Waugh v. Williams Companies, Inc. Long Term Disability Plan

FILED
United States Court of Appeals
Tenth Circuit

UNITED STATES COURT OF APPEALS April 23, 2009
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court

VICKIE WAUGH,
f/k/a VICKIE MAYS,

Plaintiff-Appellant,

v. No. 08-5123
(D.C. No. 4:07-CV-00446-CVE-SAJ)
THE WILLIAMS COMPANIES, INC. (N.D. Okla.)
LONG TERM DISABILITY PLAN,

Defendant-Appellee.

ORDER AND JUDGMENT *

Before LUCERO, PORFILIO, and ANDERSON, Circuit Judges.

Vickie Waugh, previously employed by The Williams Companies, Inc.

(TWC), appeals the district court’s order upholding the decision of the

administrator of TWC’s Long-Term Disability Plan (Plan) to terminate her

benefits. She also appeals the court’s denial of her motion for new trial.

*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Ms. Waugh argues that the district court failed to appreciate and apply the full

import of the Supreme Court’s decision in Metropolitan Life Insurance Co. v.

Glenn, 128 S. Ct. 2343 (2008). She believes Metropolitan Life substitutes “all of

the artificial rules of evidence heretofore applied in ERISA claims review

litigation for a much fairer no-nonsense review of the record as a whole.” Aplt.

App., Vol. 1 at 183. We hold Metropolitan Life is inapposite and affirm.

The Plan provides a two-tier system for the provision of benefits when an

employee is “totally disabled.” During the first twenty-four months following the

commencement of benefits, an employee is totally disabled, by policy definition,

essentially if unable to perform his or her job or some reasonable alternative

employment with TWC. After the first twenty-four months, however, an

employee can retain totally disabled status only if he or she is unable “to engage

in any gainful occupation for which he or she is reasonably fitted by education,

training or experience, as determined by the Plan Administrator. Id., Vol. 3

at 328. The Plan also requires participants receiving disability payments to

provide current medical information at least once every two years. Failure to do

so could result in termination of benefits.

Ms. Waugh, who worked for TWC for twenty-two years in various

computer-related jobs, developed carpal tunnel syndrome in the 1990s. Kemper

National Services, Inc. (Kemper), the claims administrator for the Plan,

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determined that, effective, July 27, 1999, Ms. Waugh was totally disabled. 1 In

February 2002, Kemper initiated a review of Ms. Waugh’s disability claim to

determine whether she was still eligible for benefits under the second tier total

disability definition. After receiving updated medical documentation and

obtaining a peer review from Lawrence Blumberg, M.D., Kemper sent Ms. Waugh

a letter describing the doctor’s findings and informing her the records she

provided did not support continuance of her disability benefits. Kemper,

however, granted her thirty days within which to submit additional objective test

results requested by Dr. Blumberg.

Following the submission of that documentation and another review by

Dr. Blumberg, Kemper informed Ms. Waugh she did not qualify for permanent

disability and her benefits would be terminated. Ms. Waugh administratively

appealed this finding, submitting for Kemper’s consideration one more medical

record and a partially favorable benefits determination by the Social Security

Administration. After two more peer reviews by a second and a third physician,

1
TWC’s Board of Directors was responsible for appointing a Benefits
Committee which, in turn, appointed an Administrative Committee to serve as the
Plan Administrator. The Administrative Committee, in turn, delegated full
discretionary authority to Kemper to interpret the Plan, obtain the participant
information necessary to administer the Plan, make benefit determinations under
the Plan, and conduct the first level of administrative appeals from those
determinations. The Administrative Committee, however, retained the authority
to hear and decide the second and final level of administrative appeals. The
Administrative Committee was not compensated for its service and there was no
evidence presented that Kemper’s compensation was tied to the amount of claims
approved or denied.

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both of whom agreed with Dr. Blumberg’s assessment, Kemper denied

Ms. Waugh’s first-level appeal.

Ms. Waugh then filed a second-level appeal with the Administrative

Committee, but presented no additional arguments or medical records. Following

further review by a fourth physician, who agreed with the other three, the

Administrative Committee upheld the denial of benefits. Ms. Waugh challenged

the denial of the second-level appeal, but the Administrative Committee affirmed

its denial. Ms. Waugh subsequently filed her complaint for review in district

court.

To consider Ms. Waugh’s contention that the district court misapplied

Metropolitan Life, we must first examine the standard of review that was applied.

ERISA allows plaintiffs to sue in federal court to “recover
benefits due . . . under the [healthcare] plan, to enforce . . . rights
under the terms of the plan, or to clarify . . . rights to future benefits
under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). But the
ERISA statute does not specify the judicial standard of review. The
Supreme Court closed the lacuna in 1989, holding in Firestone Tire
and Rubber Co. v. Bruch, 489 U.S. 101, 109 . . . (1989), that a denial
of benefits challenged 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 determine
eligibility for benefits or to construe the terms of the plan.” Id.
at 115 . . . . If the plan does explicitly confer discretionary authority
on an administrator with so-called Firestone language, courts must
review benefit determinations under an “arbitrary and capricious”
standard.

Geddes v. United Staffing Alliance Employee Med. Plan, 469 F.3d 919, 923

(10th Cir. 2006) (alteration in first sentence in original). Recognizing that the

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district court reviewed the benefits decision in this case under the arbitrary and

capricious standard, Ms. Waugh argues the court committed an error of law by

failing to apply Metropolitan Life, which she interprets as requiring de novo

review of the denial of benefits. Our review is therefore plenary. Sandoval v.

Aetna Life & Cas. Inc. Co., 967 F.2d 377, 380 (10th Cir. 1992) (holding that this

Court has plenary review regarding a district court’s legal conclusions).

There are two problems with this approach. First, the issue decided in

Metropolitan Life was how a court should review a discretionary benefit decision

of a plan administrator when that individual has a conflict of interest 128 S. Ct.

at 2350. The Court did not broaden the standard of review as argued by Ms.

Waugh. Second, in the district court Ms. Waugh not only failed to contend the

Plan Administrator was conflicted, she also conceded that fact.

Not to be denied, Ms. Waugh asserts: “[t]hat concession now appears ill

advised and it may be proper to remand this case to allow Plaintiff to develop

whether the Defendant is operating under [such a conflict of interest].” Aplt.

Opening Br. at 52. In effect, she asks us to overlook the impediment to her

appeal. However, “[w]e exercise our discretion to review issues not raised below

‘only in the most unusual circumstances[] . . . [and] where the argument involves

a pure matter of law and the proper resolution of the issue is certain.’” York v.

City of Las Cruces, 523 F.3d 1205, 1212 (10th Cir. 2008) (all but first alteration

in original) (quoting United States v. Jarvis, 499 F.3d 1196, 1202 (10th Cir.

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2007)). Because this case does not meet those standards, we reject her request.

But were we to overlook the absence of evidence the Plan Administrator was

burdened by a conflict of interest, Ms. Waugh still would not prevail.

Essentially, Ms. Waugh contends that after Metropolitan Life a reviewing

court must give no deference to a plan administrator’s discretionary benefits

determination. She assumes the Court’s concern with a fiduciary’s conflict of

interest provides a license for courts to review all the beneficiary’s medical

evidence and reach a de novo determination whether benefits should have been

granted. According to Ms. Waugh, no longer may decisions “be upheld even if on

the lower end of reasonableness.” Aplt. Opening Br. at 51. She asserts

Metropolitan Life vests courts with authority to reverse a plan administrator’s

decision even if that decision is reasonable and supported by substantial

evidence. 2 The Court had no intention of mandating de novo review of these

discretionary decisions. See Metro. Life Ins. Co., 128 S. Ct. at 2350 (stating that

Firestone did not change the standard of review “from deferential to de novo” and

that the Court would not “overturn Firestone by adopting a rule that in practice

could bring about near universal review by judges de novo”). We therefore affirm

2
Creatively, she posits that the level of deference a court should give a plan
administrator’s decision is the same deference that a football official reviewing an
instant replay in a booth should give to a call made by the on-the-field official.
Aplt. Reply Br. at 19-20. That is, of course, no deference.

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the district court’s order upholding the Plan Administrator’s termination of

benefits and turn to the court’s denial of Ms. Waugh’s motion for new trial.

A district court’s denial of a motion for a new trial is reviewed
for an abuse of discretion. The ruling will be reversed only if the
district court made a clear error of judgment or exceeded the bounds
of permissible choice in the circumstances. When the district court’s
decision turns on an issue of law, however, its determination on that
question is reviewed de novo.

Skaggs v. Otis Elevator Co., 164 F.3d 511, 514 (10th Cir. 1998) (citations and

quotation omitted). Under Federal Rule of Civil Procedure 59(a)(1)(B), following

a nonjury trial the district court may grant a new trial on some or all of the issues

“for any reason for which a rehearing has heretofore been granted in a suit in

equity in federal court.” Further, under Rule 59(a)(2), “[a]fter a nonjury trial, the

court may, on motion for a new trial, open the judgment if one has been entered,

take additional testimony, amend findings of fact and conclusions of law or make

new ones, and direct the entry of a new judgment.” The district court, observing

that “[t]he purpose of a Rule 59(a)(2) motion ‘is to correct manifest errors of law

or fact, or, in some limited situations, to present newly discovered evidence,’”

Aplt. App., Vol. 1 at 224 (quoting Lyons v. Jefferson Bank & Trust, 793 F. Supp.

989, 991 (D. Colo. 1992)), denied her motion because Ms. Waugh “is not seeking

to [do either], but instead is attempting to advance arguments she could have

readily asserted before.” Aplt. App., Vol. 1 at 226. Because Ms. Waugh makes

no argument that Rule 59(a)(2) gives a district court authority to address issues

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not previously raised, we see no abuse of discretion in the denial of the motion

for new trial.

The judgment of the district court is AFFIRMED.

Entered for the Court

John C. Porfilio
Circuit Judge

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08-5123, Waugh v. The Williams Company

LUCERO, J., joining in the result.

My reading of the plaintiff’s claims, as discussed in the parties’ briefs,

differs from that of my respected majority colleagues. That disagreement does

not affect the ultimate disposition of the case. I join in the result.