United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 13, 2000 Decided January 12, 2001
No. 99-5327
Jane G. Fitts,
Appellant
v.
Federal National Mortgage Association and
Unum Life Insurance Company of America,
Appellees
Appeal from the United States District Court
for the District of Columbia
(No. 98cv00617)
John J. Witmeyer III argued the cause for appellant.
With him on the briefs was David E. Schreiber.
M. Carolyn Cox argued the cause for appellee Federal
National Mortgage Association. With her on the brief was
Craig Goldblatt.
Frank C. Morris, Jr. argued the cause for appellee Unum
Life Insurance Company of America. With him on the brief
was Ann M. Courtney.
Before: Edwards, Chief Judge, Rogers and Garland,
Circuit Judges.
Opinion for the court filed Per Curiam.
Per Curiam: Jane G. Fitts sued her former employer and
the insurance company that administers claims under the
employer's long-term disability plan, alleging that they violat-
ed the Americans with Disabilities Act of 1990 (ADA) and the
Employee Retirement Income Security Act of 1974 (ERISA)
by terminating her disability benefits after 24 months. The
district court dismissed Fitts' ADA counts and granted sum-
mary judgment against her on the ERISA count. We affirm
the dismissal of the ADA counts on the ground that the long-
term disability plan comes within the safe harbor provisions
of that statute. Because we conclude that the district court
applied the wrong standard of review to the ERISA count,
however, we reverse the grant of summary judgment and
remand the case for further proceedings.
I
Under its employee welfare benefit plan, the Federal Na-
tional Mortgage Association ("Fannie Mae")1 offers its em-
ployees the opportunity to select from an array of benefits,
including a long-term disability insurance policy provided by
Unum Life Insurance Company of America. In the event
that an employee insured under the policy later becomes
totally disabled, the policy pays a percentage of the employ-
ee's income until the age of 65. The policy, however, places a
24-month cap on benefits for disabilities due to mental illness,
which it defines as "mental, emotional or nervous diseases or
disorders of any type."
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1 Fannie Mae is a federally-chartered, private corporation that
facilitates the secondary market in residential mortgages. Federal
National Mortgage Association Charter Act, 12 U.S.C. s 1716b.
Jane Fitts, an attorney, was employed by Fannie Mae from
1982 to 1995 and paid the required premiums for the long-
term disability policy. In 1995, Fitts became disabled by
bipolar disorder, an illness characterized by cycles of depres-
sive and manic episodes. See Am. Psychiatric Ass'n, Diagnos-
tic & Statistical Manual of Mental Disorders 395 (4th ed.
text rev. 2000). Fitts applied to Unum for benefits under the
policy, which Unum granted. Because Unum classified her
disorder as a mental illness, however, it limited her benefits
to 24 months. Fitts unsuccessfully protested Unum's deci-
sion, arguing that bipolar disorder is associated with changes
in the physical structure of the brain and often runs in
families, suggesting genetic causation. Unum asserts that it
invited Fitts to submit additional medical information sup-
porting her claims, but that she responded only with "conclu-
sory" letters from her treating psychiatrist and two other
psychiatrists. Fitts asserts that she signed a release permit-
ting Unum to view her entire medical file, which contained
data supporting her claim. Unum refused to alter its classifi-
cation of bipolar disorder as a mental illness and ceased
paying Fitts benefits after 24 months.
Fitts sued both Unum and Fannie Mae, contending that the
termination of her benefits after 24 months violated Titles I
and III of the ADA, 42 U.S.C. ss 12101-12213. Title I
prohibits a covered employer from discriminating "against a
qualified individual with a disability because of the disability
of such individual in regard to ... [the] terms, conditions and
privileges of employment." 42 U.S.C. s 12112(a). Title III
prohibits discrimination "on the basis of disability in the full
and equal enjoyment of the goods, services, facilities, privi-
leges, advantages, or accommodations of any place of public
accommodation ...." 42 U.S.C. s 12182(a). Fitts also
claimed that the termination of her benefits violated ERISA,
29 U.S.C. ss 1001-1461, which entitles a participant or bene-
ficiary of a covered plan "to recover benefits due to him under
the terms of his plan," 29 U.S.C. s 1132(a)(1)(B).2
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2 In addition, Fitts asserted claims under the District of Columbia
Human Rights Act (DCHRA), D.C. Code s 1-2501 et seq., and
Pursuant to Federal Rule of Civil Procedure 12(b)(6), the
district court dismissed Fitts' claim under Title I of the ADA
because, as a totally disabled individual, she was not a
"qualified individual with a disability" eligible to sue under
Title I. Fitts v. Federal Nat'l Mortgage Ass'n, 44 F. Supp.
2d 317, 322-23 (D.D.C. 1999). The court also dismissed Fitts'
claim under Title III of the ADA, finding that the long-term
disability policy was not a good or service provided by a
public accommodation and hence that neither Fannie Mae nor
Unum was subject to suit under that Title. Id. at 324.
Finally, the court granted Unum's motion for summary judg-
ment on Fitts' ERISA claim, ruling that Unum had not acted
in an arbitrary and capricious manner in classifying bipolar
disorder as a mental illness. Fitts v. Federal Nat'l Mortgage
Ass'n, 77 F. Supp. 2d 9, 24 (D.D.C. 1999). We review both
the dismissal of the ADA claims and the grant of summary
judgment on the ERISA claim de novo. See Systems Council
EM-3 v. AT&T Corp., 159 F.3d 1376, 1378 (D.C. Cir. 1998);
Heller v. Fortis Benefits Ins. Co., 142 F.3d 487, 492 (D.C. Cir.
1998).
II
In EEOC v. Aramark Corp., 208 F.3d 266 (D.C. Cir. 2000),
plaintiffs challenged an employee benefit plan that provided
24 months of long-term disability benefits for persons with
disabilities caused "to any extent" by mental conditions, but a
longer benefit period for those with physical disabilities. As
Fitts does here, the Aramark plaintiffs contended that the
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District of Columbia common law. The district court dismissed
those claims. Fitts did not appeal the dismissal of her common law
claims and has not argued the DCHRA issue in her briefs. Accord-
ingly, neither is before us on this appeal. See Fed. R. App. P.
28(a)(9) (brief must "contain appellant's contentions and the reasons
for them"); see also Artis v. Greenspan, 158 F.3d 1301, 1302 n.1
(D.C. Cir. 1998) (issues listed but not briefed may be deemed
waived). The one sentence Fitts provides on the DCHRA issue in
her reply brief is insufficient, and we would not in any event
consider an argument raised for the first time in a reply brief. See
Herbert v. Nat'l Acad. of Sciences, 974 F.2d 192, 196 (D.C. Cir.
1992).
early termination of disability benefits violated Titles I and
III of the ADA. The district court dismissed the Aramark
plaintiffs' claims for the same reasons relied upon by the
district court here. On appeal, we declined to address the
district court's reasons, affirming instead on a different
ground--that the challenged plan was protected by the
ADA's safe harbor for bona fide employee benefit plans.
Aramark, 208 F.3d at 268. That provision, contained in ADA
s 501(c), states:
Subchapters I through III of this chapter and title IV of
this Act shall not be construed to prohibit or restrict--
(1) an insurer ... or any agent, or entity that
administers benefit plans, or similar organizations
from underwriting risks, classifying risks, or adminis-
tering such risks that are based on or not inconsistent
with State law; or
(2) a person or organization covered by this chapter
from establishing, sponsoring, observing or administer-
ing the terms of a bona fide benefit plan that are based
on underwriting risks, classifying risks, or administer-
ing such risks that are based on or not inconsistent
with State law; or
(3) a person or organization covered by this chapter
from establishing, sponsoring, observing or administer-
ing the terms of a bona fide benefit plan that is not
subject to State laws that regulate insurance.
Paragraphs (1), (2), and (3) shall not be used as a
subterfuge to evade the purposes of subchapter[s] I and
III of this chapter.
42 U.S.C. s 12201(c).
The Aramark parties agreed that the benefit plan came
within the language of s 501(c)(3), because it was "bona fide
in that it exists and pays benefits," 208 F.3d at 269 (quoting
Public Employees Ret. Sys. of Ohio v. Betts, 492 U.S. 158, 166
(1989)), and because the preemption provisions of ERISA
rendered it "not subject to State laws that regulate insur-
ance," id. (quoting 42 U.S.C. s 12201(c)(3)). Plaintiffs ar-
gued, however, that the plan failed to qualify for safe harbor
because it was a "subterfuge." Id. We disagreed, holding
that because Aramark's long-term disability benefit plan,
including the 24-month cap on mental disability benefits, had
been in place since 1982--long before the ADA's 1990 enact-
ment--the 24-month benefit limit could not fall within
s 501(c)'s subterfuge exception to the safe harbor. Aramark,
208 F.3d at 269-70.
At Fitts' request, her appeal was held in abeyance pending
the decision in Aramark. The parties have fully briefed the
safe harbor issue, including the applicability of Aramark to
the instant case. We conclude that Aramark controls here
and requires that we affirm the dismissal of Fitts' ADA
claims.
Like the plaintiffs in Aramark, Fitts does not dispute that
Fannie Mae's long-term disability plan, as implemented
through the Unum policy, comes within the language of
s 501(c)(3) as a bona fide benefit plan not subject to state law
because of ERISA preemption. Fitts does contend that the
plan is a "subterfuge," but in light of Aramark that argument
is unavailing: Fitts concedes that the 24-month cap on dis-
ability benefits for mental illness has been in place--without
modification--since at least 1985. Although Fitts argues that
the intentional retention of the cap since the 1990 passage of
the ADA renders the subterfuge provision applicable, adop-
tion of such a theory would eviscerate the rule announced in
Aramark. Accordingly, we conclude that Fannie Mae falls
within the protection of the safe harbor provision of
s 501(c)(3).
Unum is likewise eligible for safe harbor protection, al-
though as the insurer it is protected under s 501(c)(1) rather
than (c)(3). Subsection (c)(1) requires both that the long-
term disability plan not be a subterfuge to evade the purposes
of the ADA and that it not be "inconsistent with State law."
The record contains an uncontested declaration that the
Unum policy was approved by the District of Columbia
Department of Insurance and Securities Regulation, J.A. at
30, and Fitts cites no District of Columbia case or statute
with which the plan is inconsistent. Accordingly, we affirm
the dismissal of appellant's ADA claims against both Fannie
Mae and Unum.
III
Under ERISA, a participant in or beneficiary of a covered
plan may sue "to recover benefits due to him under the terms
of his plan." 29 U.S.C. s 1132(a)(1)(B). Fitts contends that
Unum and Fannie Mae improperly classified her disability as
mental rather than physical, and hence improperly terminat-
ed her long-term disability benefits after only 24 months.
The district court concluded that the appropriate standard of
review for that classification was whether it was arbitrary and
capricious, determined that it was not, and granted summary
judgment for defendants.
In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101
(1989), the Supreme Court held that a denial of benefits
challenged under ERISA s 1132(a)(1)(B) is to be reviewed
under a de novo standard--not under the more deferential
arbitrary and capricious 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." 489 U.S. at 115. Firestone's employee benefit
plan provided severance benefits for employees "if released
because of a reduction in work force or if ... physically or
mentally unable to perform [the] job." Id. at 105-06. The
Court held that those provisions did not require that the
administrator's eligibility determinations be given deference.
Id. at 111-12.
Unum contends that, as the claims administrator of the
long-term disability policy, it has discretionary authority to
determine benefits eligibility because the policy requires the
insured to submit proof of disability. Such a requirement,
Unum asserts, necessarily gives the insurer discretion be-
cause it must evaluate the legitimacy of the proof submitted.
Unum Br. at 10. As Unum conceded at oral argument,
however, virtually all insurance policies require proof of eligi-
bility before the dispensation of benefits--hardly a surprising
fact, since insurance companies are not in the business of
giving away money to anyone who requests it. Accordingly,
if we were to regard any plan that requires proof of eligibility
as conferring discretion, Firestone's exception would swallow
its rule and render the standard of review deferential in
almost every case. As Unum's argument would effectively
circumvent the Supreme Court's decision, we cannot accept
it.3
As a fallback, Unum points out that under Fannie Mae's
Flexible Benefits Plan, of which the long-term disability
insurance plan is a part, the company's Benefit Plans Com-
mittee is designated the Plan Administrator, s 2.01(e), and is
to "be afforded maximum deference allowed by law" in all of
its "decisions, interpretations [and] determinations," s 7.01.
The Plan further provides that the Committee "may" dele-
gate its authority to "outside consultants or companies,"
including "those matters involving the exercise of discretion."
s 7.03 (emphasis added). Unum contends that "by purchas-
ing and incorporating into its plan the terms of the long-term
disability policy, which itself grants Unum discretion, Fannie
Mae in fact did delegate discretionary authority to Unum."
Unum Br. at 9.
First, as we have noted above, the policy does not grant
Unum discretion; hence the purchase and incorporation of
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3 Most circuits that have considered the issue have concluded that
the mere requirement of proof of eligibility does not confer discre-
tion upon an administrator. See Herzberger v. Standard Ins. Co,
205 F.3d 327, 332 (7th Cir. 2000) ("That the plan administrator will
not pay benefits until he receives satisfactory proof of entitlement
... states the obvious, echoing standard language in insurance
contracts not thought to confer any discretionary powers on the
insurer."); see also Feder v. Paul Revere Life Ins. Co., 228 F.3d
518, 524 (4th Cir. 2000); Kinstler v. First Reliance Standard Life
Ins. Co., 181 F.3d 243, 252 (2d Cir. 1999); Kearney v. Standard Ins.
Co., 175 F.3d 1084, 1089-90 (9th Cir. 1999) (en banc). Unum relies
heavily on the Sixth Circuit's decision in Perez v. Aetna Life Ins.
Co., 150 F.3d 550 (6th Cir. 1998). The policy at issue there,
however, did not simply require proof of eligibility but "satisfacto-
ry" proof. No such language appears in Unum's policy. Moreover,
Perez's view has been rejected by the above-cited circuits.
the policy into the benefits plan establishes nothing. Nor is
there any other indication that Fannie Mae (or, more precise-
ly, the Committee) has delegated any discretionary authority
to Unum to determine eligibility.4 Finally, there is no "deci-
sion[ ], interpretation[ ] [or] determination[ ]" by Fannie Mae
itself at issue here. Fannie Mae has renounced its own
discretionary authority with respect to disability benefits
determinations. See Fannie Mae Br. at 11. At oral argu-
ment, the parties agreed that Fannie Mae exercised no
discretion with respect to the eligibility determination in this
case, and further agreed that there is no appeal to Fannie
Mae from Unum's disability benefit determinations. Thus,
neither Unum nor Fannie Mae exercised the discretion that
would justify the application of arbitrary and capricious re-
view.
For the foregoing reasons, we conclude that Unum's classi-
fication of Fitts' illness as mental rather than physical must
be reviewed de novo. We do not, however, proceed with the
de novo review ourselves, because numerous factual disagree-
ments persist. Fitts contends that if Unum's classification is
reviewed de novo, the record will demonstrate that her
disability is physical; Unum asserts the contrary. Fitts
contends that current medical research on bipolar disorder
supports her claim; Unum argues that there is no such
medical consensus. Unum asks us to rule on a motion to
exclude certain items of evidence proffered by the plaintiff;
Fitts argues that the evidence is admissible. Although the de
novo standard might theoretically permit this court to per-
form the necessary review, the intensely factual nature of the
record counsels that we return the case for the district court's
examination. In light of the change in the standard of
review, the parties will be free to supplement the existing
record by, inter alia, submitting current medical evidence
regarding bipolar disorder.
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4 Indeed, section 7.10(d) of the Plan provides that "notwithstand-
ing any other provision of this section 7, claims with respect to the
benefits provided under an insurance contract ... shall be made
and reviewed under the terms of such contract." As discussed, the
terms of the long-term disability policy do not confer discretion on
Unum.
IV
We affirm the district court's dismissal of Fitts' claims
under the ADA on the ground that the long-term disability
plan is protected by the statute's safe harbor provision. We
reverse the court's grant of summary judgment on the
ERISA claim, however, and remand for de novo review of
Unum's classification of Fitts' disability as a mental illness.