[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
May 18, 2005
No. 03-16373 THOMAS K. KAHN
CLERK
Non-Argument Calendar
________________________
D.C. Docket No. 02-00021-CV-CDL-4
CAROL ANN POTTER,
Plaintiff-Appellant,
versus
LIBERTY LIFE ASSURANCE
COMPANY OF BOSTON,
Defendant-Appellee.
__________________________
Appeal from the United States District Court
for the Middle District of Georgia
_________________________
(May 18, 2005)
Before ANDERSON and WILSON, Circuit Judges, and SHAPIRO*, District
Judge.
*
Honorable Norma L. Shapiro, United States District Judge for the Eastern District of
Pennsylvania, sitting by designation.
PER CURIAM:
Carol Ann Potter (“Ms. Potter”) filed this action against Liberty Life
Assurance Company of Boston (“Liberty”) under the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et seq., as amended. She
appeals the district court’s grant of summary judgment in favor of Liberty.
FACTS AND PROCEDURAL HISTORY
Ms. Potter worked as a senior claims underwriter at American Family Life
Assurance Company of Columbus (“AFLAC”). She suffered from physical
symptoms variously diagnosed as mixed connective tissue disorder, fibromyalgia,
Raynaud’s phenomenon and collagen vascular disorder.1 Ms. Potter took medical
leave; AFLAC terminated her after she exhausted her leave. Before she was
terminated, Ms. Potter had applied for long-term disability benefits under a Liberty
policy. After reviewing her medical files, Liberty denied her claim.
Ms. Potter’s medical records show she was diagnosed with Raynaud’s
phenomenon in 1979. Ms. Potter’s primary care physician, Dr. Elizabeth Martin
1
Mixed connective tissue disorder is a rheumatic disease characterized by Raynaud’s
phenomenon (coldness in extremities), arthritis or pain in the joints, swelling of the hands,
scleroderma, and other symptoms. Fibromyalgia and collagen vascular disorder are diseases with
similar symptoms.
2
(“Dr. Martin”), diagnosed Ms. Potter with mixed connective tissue disorder
(“MCTD”). Laboratory tests showed Ms. Potter had a high antinuclear antibodies
titer with a speckled pattern, consistent with MCTD. Dr. Fox, a rheumatologist to
whom Dr. Martin referred Ms. Potter, diagnosed her with fibromyalgia. A third
physician, Dr. Folarin Olubowale, diagnosed her with collagen vascular disorder.
Ms. Potter’s symptoms included, inter alia, generalized joint pain, bursitis, hip
pain, fatigue, and depression.
Ms. Potter first took medical leave from AFLAC on October 8, 1999. She
returned to work on January 10, 2000, but was unable to work full time. On many
days, she could not work at all. Her claim for long term disability benefits was
received by Liberty on February 3, 2000. The claim application included Dr.
Martin’s attending physician statement diagnosing Ms. Potter with MCTD. Dr.
Martin stated Ms. Potter should be restricted to a daily maximum of four hours of
clerical work, and she suffered from a “class 3" or moderate mental impairment,
defined as “Patient is able to engage in only limited stressful situations and engage
in only limited interpersonal relations.”
Liberty claims manager Paige Cancer (“Ms. Cancer”) was assigned to Ms.
Potter’s claim. Having no medical training, Ms. Cancer relied on a nurse file
reviewer to evaluate the claim. The nurse began her review by analyzing doctors’
3
notes of Ms. Potter’s visits with Dr. Martin and Dr. Fox. As of March 10, 2000,
the nurse had notes from Dr. Martin of an office visit on December 27, 1999, and
notes from Dr. Fox of office visits through January 4, 2000. As of January 4, Dr.
Fox had not yet diagnosed Ms. Potter with fibromyalgia, and the office visit notes
suggested that Ms. Potter did not have MCTD. Dr. Fox diagnosed Ms. Potter with
fibromylagia in an office visit of February 16, 2000, but these notes had not yet
been sent to the nurse. The nurse was aware that Ms. Potter had made additional
visits to Dr. Fox, and wrote that she would require additional information from
both Dr. Martin and Dr. Fox.
On March 15, 2000, the nurse was still awaiting additional office visit notes
from Dr. Fox, and her attempts to contact Dr. Martin had been unsuccessful. The
nurse mailed Dr. Martin a questionnaire asking for the basis on which she had
diagnosed MCTD, whether Dr. Martin would recommend a psychiatric evaluation,
and other information. A letter accompanying the questionnaire asked Dr. Martin
to respond by March 24, 2000.
Also on March 15, 2000, before the nurse received any of the additional
information she sought from Ms. Potter’s physicians, Ms. Cancer denied Ms.
Potter’s claim in letter recounting the medical information on file and stating that
there was no medical information to support Ms. Potter’s claim of disability. The
4
denial was based on Dr. Fox’s outdated office notes stating Ms. Potter did not
have MCTD. In her deposition, Ms. Cancer offered no explanation for denying
the claim before the nurse’s review was complete or whether it was normal
practice to do so. She stated that Liberty was having trouble reaching Dr. Martin,
but could not recall whether anyone contacted Ms. Potter about the difficulty.
Soon after Liberty denied Ms. Potter’s claim, Dr. Martin wrote in her office
visit notes:
Apparently there were some problems w/her Disability claim and the
company went ahead and made a decision to deny her claim w/o
having full documentation from either my office, Dr. Fox’s office or
Dr. Olubolwale. [...] On review it does not appear that they have had
adequate records for her. Will be happy to forward-on the
appropriate records from our office awa copies from the other
consultants as appropriate. Will also forward responses from
questions posed to me from the case manager; however, it is
confusing to me that they requested my response by the 23rd, yet they
have already ruled.
Despite Ms. Cancer’s denial of the claim, the nurse file reviewer continued
her review and received additional information from Dr. Fox and Dr. Martin. On
March 24, 2000, the nurse noted that Dr. Fox had diagnosed Ms. Potter with
fibromyalgia on the office visit of February 16, 2000. She also received Dr.
Martin’s questionnaire responses explaining her diagnosis of MCTD and
recommending a psychiatric consult. In her notes, the nurse wrote that the case
5
“may need IME (independent medical examination).” Later notes by the nurse
stated she would need to contact Dr. Fox again, as well as Ms. Potter’s therapist.
In subsequent communications with the nurse, Dr. Fox reiterated the diagnosis of
fibromyalgia, and cited abnormal laboratory results to support the diagnosis.
On May 16, 2000, Ms. Potter wrote a letter to Liberty to appeal the denial of
her claim. The appeal was reviewed by Kathleen Malia (“Ms. Malia”), an appeal
review consultant working as an independent contractor for Liberty. Ms. Malia,
denying the appeal, stated:
The determining factor, however, is the claimant’s ability to perform
part time work, although she may have had difficulty with full time
employment. The policy only allows partial following a period of
total disability for which a benefit has been paid.
The appeal recommendation also stated that Ms. Potter would not be eligible for
partial disability because she would be required to work part-time. Ms. Potter
alleged she was unable to work even part-time, and AFLAC would not hire her on
a part-time basis regardless of her ability to do so.
Ms. Malia relied on the evaluations supplied by Dr. Fox and Dr. Martin,
specifically Dr. Martin’s recommendation that Ms. Potter was capable of four
hours of sedentary activity daily.2 Ms. Potter’s duties required substantial
2
Ms. Malia also testified that Dr. Fox stated Ms. Potter could work full time, but Ms.
Potter and Dr. Fox disputed this. Liberty could not produce any written documentation in
6
interpersonal relations, and more than sedentary activity (e.g., training personnel
and assisting in workshops).3 When asked how the mental limitations placed by
Dr. Martin on Ms. Potter would affect her ability to work, Ms. Malia replied, “I
would defer that question to a doctor.” But Ms. Malia did not refer Ms. Potter’s
case to a doctor for evaluation, nor did any other Liberty agent.
Ms. Cancer stated she could not assess how mental limitations would have
affected Ms. Potter’s ability to perform her duties, and it would be the job of a
nurse care manager to do so. The nurse care manager solicited Dr. Martin’s advice
regarding a psychiatric evaluation, but the nurse had not yet received the doctor’s
support. Since issues of material fact must be resolved in favor of the non-moving party, the
district court erred in considering this evidence when deciding whether Liberty had a reasonable
basis for its decision.
3
Ms. Potter’s job description lists her “principal duties and responsibilities”:
1. Appraises, clarifies and takes action to approve, rate, modify or decline
applications for insurance. Responds to medical, policyholder and field force
inquiries. Reviews and processes requests for additional coverage or changes to
existing policies. Has unlimited approval authority for all lines of business. 70%
2. Trains, documents and provides instruction to Underwriting support personnel
in technical decision making processes. Assists manager and unit supervisors
with workshops. Assists WWHQ personnel with specific underwriting questions
(includes Beelines and Keylines). 15%
3. Reviews and decodes confidential medical information; generates coding to be
reported to the Medical Information Bureau. Assists manager with special
medical studies and reports. 10%
4. Performs other duties as assigned by manager. 5%
7
recommendation when the claim was initially denied. Liberty did not employ any
vocational expert or consultant to evaluate the demands of Ms. Potter’s job as they
related to the physical and mental restrictions assessed by Dr. Martin.
After Ms. Potter retained counsel, her renewed appeal cited other
physicians’ examinations and additional medical records supporting the diagnosis
of MCTD, but Liberty again rejected her appeal. Ms. Potter later obtained
disability benefits from Social Security. The administrative law judge found Ms.
Potter was “unable to sustain even this limited [part-time] amount of sedentary
work.” Liberty, informed of the favorable Social Security decision, declined to
take it into account and denied her appeal again. Ms. Potter then filed this ERISA
action against Liberty. The district court granted summary judgment for Liberty
because Liberty failed to show the claim denial was correct, but did show its
decision was not tainted by self-interest.
STANDARD OF REVIEW
We review a grant of summary judgment de novo. Cole v. United States
Dep’t of Agric., 133 F.3d 803, 805 (11th Cir. 1998), and apply the same legal
standard as the district court. Earley v. Champion Int’l Corp., 907 F.2d 1077,
1080 (11th Cir. 1990). Summary judgment is appropriate only if the pleadings,
depositions, answers, admissions and any affidavits create no genuine issue of
8
material fact. Fed.R.Civ.P. 56(c). The moving party bears the initial burden of
demonstrating the absence of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317 (1986).
The policy at issue states, “Liberty shall possess the authority, in its sole
discretion, to construe the terms of the policy and to determine benefit eligibility
hereunder.” When a plan gives a claims administrator discretion to deny a claim,
but it acts under a conflict of interest, the court must apply a heightened arbitrary
and capricious standard of review. Buckley v. Metropolitan Life, 115 F.3d 936,
939 (11th Cir. 1997). First, the court decides if the claims administrator’s decision
is “wrong”. Godfrey v. BellSouth Telecomm., Inc., 89 F.3d 755, 758 (11th Cir.
1996). If so, the court then determines whether the decision is nonetheless
“reasonable” (i.e., not arbitrary and capricious). Lee v. Blue Cross/Blue Shield, 10
F.3d 1547, 1550 (11th Cir. 1994). If the decision is wrong but reasonable, the
burden is on the claims administrator to show the decision was not tainted by self-
interest.4 Brown v. Blue Cross & Blue Shield of Ala., Inc., 898 F.2d 1556, 1566-67
(11th Cir. 1990). This standard applies both to the interpretation of the policy
language and factual determinations. Torres v. Pittston Co., 346 F.3d 1324, 1332
4
The question of taint from self-interest should not be confused with the conflict of
interest determination. A party may be acting under a conflict of interest, but without the taint of
self-interest.
9
(11th Cir. 2003).
The parties agree that Liberty had discretion to interpret the policy. Since
Liberty was responsible for paying claims as well as determining their validity, the
parties also agree Liberty acted under a conflict of interest. See Brown, 898 F.2d
at 1561. The heightened arbitrary and capricious standard of review applies to
Liberty’s denial of Ms. Potter’s claim.
DISCUSSION
Liberty argues Ms. Potter was not disabled under the definition of
“disability” in the policy, but would have been “partially disabled” had she worked
part-time. Ms. Potter contests Liberty’s interpretation of the policy provisions
defining “disability” as well as Liberty’s factual determination that she was not
disabled.
The policy defined “disability”:
1. For persons other than pilots, co-pilots, and crewmembers of an aircraft:
i. if the Covered Person eligible for the 24 Month Own
Occupation benefit, “Disability” or “Disabled” means that
during the Elimination Period and the next 24 months of
disability the Covered Person, as a result of Injury or Sickness,
is unable to perform the Material and Substantial Duties of his
Own Occupation; and
ii. thereafter, the Covered Person is unable to perform, with
reasonable continuity, the Material and Substantial Duties of
10
Any Occupation.
The policy defined “partial disability”:
“Partial disability” or “Partially Disabled”, with respect to Long Term
Disability, means the Covered Person, as a result of Injury or Sickness,
is able to:
1. perform one or more, but not all, of the Material and Substantial
Duties of his Own Occupation or Any Occupation on an Active
Employment or a part-time basis; or
2. perform all of the Material and Substantial Duties of his Own
Occupation or Any Occupation on a part-time basis; and
3. earn between 20% and 80% of his Basic Monthly Earnings.
Liberty contends the definitions of “disabled” and “partially disabled” must
be read in conjunction, and are mutually exclusive. Under this interpretation, a
person who could not perform all the duties of her occupation but who could work
part-time or perform some of the duties would be “partially disabled,” but not
“disabled.” Ms. Potter argues that the definitions are not mutually exclusive, and
that any person who could not perform all the duties of her job would be
“disabled”. The “partially disabled” category is only a subset of the “disabled”
category, by this argument.
Liberty’s interpretation is consistent with a reading of the policy in its
entirety. The plan provides for “partial disability” benefits apart from “disability”
11
benefits. A beneficiary can receive benefits under one of the two categories, not
both. The categories are mutually exclusive. See, e.g., Falik v. Penn Mut. Life Ins.
Co., 204 F.Supp.2d 1155, 1157 (E.D. Wis. 2002) (a claimant eligible for “residual
disability” benefits could not also be eligible for “disability benefits”).
Ms. Potter also argues that because AFLAC refused to hire her on a part-
time basis, she was not “able” to work for them on a part-time basis. She contends
that Liberty bore the burden of showing she was “able” to work part-time because
she could have been hired on a part-time basis by another employer. Liberty
argues that the term “able” refers solely to a person’s inherent functional capacity
to perform the duties of the occupation, not whether such a part-time position
existed at AFLAC or elsewhere.
The term “able” must be read in context. In the provisions defining
disability and partial disability, “able” refers to the employee’s ability to perform
the duties of the occupation. Being “able to perform” means the employee has the
functional capacity to perform. See, e.g., Duhon v. Texaco, Inc., 15 F.3d 1302,
1309 (5th Cir. 1994) (plan administrator did not have to insure the availability of
an alternative job); Jestings v. New England Telephone and Telegraph Co., 757
F.2d 8, 10 (1st Cir. 1985) (plan looking solely to employee’s health, not job
availability, was reasonable).
12
Ms. Potter relies on language in the Policy providing for the termination of
partial disability benefits when “the Covered Person is able to work in their [sic]
Own Occupation on a part-time basis, but chooses not to.” She points out that one
does not “choose” not to work part-time when no such position is available. This
may be true, but a functionally capable person can choose not to work, so this
provision does not conflict with Liberty’s interpretation of “able”. Even if partial
disability benefits could not be terminated when no partial position is available,
Ms. Potter is not appealing a termination of disability benefits. The district court
did not err in finding Liberty’s interpretation of the policy was correct.
The heightened arbitrary and capricious standard also applies to Liberty’s
factual determination that Ms. Potter was not disabled. Under this standard,
Liberty can prevail by showing the determination was not “wrong.” Even if the
determination were wrong, Liberty can still prevail by showing it was not arbitrary
and capricious, nor tainted by self-interest.
Liberty argues Ms. Potter was able to work four hours daily, so she would
have been eligible for partial disability benefits only. The district court found
material issues of fact regarding Ms. Potter’s ability to perform her job part-time,
and ruled that Liberty failed to show its decision was correct.
The district court did not err in this finding. Although some of Ms. Potter’s
13
medical records suggested she could perform four hours of sedentary work daily,
Ms. Potter disputed this in her testimony. After returning from medical leave, Ms.
Potter was unable to work part-time many days. Liberty also failed to demonstrate
that the mental limitations imposed by Dr. Martin would allow Ms. Potter to work
on a part-time basis. Finally, the Social Security Administration found her
disabled.5 These circumstances created issues of material fact regarding Ms.
Potter’s eligibility for disability benefits.
To prevail, Liberty must show that its erroneous determination of Ms.
Potter’s status was not arbitrary and capricious, and not tainted by self-interest.
Normally, a decision to deny benefits is arbitrary and capricious if “no reasonable
basis exists for the decision.” Levinson v. Reliance Standard Life Ins. Co., 245
F.3d 1321 (11th Cir. 2001). Under the heightened standard, a decision is tainted
by self-interest if it advances the conflicting interests of the fiduciary at the
expense of the affected beneficiary, and the fiduciary cannot justify the decision
on the ground of its benefit to the class of all participants and beneficiaries.
Brown, 898 F.2d at 1566-67. Also, “[a]n improper motive sufficient to set aside a
5
A district court may consider a Social Security Administration determination of
disability in reviewing a plan administrator's determination of benefits under a plan governed by
ERISA, although it is not determinative. Paramore v. Delta Airlines, Inc., 129 F.3d 1446, 1452
n.5 (11th Cir. 1997); Kirwan v. Marriott Corp., 10 F.3d 784, 790 n.32 (11th Cir. 1994).
14
fiduciary’s decision may be inferred from the fiduciary’s failure to investigate or
to interpret honestly evidence that greatly preponderates in one direction.” Id. at
1566, n.11 (citing with approval Colket v. St. Louis Union Trust Co., 52 F.2d 390
(8th Cir. 1931)).
As a reasonable basis for its determination, Liberty claims Dr. Martin
concluded that Ms. Potter could perform “her sedentary occupation” on a part-time
basis. This is incorrect; Dr. Martin never concluded Ms. Potter’s occupation was
sedentary, or that she could work on a part-time basis. Dr. Martin merely said Ms.
Potter could perform four hours of sedentary activity with mental limitations
restricting her to limited stress and interpersonal relations. Dr. Martin never
determined whether Ms. Potter’s actual occupational duties were sufficiently
sedentary, or whether the stress level and degree of interpersonal interactions were
too demanding. Liberty did not conduct this analysis either. Ms. Malia, Liberty’s
appeals reviewer, stated that such an analysis would have required her to consult a
doctor, but Liberty never did so. Liberty did not employ a vocational expert to
assess the demands of Ms. Potter’s work in light of her restrictions. Liberty’s
nurse consultant noted that Dr. Martin recommended a psychiatric evaluation, but
Liberty never obtained one.
But even if Liberty had a reasonable basis for its decision, Liberty must also
15
show its decision was not tainted by self-interest. Liberty argues that its claims
reviewers were not compensated or given bonuses for denying claims, and they
had no knowledge of the potential cost to Liberty if Ms. Potter’s claim was
successful. Also, Ms. Malia, the appeals reviewer, was an independent
contractor.6 In rebuttal, Ms. Potter points to the cursory and incomplete nature of
the initial claims review as evidence that Liberty was motivated by self-interest.
Ms. Cancer, Liberty’s claims reviewer, initially denied the claim before her own
nurse consultant had completed her investigation. The nurse consultant was still
in the process of collecting medical records, and sent Dr. Martin a questionnaire
requesting additional information on the same day the claim was denied. Dr.
Martin, on whose opinion Liberty relies, expressed concern that Liberty denied the
claim prematurely without sufficient investigation. Liberty obtained copies of the
medical records in which Dr. Martin noted this concern, yet continued to rely
incorrectly on her earlier, out-of-context statements in denying Ms. Potter’s
appeals.
6
Liberty, relying on an unpublished district court opinion, argues that these facts are
sufficient to prove the lack of taint from self-interest. See Metropolitan Life Ins. Co. v.
Nasworthy, No. 5:00-CV-406-4(DF) (M.D. Ga. May 13, 2002). Even if this court were bound by
Nasworthy, the case is distinguishable. First, the court’s decision in Nasworthy rested in part on
the claimant’s refusal to comply with the plan administrator’s request for medical documentation.
More importantly, the insurer presented evidence to show that its payment of that claim would
result in increased premiums for other beneficiaries.
16
Under the heightened arbitrary and capricious standard, the burden lies with
Liberty to demonstrate lack of taint from self-interest. Brown, 898 F.2d at 1566.
As the moving party with the burden of proof, Liberty must affirmatively show the
absence of a genuine issue of material fact; it must support its motion with
credible evidence that would entitle it to a directed verdict at trial. U.S. v. Four
Parcels of Real Property in Greene and Tuscaloosa Counties in State of Ala., 941
F.2d 1428, 1438 (11th Cir. 1991) (en banc). This high standard requires Liberty to
prove that the factfinder would be compelled to find the decision beneficial to the
class of all participants and beneficiaries. Brown at 1567. The district court stated
that Liberty’s decision was “in the best interests of all participants and
beneficiaries” but cited no facts or evidence in support because Liberty presented
none. Liberty failed to show its decision to deny Ms. Potter’s claim was
“calculated to maximize benefits to participants in a cost-efficient manner.” Lee,
10 F.3d at 1552.
By contrast, the incomplete and cursory nature of Liberty’s initial
investigation created issues of material fact from which a reasonable factfinder
could conclude Liberty’s decision was motivated by self-interest. In granting
summary judgment, the district court misconstrued Brown’s test for self-interest
and wrongly placed the burden of proof on Ms. Potter.
17
CONCLUSION
The district court’s grant of summary judgment was in error. We
REVERSE and REMAND for proceedings not inconsistent with this opinion.
18