets of a welfare plan which terminates shall be
distributed in accordance with the terms of the plan except as otherwise provided
in the regulations of the Secretary.’” Chiles, 95 F.3d at 1516 (quoting 29 U.S.C.
§ 1103(d)(2)). The initial Coleman LTD plan only specifies that if the company
terminates the plan, it must “giv[e] written notice to the policyholder[s] at least
31 days in advance.” Aplt’s App. vol. I, at 63. The Coleman LTD policyholders
did not receive notice of a plan termination at the time of the enactment of
Amendment 23. Moreover, Coleman employees were not presented with an
opportunity to opt in or out of a new plan. Although Amendment 23 made
13
substantive changes to the plan that affected particular claims for benefits, like
Ms. Welch’s, the employees’ coverage under the plan was not disrupted in a way
that would indicate that the initial plan had terminated and a new plan had been
initiated.
Indeed, this case bears little resemblance to cases in which we have held
that there was a plan termination. In Chiles, 95 F.3d at 1515-16, when an
employer sold one of its divisions to another company, new trustees were
appointed to a replacement LTD plan instituted by the buyer, the buyer became
the administrator of the new plan, the seller transferred money to fund the new
plan, and the buyer assumed all of the seller’s obligations with respect to LTD
plan participants. We held that “[g]iven the facts of this case, the [seller’s] Plan
terminated with respect to [the] division employees when [the seller] was released
from its obligation to fund the plan with respect to those employees and the
employees could look to the [buyer’s] LTD Plan for benefits.” Id. at 1516.
Accord, Courtney v. Am. Airlines, Inc., 40 F. Supp. 2d 389, 396 (N.D. Tex. 1999)
(holding that LTD plan terminated upon the merger of two companies). Clearly,
none of these factors are present in the case at bar. The enactment of Amendment
23 did not affect Coleman’s control of the plan or its obligations under it.
Accordingly, we cannot find that the plan “terminated” under the reasoning of
Chiles.
14
Finally, we note that the changes to the plan were effected by an
amendment. Despite UNUM’s choice of words that the amendment “entire[ly] . .
. replaced” the initial plan, Aplt’s App. vol. I, at 118, it is apparent that UNUM
intended to merely modify or amend the initial plan, not to end it and institute a
completely new one. In fact, Amendment 23 seems to have made few substantive
changes to the plan. For instance, the benefit percentage remains the same, as
does the waiting period, the elimination period, and the maximum benefit period.
Compare Aplt’s App. vol. I, at 48-49 with id. at 123. Although the language on
the face of Amendment 23 indicated that “[t]he entire policy is replaced by the
policy attached to this amendment,” id. at 118, and a complete copy of the new
plan was attached to Amendment 23, we deem it plausible that UNUM used these
words to indicate its intention to provide Coleman’s employees with a complete,
integrated copy of the plan in the interest of convenience. This wording is not
ideal, but it does not amount to termination of the plan, especially since UNUM
retained the right to change the plan “in whole or in part.” Id. at 65.
Taking into account all of the circumstances, we hold that Coleman’s initial
LTD plan was amended, not terminated, by Amendment 23. Therefore, assuming
without deciding that the initial LTD plan contained language sufficient to
contractually vest Ms. Welch’s benefits upon plan termination, the enactment of
Amendment 23 would not have triggered the vesting of Ms. Welch’s benefits.
15
2. Vesting at the Conclusion of the Elimination Period or Upon Ms.
Welch’s Disability
UNUM contests Ms. Welch’s arguments, which she raised below and which
she reasserts on appeal, that her LTD benefits “were capable of vesting and did
vest, at the conclusion of the waiting [i.e. elimination] period,” Aple’s Br. at 15,
or upon the date she became disabled. Id. at 16-17.
We reiterate that “[a]n employer or plan sponsor may unilaterally modify or
terminate welfare benefits, unless it contractually agrees to grant vested benefits.”
Chiles, 95 F.3d at 1510. With regard to the payment of disability benefits, the
initial LTD plan provides that
When the Company receives proof that an insured is disabled due to
sickness or injury and requires the regular attendance of a physician, the
Company will pay the insured a monthly benefit after the end of the
elimination period. The benefit will be paid for the period of disability
if the insured gives to the Company proof of continued:
1. disability; and
2. regular attendance of a physician.
...
Disability benefits will cease on the earliest of:
1. the date the insured is no longer disabled;
2. the date the insured dies;
3. the end of the maximum benefit period;
4. the date the insured’s current earnings exceed 80% of his indexed
pre-disability earnings;
5. the date the insured receives retirement benefits under the
employer’s retirement plan due to his voluntary election to receive
such benefits.
Aplt’s App. vol. I, at 57, 60. The plan also advises that “[t]his policy may be
changed in whole or in part.” Id. at 65.
16
“Contractual vesting of a welfare benefit is an extra-ERISA commitment
that must be stated in clear and express language. . . . [It] is a narrow doctrine.”
Chiles, 95 F.3d at 1513 (internal quotation marks omitted). There is no language
in the LTD plan that provides for the vesting of claims for benefits upon
disability or at the end of the elimination period, and the plan specifically
reserves UNUM’s right to change the plan. We cannot read a vesting requirement
into the contract. See id. (declining to read LTD plan as providing for vesting
upon the unexpressed condition of attaining disability when the plan “clearly
pinpoint[ed] plan termination, not employee disability, as the vesting trigger”).
Therefore, we hold that Ms. Welch’s benefits did not vest upon her attaining
disability or at the conclusion of the elimination period. 1
C. Application of Amendment 23
As detailed in the foregoing discussion, we hold that Ms. Welch’s benefits
1
Because the magistrate judge found that UNUM could not retroactively
apply Amendment 23 to limit Ms. Welch’s claims, he did not address the merits
of Ms. Welch’s argument that her benefits vested pursuant to language contained
in Amendment 23 that “[a]ny decrease in coverage will take effect immediately
but will not affect a payable claim that occurs prior to the decrease.” Aplt’s App.
vol. I, at 132. The magistrate judge merely stated that “Plaintiff has repeatedly
asserted that the old plan is the one applicable to her. The [above language] is
part of the new plan.” Id. vol. II, at 571-72. Because we hold that UNUM
properly applied Amendment 23 to Ms. Welch’s claims, Ms. Welch’s argument
may remain tenable. We note that there is no indication in the record that UNUM
actually considered this policy language when it was considering whether to limit
the benefit period for Ms. Welch’s disability payments.
17
were not vested under the LTD plan. Accordingly, we hold that it was not
improper for UNUM to retroactively apply Amendment 23 to Ms. Welch’s claims,
because it did not deprive her of vested benefits. Member Services, 130 F.3d at
954. However, the question remains as to whether UNUM appropriately applied
Amendment 23’s self-reported symptoms limitation to Ms. Welch’s claim for
disability benefits based upon a diagnosis of fibromyalgia.
Amendment 23’s twenty-four-month self-reported symptoms limitation
applies to payments on “disabilities, due to sickness or injury, which are primarily
based on self-reported symptoms.” Aplt’s App. vol. I, at 143. “Self-reported
symptoms” are defined as
the manifestations of your condition which you tell your doctor, that are
not verifiable using tests, procedures, or clinical examinations
standardly accepted in the practice of medicine. Examples of self-
reported symptoms include, but are not limited to headaches, pain,
fatigue, stiffness, soreness, ringing in ears, dizziness, numbness and
loss of energy.
Id. at 144.
UNUM contends that Ms. Welch “could present no evidence, other than
‘self-reported symptoms’ to justify continuation of her disability benefits” for
fibromyalgia. Aplt’s Br. at 26. Ms. Welch, on the other hand, contends that her
“condition is confirmed by the results of a variety of objective tests performed
over a period of time, showing varying degrees of connective tissue and
inflammatory disease.” Aple’s Br. at 19. “Because proving the disease is
18
difficult . . . , fibromyalgia presents a conundrum for insurers and courts
evaluating disability claims.” Walker v. Am. Home Shield Long Term Disability
Plan, 180 F.3d 1065, 1067 (9th Cir. 1999). Compare id. (holding that “no
objective test exists” for proving fibromyalgia); Jordan v. Northrop Grumman
Corp. Welfare Benefit Plan, 370 F.3d 869, 872 (9th Cir. 2004) (“[F]ibromyalgia’s
cause or causes are unknown, there is no cure, and, of greatest importance to
disability law, its symptoms are entirely subjective.”); Green-Younger v.
Barnhart, 335 F.3d 99, 108 (2d Cir. 2003) (“[A] growing number of courts,
including our own, . . . have recognized that fibromyalgia is a disabling
impairment and that ‘there are no objective tests which can conclusively confirm
the disease.’”) (quoting Preston v. Sec. of Health and Human Servs., 854 F.2d
815, 818 (6th Cir. 1988)); Hawkins v. First Union Corp. Long-Term Disability
Plan, 326 F.3d 914, 919 (7th Cir. 2003) (noting that fibromyalgia “itself can be
diagnosed more or less objectively by the 18-point test . . . , but the amount of
pain and fatigue that a particular case of it produces cannot be”); and McPhaul v.
Bd. of Comm’rs of Madison County, 226 F.3d 558, 562 (7th Cir. 2000) (holding
that fibromyalgia’s “cause is unknown, there is no cure, and the symptoms are
entirely subjective”); with Boardman v. Prudential Life Ins. Co. of Am., 337 F.3d
9, 16 n.5 (1st Cir. 2003) (“While the diagnoses of chronic fatigue syndrome and
fibromyalgia may not lend themselves to objective clinical findings, the physical
19
limitations imposed by the symptoms of such illnesses do lend themselves to
objective analysis.”); Brosnahan v. Barnhart, 336 F.3d 671, 678 (8th Cir. 2003)
(noting that Social Security claimant’s testimony and reports to the Social
Security Administration were “supported by objective medical evidence of
fibromyalgia”); and Russell v. UNUM Life Ins. Co. of Am., 40 F. Supp. 2d 747,
751 (D.S.C. 1999) (considering a nearly identical self-reported symptoms
limitation and holding that fibromyalgia is an objectively diagnosable condition).
There is no dispute that the Coleman LTD plan gives UNUM discretionary
authority to determine eligibility for benefits and to construe the terms of the
plan. Aplt’s App. vol. I, at 50. However, in making those discretionary
determinations, UNUM, as the plan administrator and insurer, operates under a
conflict of interest. Pitman v. Blue Cross and Blue Shield of Okla., 217 F.3d
1291, 1296 n.4 (10th Cir. 2000) (holding that when one party serves “as both
insurer and administrator of the plan, there is an inherent conflict of interest
between its discretion in paying claims and its need to stay financially sound”).
In these circumstances, under our circuit’s “sliding scale” approach, a court
reviewing a benefits determination “will always apply an arbitrary and capricious
standard, but the court must decrease the level of deference given to the
conflicted administrator’s decision in proportion to the seriousness of the
conflict.” Chambers v. Family Health Plan Corp., 100 F.3d 818, 825 (10th Cir.
20
1996).
In this case, the magistrate judge’s finding that Amendment 23 could not be
applied to Ms. Welch “obviate[d] the need to decide whether fibromyalgia falls
within the self-reported symptom limitation of the new plan.” Aplt’s App. vol. II,
at 579. Therefore, the lower court never applied the arbitrary and capricious
standard to UNUM’s benefits determination for Ms. Welch.
“As a general rule, we do not consider issues not passed on below, and it is
appropriate to remand the case to the district court to address an issue first.” N.
Tex. Prod. Credit Ass’n v. McCurtain County Nat’l Bank, 222 F.3d 800, 812 (10th
Cir. 2000). Accordingly, we remand the case to give the district court the
opportunity to consider the evidence and arguments of the parties regarding
UNUM’s determination that fibromyalgia falls into the self-reported symptoms
limitation.
III. CONCLUSION
We hold that (1) even assuming, without deciding, that the Coleman LTD
plan vested benefits upon the plan’s termination, Ms. Welch’s benefits did not
vest because Amendment 23 did not cause the initial plan to terminate, and (2) the
LTD plan did not provide for benefits to contractually vest upon disability or at
the end of the elimination period. Therefore, we REVERSE the magistrate
21
judge’s grant of summary judgment to Ms. Welch and REMAND the case for
further proceedings consistent with this opinion.
22