United States Court of Appeals
For the First Circuit
No. 08-2381
DONNA CUSSON,
Plaintiff, Appellant,
v.
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON;
and THE FLEETBOSTON FINANCIAL CORPORATION
LONG-TERM DISABILITY PLAN,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, U.S. District Judge]
Before
Torruella, Selya, and Howard,
Circuit Judges.
Mala M. Rafik, with whom Alyssa A. Yenikomshian, S. Stephen
Rosenfeld, and Rosenfeld & Rafik, P.C., was on brief for appellant.
Samuel Berk and Margaret Arenas Malek, on brief for amicus
curiae Massachusetts Employment Lawyers Association, in support of
reversal.
George M. Thompson and Sager & Schaffer, LLP, on brief for
amicus curiae Health Law Advocates, in support of reversal.
Andrew C. Pickett, with whom Matthew D. Freeman and Jackson
Lewis LLP, was on brief for appellees.
January 14, 2010
TORRUELLA, Circuit Judge. In this appeal, appellant
Donna Cusson ("Cusson") challenges the district court's decision to
grant summary judgment to appellees Liberty Life Assurance Company
of Boston ("Liberty") and the FleetBoston Financial Corporation
Long-Term Disability Plan ("LTD Plan"). After Liberty terminated
Cusson's long-term disability ("LTD") benefits, Cusson sued in the
U.S. District Court of Massachusetts, arguing that the termination
of her benefits was improper under the Employee Retirement and
Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1431 (2006). The
district court granted summary judgment in favor of the defendants,
and Cusson now appeals. After careful consideration, we affirm the
district court's judgment.
I. Background1
A. The Long-Term Disability Plan
Cusson was employed at FleetBoston as a Senior Facilities
Planner. She was covered under both a short-term disability plan
("STD Plan") and the LTD Plan. Liberty is both the administrator
of and payer of benefits under the LTD Plan. Under the terms of
the insurance policy ("the Policy") for the LTD Plan, the
definition of "Disability" or "Disabled" for LTD purposes varies
over time with the duration of the disability. For the initial
twenty-four-month period after a claimant switches into the LTD
1
For additional background, see the decision below. Cusson v.
Liberty Life Assurance Co., No. 78-3386, 2008 U.S. Dist. LEXIS
77084 (D. Mass. Sep. 30, 2008).
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Plan from the STD Plan, a person is considered "disabled" if she is
unable to perform "all of the material and substantial duties of
[her] own occupation." However, after twenty-four months, a person
is considered "disabled" if she is "unable to perform, with
reasonable continuity, all of the material and substantial duties
of [her] own or any other occupation for which [s]he is or becomes
reasonably fitted by training, education, experience, and physical
or mental capacity."
B. Cusson's Fibromyalgia Diagnosis and Initial LTD Benefits Award
In March 2002, Cusson was diagnosed with breast cancer.
She began to receive benefits under the STD Plan in April 2002
because of the pain and fatigue caused by her chemotherapy. Cusson
was notified on October 9, 2002 that she qualified for LTD benefits
under the Policy. Liberty also informed Cusson that she was
required to apply for Social Security Disability Income ("SSDI")
benefits. Cusson's chemotherapy ended in October 2002. However,
she continued to feel symptoms similar to what she felt during her
cancer treatment, including dizziness, fatigue, headaches, and
widespread body pain.
In February 2003, Cusson's rheumatologist, Dr. James
Figueroa ("Figueroa"), diagnosed her with fibromyalgia.
Fibromyalgia is characterized by "chronic and frequently difficult
to manage pain in muscles and soft tissues surrounding joints."
Rose v. Hartford Fin. Servs. Group, 268 F. App'x. 444, 446 n.4 (6th
-3-
Cir. 2008) (citing Taber's Cyclopedic Medical Dictionary 402 (19th
ed. 2001)). A patient may be diagnosed with fibromyalgia if she
has (1) a history of widespread pain for at least three months and
(2) pain in at least eleven out of eighteen tender point sites upon
digital palpation. Id. Symptoms of fibromyalgia can include
stiffness, fatigue, and disturbed sleep. See Sarchet v. Chater, 78
F.3d 305, 306 (7th Cir. 1996).
On March 28, 2003, at Liberty's request, Cusson completed
an Activities Questionnaire, a document in which a claimant is
asked to describe her day-to-day activities and her functional
limitations. Cusson indicated that she was able to sit for
approximately two hours, stand for fifteen to thirty minutes, and
walk for thirty to forty-five minutes. She noted that these
lengths of time were "longer/shorter depending on the day and how
I feel." She also reported memory and concentration problems, and
indicated that she was never able to predict how she would feel
from one day to the next.
On August 21, 2003, at Liberty's request, Figueroa filled
out a questionnaire regarding Cusson's condition. Figueroa was
asked to describe "specific restrictions and limitations . . .
preventing your patient from being able to work." Figueroa also
submitted a Physical Capacities Form, on which he reported that
Cusson could lift no more than ten pounds twice a day, could sit
for four hours per day but needed to stand up every fifteen
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minutes, could stand for up to one hour but needed to sit every
five to ten minutes, and could walk for an hour but needed to rest
every few minutes. Figueroa concluded that Cusson could not work
a full eight-hour day until her pain and fatigue subsided.
On March 15, 2004, Liberty notified Cusson that beginning
September 29, 2004, the definition of "disabled" under the Policy
would change, after which Cusson would have to be unable to perform
all of the material and substantial duties of any occupation for
which she was qualified. On May 7, 2004, Figueroa, at Liberty's
request, completed a Functional Capacities Form and a Restrictions
Form. The Functional Capacities Form asked Figueroa to list, for
various activities, whether Cusson had "[n]o [r]estrictions," could
perform the activity "[f]requently (1/3 to 2/3 of the time),"
"[o]ccasionally (up to 1/3 of the time)," or was "[u]nable to"
perform the activity. Figueroa indicated that Cusson was "[u]nable
to" squat, bend, kneel, climb, push or pull objects, or lift any
weight over ten pounds.
C. 2004 Review and Termination of Cusson's LTD Benefits
On May 18, 2004, Liberty hired Omega Insurance Services,
Inc. ("Omega") to conduct video surveillance of Cusson. Eleven
days later, Liberty again told Cusson to apply for SSDI benefits,
warning that if she did not, Liberty would reduce her disability
benefit by the amount she was eligible to receive from the Social
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Security Administration ("SSA"). Liberty also informed Cusson that
it would help her obtain SSDI benefits.
Omega conducted surveillance of Cusson on June 9-12, 17,
and 24, 2004. Omega videotaped Cusson when she was observed
outside of her home, and it obtained fifty minutes and fifty-eight
seconds of video over the course of these six days. The video
footage that was obtained appeared to show Cusson engaged in normal
activities. For example, on June 9, Cusson was observed walking
her dog for approximately thirty minutes; according to the Omega
report, Cusson walked "in a smooth, fluid manner without exhibiting
any external signs of impairment." Later that day she drove to a
nearby Home Depot store and was seen exiting the store an hour
later carrying a shopping bag. On June 24, Cusson was observed
having lunch with a friend at a restaurant and then going to a Wal-
Mart. Cusson was inside the Wal-Mart for almost one hour, after
which she exited with a loaded shopping cart. She loaded the items
from her cart, including what Omega's report described as a large
bag of cat litter, into her car, and she was also observed bending
at the waist to pick up items that had fallen on the ground.
On July 20, 2004, Liberty told Cusson that if she did not
provide proof of her SSA application by August 3, 2004, Liberty
would immediately reduce her benefits by the estimated amount of
the SSDI benefit. Liberty also instructed Omega to conduct a
second round of surveillance. This surveillance occurred between
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July 26 and 28, during which time Cusson was seen on the
surveillance tape once, on July 27, for a total of one minute and
seven seconds.
In August 2004, Liberty ordered a third round of video
surveillance. Omega performed this surveillance on August 2, 9-10,
14, and 26. Cusson was seen leaving her home only on August 26.
Cusson was observed bending fully at the waist to retrieve an item
outside her front door. She was then seen driving to a local
restaurant and eating lunch with another person, and was then seen
driving to a dry cleaner's, a Wal-Mart, and other department
stores. During the course of her errands, she was observed
carrying various items into and out of stores and bending at the
waist to retrieve items from or place items into her car.
On September 15, 2004, Cusson completed another
Activities Questionnaire from Liberty, in which she described her
functional limitations, including pain, fatigue, memory loss, and
inability to concentrate. Cusson reported that since her last
Activities Questionnaire from March 28, 2003, she could not
remember going to a mall because malls were "just too big";
instead, Cusson noted, she went "mostly to small stores [with] easy
access in + out." Cusson also reported that she had "good" days
and "bad" days. She said that on a "good" day she would be able to
perform activities such as running errands, visiting other people,
and having lunch outside her home. However, she reported that on
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a "bad" day she would be unable to sleep because of her pain and
would often be unable to get out of bed for several days.
On October 13, 2004, Figueroa reported to Liberty that,
during an eight-hour work day, Cusson could sit for less than two
hours, stand for less than thirty minutes, and walk for fifteen
minutes. Figueroa also noted that Cusson could not lift or carry
more than ten pounds and could not work eight hours per day in any
occupation. Two days later, Figueroa reported to Liberty that
Cusson's "limitations tend to vary with the severity of [her]
symptoms."
Upon receipt of Figueroa's reports, Liberty referred
Cusson's file to Dr. Robert Millstein ("Millstein"), a full-time
Liberty employee, for review. Millstein reviewed Cusson's claim
and concluded that "the video surveillance demonstrates functional
capacity which exceeds that reported on the most recent activities
questionnaire and confirms that the claimant retains the physical
capacity to perform full-time work at a light level." Millstein
noted a number of apparent inconsistencies between Cusson's
reported limitations and the video surveillance. For example,
Millstein noted that although Cusson reported fatigue, the
surveillance showed that "on consecutive days, [Cusson] is seen out
of her house for long periods of time performing activities which
would be best characterized as requiring light to medium physical
capacity." Thus, Millstein concluded, "the record does not support
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the presence of fatigue which would preclude full-time work."
Millstein also noted that Cusson was seen going into large stores,
such as Wal-Mart and Home Depot, even though she had previously
reported that she did not go to malls because malls were too big.
Millstein also noted that Cusson was seen bending at the waist and
placing a large object, a bag of cat litter, in her car.
Millstein's report contained inaccurate statements about
the surveillance results. Millstein frequently confused sightings
of Cusson returning home with sightings of Cusson leaving her home.
Millstein also said that on certain days Cusson left her home and
remained out of her home for long periods, when in fact the
surveillance for those days clearly shows that Cusson returned to
her home at various points throughout the day. As a result of
these errors, Millstein's report overstates the amount of time
Cusson spent outside of her home on certain days, sometimes by as
much as a factor of three.
In November 2004, Liberty ordered a fourth round of
surveillance, this time conducted by MJM Investigations, Inc.
("MJM"). MJM observed Cusson on November 2-6 and 11, 2004. Cusson
was seen outside of her home for a total of roughly half an hour
over the course of the surveillance. On November 2, Cusson was
observed exiting her house carrying various bags and leaving her
home as the passenger in a car. On November 4 and 11, Cusson was
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briefly seen driving to various locations to run errands. Cusson
was not seen outside of her home on November 3, 5, or 6.
On November 29, 2004, Liberty conducted a Transferable
Skills Analysis and Labor Market Survey ("TSA") of Cusson's claim,
relying solely on Millstein's report. The analysis concluded that
Cusson could perform her occupation as a Facilities Manager as well
as other occupations, such as Construction Manager, Property/Real
Estate Manager, and Civil Engineer.
On December 8, 2004, Liberty sent Cusson a letter
informing her that her benefits were being terminated. The letter
discussed the video surveillance and Millstein's review of Cusson's
file. The letter also noted the results of the TSA and informed
Cusson that she was capable of performing her original job as a
Facility Planner. In addition, the letter noted that Liberty had
written to Figueroa requesting a response to Millstein's report and
the video surveillance, but that Figueroa had not responded.
D. Cusson's Appeal and Further Tests
On June 1, 2005, Cusson notified Liberty that she was
appealing its decision to terminate her benefits. Cusson submitted
various documents, including her own sworn statement; affidavits
from her friends, family, and former colleagues; and a chart
comparing the surveillance reports with her own recollection of her
activities on the days she was surveilled. Cusson's sworn
statement and activity chart indicate that on some of the days she
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was seen outside of her home, she would "hit a wall" and return
home "crying in pain." However, Cusson's activity chart is
completely silent as to what she was doing, or what symptoms she
was experiencing, on many days when she was not observed outside of
her home.
Cusson also submitted medical reports from in-person
examinations by Dr. Peter Schur ("Schur"), a rheumatologist, and
Drs. Daniel Cohen ("Cohen") and Jean Matheson ("Matheson"), who
specialize in sleep disorders. Schur's examination was paid for by
Cusson's health insurer as part of her treatment. Schur's
examination indicated that Cusson had limited motion in her
shoulders, hips, and back; had "fair muscle tone at best"; and was
painfully sensitive to touch. Schur concluded that Cusson was
disabled "at present," and recommended treatment options. Cohen
and Matheson indicated that Cusson had trouble sleeping because of
her pain, but they did not render an opinion as to disability.
Cusson also submitted a report from Paul Blatchford, Ed.
M. ("Blatchford"), a vocational rehabilitation expert, who
conducted an in-person evaluation on February 15, 2005.
Blatchford's report detailed Cusson's impaired performance on a
variety of standardized vocational tests approved by the United
States Department of Labor ("DOL"). The report noted that Cusson
appeared exhausted and distracted throughout the entire proceeding.
Blatchford noted that under DOL guidelines, the occupations for
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which Cusson was qualified required "sedentary" to "light" exertion
levels. Blatchford concluded that Cusson's functional capacity
precluded her from performing and sustaining any work-related
activities. Blatchford also disputed Liberty's interpretation of
the surveillance videos. He argued that the videos failed to
address Cusson's cognitive limitations. He also noted that
although the video showed that Cusson was capable of short periods
of activity, a fact that she herself had reported, it did not show
Cusson engaged in sustained activity that would be necessary for
any kind of employment.
On July 26, 2005, Liberty informed Cusson that it had
referred her file for two peer reviews. Both reviews were paid for
by Liberty. One review was conducted by Dr. Walter Longo
("Longo"), an oncologist, who determined that there was "no
objective data supporting ongoing impairment due to prior therapy"
for breast cancer, but that it was possible that Cusson could have
limitations due to fibromyalgia. The other was conducted by Dr.
Jeffrey Liebermann ("Liebermann"), a rheumatologist, who concluded
that Cusson "should be able to perform the duties of light or
sedentary occupations" despite her fibromyalgia, and that Cusson's
impairments were "entirely subjective." Liebermann also claimed to
have spoken on the phone with Figueroa. Liebermann reported that
during his conversation with Figueroa, Figueroa said that he had
told Cusson that he no longer wished to be consulted about the
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disability aspects of her case. On August 11, 2005, Liebermann
sent Figueroa a letter purporting to summarize their conversation
and requesting that Figueroa review and make comments or
corrections to the letter and fax it back to him. Figueroa did not
sign the letter or return it.
On September 7, 2005, Cusson underwent an examination by
Dr. Mitchell Abramson ("Abramson"). Abramson reported that Cusson
had "multiple trigger points" for pain and was unable to bend
forward more than forty degrees due to back pain. Abramson
concluded that Cusson "appear[ed] to be disabled due to her medical
illness." On September 9, 2005, Blatchford wrote an addendum to
his February 15, 2005 report, stating that Liberty's interpretation
of the surveillance reports was "inaccurate, and contradicted by
the videotapes themselves." Blatchford noted that the video of
Cusson running errands was "consistent with [Cusson's] ability to
perform activities for limited periods of time," but that Cusson's
need for frequent rest and her "tendency to 'fade' after engaging
in any task for a sustained period of time" showed that she
"lack[ed] the ability to engage in sustained work, whether
sedentary or otherwise."
Cusson submitted Abramson's report, Blatchford's
addendum, and other documentation to Liberty on September 15, 2005.
In response, Liberty conducted a second round of peer reviews.
Both of these additional reviews were conducted by MLS National
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Medical Evaluations, Inc. ("MLS") and paid for by Liberty. The
first review was conducted by Dr. Reynold Karr ("Karr"), a
rheumatologist, who concluded that he did not "identify any
objective medical basis for impairment or need for physical
restrictions based upon review of the accompanying medical record."
The second MLS review was conducted by Dr. Matthew Kaufman
("Kaufman"), an oncologist. Kaufman indicated that, from his
perspective as an oncologist, there was no "identifiable or
medically supported level of functional impairment that can be
objectively verified." However, Kaufman noted that fibromyalgia
fell outside his area of expertise, and conceded that Cusson "may
have a level of functional impairment due to . . . fibromyalgia
and/or psychological overlay."
On November 1, 2005, Liberty upheld its decision to
terminate Cusson's benefits. Liberty stated that "based on the
totality of clinical and objective medical documentation contained
in Ms. Cusson's file, sedentary to light capacity has been
established."
E. Award of SSDI Benefits
On January 21, 2006, an Administrative Law Judge ("ALJ")
awarded Cusson SSDI benefits, with a disability date of March 15,
2002. In granting the benefits, the ALJ found that Cusson was
"unable to do sustained work activities in an ordinary work setting
on a regular and continuing basis."
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F. District Court Proceedings
On December 7, 2005, Cusson filed suit against Liberty
and the LTD Plan in the District of Massachusetts under ERISA, 29
U.S.C. § 1001 et seq. Cusson sought to recover her benefits
pursuant to 29 U.S.C. § 1132(a)(1)(B). Liberty answered and
asserted a counterclaim seeking reimbursement for overpayment of
benefits under the Policy as a result of Cusson having received
SSDI benefits. The parties filed cross-motions for summary
judgment on all issues.
Because the LTD Plan gave Liberty discretion to determine
eligibility for benefits, the district court applied an abuse of
discretion standard to Liberty's decision. Under this standard,
Liberty's decision would be upheld if it was "reasoned and
supported by substantial evidence." Gannon v. Metro. Life Ins.
Co., 360 F.3d 211, 213 (1st Cir. 2004). The district court
recognized that Liberty had a structural conflict of interest,
since it both evaluated benefit claims and paid the benefits.
However, the district court, citing the Supreme Court's decision in
Metropolitan Life Insurance Co. v. Glenn, held that even in the
face of a conflict, the standard of review remained deferential,
and that the conflict was "one factor among many that a reviewing
judge must take into account." 128 S. Ct. 2343, 2351 (2008).
Cusson made two main arguments in her district court case
opposing the denial of benefits. First, she argued that Liberty
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and its reviewers improperly used and interpreted the surveillance
videos. Second, she argued that Liberty's review process was
flawed, and that these flaws showed that Liberty's decision was an
abuse of discretion. The district court held that Liberty's
decision to terminate her benefits was not an abuse of discretion.
With respect to the surveillance results, the court held that,
although the surveillance supported the inference that Cusson could
not perform sustained activity, the surveillance also supported the
inference that "Cusson and Dr. Figueroa had significantly
overstated [Cusson's] functional limitations." The court also
rejected Cusson's various claims of procedural unfairness in
Liberty's review process. In addition to upholding Liberty's
decision to terminate Cusson's benefits, the court also granted
summary judgment to Liberty on its counterclaim.
Cusson now appeals the district court's decision.
II. Discussion
A. Applicable Law and Standard of Review
We review a district court's grant of summary judgment de
novo. Thompson v. Coca-Cola Co., 522 F.3d 168, 175 (1st Cir.
2008). Normally, when we review a district court's grant of
summary judgment, "[w]e will reverse only if, after reviewing the
facts and making all inferences in favor of the non-moving party
[here, Cusson], the evidence on record is sufficiently open-ended
to permit a rational factfinder to resolve the issue in favor of
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either side." Id. (internal quotation marks omitted). However, in
an ERISA benefit-denial context, "the district court sits more as
an appellate tribunal than as a trial court." Leahy v. Raytheon
Corp., 315 F.3d 11, 18 (1st Cir. 2002). In such cases, "summary
judgment is simply a vehicle for deciding the issue," and,
consequently, "the non-moving party is not entitled to the usual
inferences in its favor." Orndorf v. Paul Revere Life Ins. Co.,
404 F.3d 510, 517 (1st Cir. 2005).
When an ERISA plan gives the administrator the discretion
to determine eligibility for benefits (as in this case), a
reviewing court must uphold that decision unless it is "arbitrary,
capricious, or an abuse of discretion." Gannon, 360 F.3d at 213
(citing Vlass v. Raytheon Employees Disability Trust, 244 F.3d 27,
30 (1st Cir. 2001)). However, Cusson argues that the Supreme
Court's decision in Glenn changed the standard of review from an
abuse of discretion standard to a "combination of factors" standard
in cases where, as here, there is a structural conflict of
interest. We disagree.
In deciding what effect a conflict would have on the
standard of review, the Supreme Court in Glenn "elucidate[d] what
[the] Court said in Firestone, namely, that a conflict should 'be
weighed as a factor in determining whether there is an abuse of
discretion.'" Glenn, 128 S. Ct. at 2350 (quoting Firestone Tire &
Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). However, the Court
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went on to say, "We do not believe that Firestone's statement
implies a change in the standard of review, say, from deferential
to de novo review." Id. Rather, the Court said that "Firestone
means what the word 'factor' implies, namely, that when judges
review the lawfulness of benefit denials, they will often take
account of several different considerations of which a conflict of
interest is one." Id. at 2351.
Because Glenn did not alter the standard of review, and
because our review of the lower court's grant of summary judgment
is de novo, we will review Liberty's decision to deny Cusson's
benefits under the same abuse of discretion standard used by the
district court. See Denmark v. Liberty Life Assurance Co. (Denmark
III), 566 F.3d 1, 9 (1st Cir. 2009) (where the plan administrator
has discretion, "Glenn's baseline principle, consistent with this
circuit's prior precedents, [is] that judicial review of such a
benefit-denial decision is for abuse of discretion").
B. Appropriate Weight Given to the Conflict of Interest
Although the presence of a conflict of interest does not
change the standard of review in this case, the conflict itself
can, under certain circumstances, be accorded extra weight in the
court's analysis. In Glenn, the Supreme Court held that "[t]he
conflict of interest at issue . . . should prove more important
(perhaps of great importance) where circumstances suggest a higher
likelihood that it affected the benefits decision, including, but
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not limited to, cases where an insurance company administrator has
a history of biased claims administration." 128 S. Ct. at 2351.
On the other hand, the conflict "should prove less important
(perhaps to the vanishing point) where the administrator has taken
active steps to reduce potential bias and to promote accuracy."
Id.
We have interpreted this language from Glenn to mean that
"courts are duty-bound to inquire into what steps a plan
administrator has taken to insulate the decisionmaking process
against the potentially pernicious effects of structural
conflicts." Denmark III, 566 F.3d at 9. Although Cusson argues
that it is Liberty's burden to show that the conflict did not
affect its decision, the Supreme Court explicitly declined to
specify a burden-of-proof rule for determining the weight that a
conflict should be given. See Glenn, 128 S. Ct. at 2351 ("Neither
do we believe it necessary or desirable for courts to create
special burden-of-proof rules, or other special procedural or
evidentiary rules, focused narrowly upon the evaluator/payer
conflict."). We therefore apply the same burden of proof to the
conflict issue that we do to any other aspect of an ERISA claim for
improper denial of benefits; hence, Cusson bears the burden of
showing that the conflict influenced Liberty's decision. See Terry
v. Bayer Corp., 145 F.3d 28, 34 (1st Cir. 1998) ("Here, [claimant]
bears the burden of making a showing sufficient to establish a
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violation of ERISA, namely, that the benefit termination was
unreasonable." (internal quotation marks omitted)).
Cusson has not raised (and, thus, the parties have not
briefed) the issue of the adequacy of Liberty's internal procedures
to insulate the review process from the conflict. Instead, Cusson
argues that certain alleged flaws in the way the review was
conducted prove that Liberty's decision was influenced by its
conflict. As discussed below, we do not find that these alleged
flaws show that Liberty was improperly influenced by its conflict.
Firstly, Cusson argues that Liberty relied exclusively on
Millstein's report, including his inaccurate statements about the
surveillance results, rather than relying on the totality of the
record. Cusson correctly points out that in its initial denial
letter, Liberty quoted language that it claimed was from the
surveillance reports, but that was actually from Millstein's
interpretation of the surveillance. Liberty also claimed that it
relied on its TSA, but the record indicates that the TSA was based
solely on Millstein's report.
We find nothing wrong with the degree of Liberty's
reliance on Millstein's report. Although the denial letter from
Liberty quoted Millstein's summary of the surveillance data, and
not the surveillance reports themselves, the record also indicates
that Liberty's case manager did review the tapes. Moreover, as the
district court noted, even though Millstein made inaccurate
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statements about the surveillance data in his report, Millstein's
main substantive point about the surveillance -- that it showed
Cusson engaged in activities that she claimed she could not do --
was accurate. Many of the activities that Cusson was observed
doing were activities that she specifically reported being unable
to do, such as bending at the waist and lifting objects heavier
than ten pounds. Moreover, when Cusson was seen outside, she did
not appear to show any signs of fatigue or impaired physical
capabilities. While this is by no means ironclad proof of ability
to work, it is evidence that Liberty was entitled to consider. We
read Liberty's decision as being based not simply on the amount of
activity observed, but also on the nature of the activity observed,
and Millstein's report contained no errors with respect to the
latter.
Next, Cusson argues that Liberty improperly relied on
Liebermann's hearsay testimony about his conversation with
Figueroa. Liebermann claimed that he spoke with Figueroa and that
Figueroa "understood that there was a significant discrepancy
between the claimant's reported functionality and what was seen on
the surveillance tapes." Liebermann further claimed that Figueroa
indicated that he had told Cusson that he no longer wished to be
involved in the disability aspect of her case. However, Cusson
noted that Figueroa never responded to Liebermann's request to sign
off on Liebermann's account of their conversation. Thus, Cusson
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argues, Liebermann's entire account of the conversation is hearsay
that neither Liberty nor the district court should have relied on
in its decision.
However, "[a] plan administrator is not a court of law
and is not bound by the rules of evidence." Speciale v. Blue Cross
& Blue Shield Ass'n, 538 F.3d 615, 622 n.4 (7th Cir. 2008).
Because Figueroa never responded to Liebermann's request to comment
on his account of the conversation, it was not an abuse of
discretion for Liberty to assume that Liebermann's account of the
conversation was accurate. Since Cusson never presented Liberty
with any evidence to challenge directly Liebermann's account of the
conversation, we find nothing inappropriate about Liberty's
reliance on that account.
Cusson next argues that Liberty's reviewing physicians
were biased against patients with fibromyalgia. Although
Liebermann's report mentions some of the evidence submitted by
Cusson, Cusson alleges that Liebermann reached his conclusion about
her ability to work without actually analyzing the medical evidence
in her file. In his report, Liebermann stated: "This claimant has
a diagnosis of [f]ibromyalgia. As such, she should be able to
perform the duties of light or sedentary occupations." Cusson
argues that this statement indicates that Liebermann had a
preconceived notion that fibromyalgia could never be a disabling
diagnosis, and thus did not fairly consider her file. Similarly,
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Millstein cited a 1986 study of fibromyalgia patients that
indicated that most of them were eventually able to return to work.
Cusson points out that the Seventh Circuit has held that "[t]he
fact that the majority of individuals suffering from fibromyalgia
can work is the weakest possible evidence that [an individual
claimant] can." Hawkins v. First Union Corp. Long Term Disability
Plan, 326 F.3d 914, 919 (7th Cir. 2003).
If Liebermann or Millstein had said that fibromyalgia
patients are never disabled, those statements would be clearly
wrong. However, although Liebermann and Millstein made statements
that might be interpreted as improper generalizations, it does not
necessarily follow that they relied on such generalizations when
issuing their reports. Had either doctor concluded that Cusson was
not disabled because fibromyalgia is never or not always disabling,
that conclusion would have been inappropriate. However, both
doctors' reports indicate that they reviewed the surveillance
footage and based their conclusions on the apparent contradiction
between the footage and Cusson's reported impairments.
Cusson also argues that Liberty's reliance on paper file
reviews instead of direct medical examinations shows that it was
influenced by its conflict. Cusson acknowledges that this court
has found "a nonexamining physician's review of a claimant's file
[to be] . . . reliable medical evidence." Gannon, 360 F.3d at 214.
However, Cusson argues that the particular circumstances of this
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case warrant a preference for reports by examining physicians. She
notes that fibromyalgia is a disease that can only be diagnosed by
a clinical examination of a patient based on subjective reports of
pain. Certain circuits have held that in such cases some deference
to examining physicians is appropriate. See, e.g., Kalish v.
Liberty Life Assurance Co., 419 F.3d 501, 509-10 (6th Cir. 2005);
Hawkins, 326 F.3d at 919 (the "gravest problem" with the opinion
offered by an ERISA plan administrator's paper-reviewing doctor was
his refusal to accept "subjective symptoms" of pain and fatigue
known to be associated with fibromyalgia). Moreover, Cusson notes
that Liberty's reviewing physicians were paid for their reports by
Liberty, whereas Cusson's treating physicians were paid by her
health insurance company. The Supreme Court has recognized that
"physicians repeatedly retained by benefits plans may have an
incentive to make a finding of 'not disabled' in order to save
their employers money and to preserve their own consulting
arrangements." Black & Decker Disability Plan v. Nord, 538 U.S.
822, 832 (2003) (internal quotation marks omitted).
We see no reason why the nonexamining physicians' reports
in this case are unreliable. We recognize that fibromyalgia is a
disease that is diagnosed primarily based on a patient's self-
reported pain symptoms. However, Liberty's reviewers did not
question the diagnosis of fibromyalgia; instead, they questioned
the effect of the disease on Cusson's ability to work. "[T]his
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court draws a distinction between requiring objective evidence of
the diagnosis, which is impermissible for a condition such as
fibromyalgia that does not lend itself to objective verification,
and requiring objective evidence that the plaintiff is unable to
work, which is allowed." Denmark v. Liberty Life Assurance Co.
(Denmark II), 481 F.3d 16, 37 (1st Cir. 2007), vacated on other
grounds, 566 F.3d 1 (1st Cir. 2009). Because it is permissible to
require documented, objective evidence of disability, it was not
inappropriate for Liberty's reviewers to rely on the lack of such
documented evidence, or on the footage that contradicted Cusson's
reports of limitations, in making their recommendations. The fact
that Liberty's reviewers were paid for their reports does not, by
itself, lead us to believe that Liberty was influenced by its
conflict, since Cusson has provided no evidence that Liberty
retained its reviewers specifically because they have a record of
denying claims.
Next, Cusson claims that Liberty failed to provide her
complete medical record to its reviewers. Liberty's internal files
indicated that "[a]ll medical records" had been sent to its
reviewers. However, the reviewers did not list certain documents
that were favorable to Cusson -- such as various medical records,
her activity log, and portions of the surveillance reports that
showed no activity -- in their reports. The district court held
that under our holding in Tsoulas v. Liberty Life Assurance Co., it
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would be improper for the court automatically to assume that unless
the medical report lists each item the examiner reviewed, he or she
did not review it. See 454 F.3d 69, 77 (1st Cir. 2006). However,
Cusson argues that the district court's reliance on Tsoulas was
incorrect. Cusson points out that in Tsoulas, the plaintiff's
claim that Liberty failed to provide certain documents to the
reviewers was obviously incorrect because some of the documents
that the plaintiff said were missing were explicitly listed in
those same reviewers' reports. Id. In contrast, the documents
that Cusson claims were not provided are not listed in any of
Liberty's reviewers' reports.2
Cusson's attempt to distinguish Tsoulas from this case
fails. Contrary to Cusson's position, the reviewing physician
reports in Tsoulas did not explicitly mention certain reports that
the claimant said were missing; rather, the district court inferred
that those documents were provided because the physicians' reports
listed some, but not all, of the documents. See id. Likewise, in
this case, each of the reviewing physicians' reports list at least
some of the supplementary material provided by Cusson. Hence, in
this case, as in Tsoulas, we find no reason to believe that Liberty
did not supply the entire record.
2
Cusson also argues that, in the wake of Glenn, the district
court was wrong to place the burden of proof on her to show that
the records were not provided. However, as we noted above, the
Supreme Court explicitly chose not to impose any new burden-of-
proof rules with respect to conflicts.
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Finally, Cusson argues that Liberty's failure to credit
the SSA's award of disability benefits shows that Liberty was
influenced by its conflict. Cusson notes that Liberty insisted
that she apply for SSDI benefits, which she was awarded, but now
seeks to benefit financially from that award by claiming the right
to reimbursement for overpayment. Cusson notes that in Glenn, the
Supreme Court treated this behavior as evidence that a conflict
influenced the plan administrator's judgment. In Glenn, the plan
administrator encouraged the claimant to apply for SSDI benefits
and then recovered the bulk of those benefits by virtue of the
reimbursement provision. The administrator then turned around and
denied benefits for the same disability that it had encouraged the
claimant to plead to the SSA. The Court held:
This course of events was not only an
important factor in its own right (because it
suggested procedural unreasonableness), but
also would have justified the court in giving
more weight to the conflict (because MetLife's
seemingly inconsistent positions were both
financially advantageous).
Glenn, 128 S. Ct. at 2352.
We find nothing suspicious about Liberty's failure to
credit Cusson's successful application for SSDI benefits, because
Cusson was not awarded SSDI benefits until after Liberty denied her
LTD benefits. We have held that when reviewing an insurer's
decision to deny benefits, we determine whether "the insurer's
eligibility determination was unreasonable in light of the
-27-
information available to it when it made its decision." Denmark
II, 481 F.3d at 39 (internal quotation mark omitted). Because the
SSA's award of benefits had not yet occurred when Liberty made its
decision, that fact could not have been known to Liberty.
In summary, as discussed above, we do not find that
Liberty's decision was improperly influenced by its structural
conflict of interest. We therefore do not accord any special
weight to the conflict in our analysis of whether Liberty's
decision was proper, but rather consider it along with all of the
factors present in this case to determine if Liberty's ultimate
conclusion regarding Cusson's benefits was "reasoned and supported
by substantial evidence." Gannon, 360 F.3d at 213. We turn to
this question below.
C. Whether Liberty's Decision Was an Abuse of Discretion
Cusson argues that the factors discussed in Section
II(B), supra, which she claims show that Liberty was influenced by
its conflict, also show that Liberty's ultimate decision was an
abuse of discretion. For the same reasons we articulated above, we
do not believe that these factors prove that Liberty's decision was
an abuse of discretion.
Cusson further argues that, contrary to the conclusions
of Liberty and its reviewers, the surveillance video does not
actually contradict any of her self-reported disabilities. Cusson
never claimed that she was entirely incapable of performing
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normally; rather, she only claimed that she was unable to function
normally most of the time. Thus, Cusson argues, given how
infrequently she was seen outside of her home during the course of
the surveillance, the surveillance is consistent with her claim of
disability, and it was an abuse of discretion for Liberty to use it
as evidence against her claim. Cusson notes that the surveillance
video represents a mere two hour snapshot from twenty days of her
life over the course of four months.3 Cusson cites a number of
cases in which courts have held that it was an abuse of discretion
to rely on such limited surveillance data. See, e.g., Soron v.
Liberty Life Assurance Co., 2005 WL 1173076, at *11 (N.D.N.Y.
May 2, 2005) (surveillance cannot be used to discount plaintiff's
self-reported symptoms where "it shows her performing isolated
activities for brief periods of time with no revelation of
consequences"); Osbun v. Auburn Foundry, Inc., 293 F. Supp. 2d 863,
870 (N.D. Ind. 2003) (1.5 hours of surveillance video over two days
fell short of demonstrating that plaintiff was capable of
3
Cusson argued to the district court that Liberty's internal
training manuals regarding video surveillance should have been
admitted to the record. The district court denied this request
because Cusson did not demonstrate a "very good reason" for the
inclusion of the manuals. See Liston v. UNUM Corp. Officer
Severance Plan, 330 F.3d 19, 23 (1st Cir. 2003). Cusson challenges
this decision on appeal. However, Cusson does not clearly explain
why these documents would assist this court in determining whether
Liberty's decision was an abuse of discretion. Because we do not
see why these documents would be relevant to this case, we do not
reach the issue of whether the district court properly excluded
them.
-29-
sustaining a job); Cross v. Metro. Life Ins. Co., 292 F. App'x.
888, 892 (11th Cir. 2008) (five days of surveillance resulting in
two hours of video provided a "mere snapshot" of plaintiff's
activities and failed to take into account impact of those
activities on plaintiff).
We conclude that it was reasonable to use the
surveillance as evidence against Cusson's claim of disability. We
have permitted ERISA plan administrators to use this type of
sporadic evidence in the past. See, e.g., Denmark II, 481 F.3d at
38 (it was not arbitrary and capricious for Liberty to consider
reports and photographs from four days of surveillance that showed
claimant outside only for short periods of time on two of the four
days); Tsoulas, 454 F.3d at 79 (no abuse of discretion where
Liberty considered surveillance evidence consisting of four hours
per day for three days even though it only represented a "small --
impliedly non-representative -- fraction of each day"). More
importantly, although the limited amount of time she was seen
outside her home is a factor that weighs in Cusson's favor, Liberty
was certainly entitled to take notice of the fact that the video
shows Cusson doing particular activities that she claimed she could
not do. For example, she is seen going into large stores on two
separate occasions, despite having claimed that she avoided malls
because they were too big and preferred small stores. While we of
course recognize that a Home Depot or a Wal-Mart is not the same
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thing as a mall, we cannot say that it was an abuse of discretion
for Liberty and its reviewers to conclude that Cusson's apparent
ability to navigate very large stores contradicted her claim that
her illness required her to frequent small stores. The
surveillance also shows Cusson bending, kneeling, picking up large
objects such as a bag of cat litter, and pushing a loaded cart,
despite the fact that the Functional Capacities Form completed by
Figueroa on May 4, 2004 indicated that Cusson was physically unable
to perform these activities.
Because we find that Liberty was entitled to credit the
surveillance, we are left to determine whether Liberty's ultimate
conclusion was supported by the totality of the evidence. We find
that it was. Cusson argues that Liberty failed to consider her
objective evidence of disability. However, the record reflects
that Liberty reached its decision not because it failed to consider
the evidence in Cusson's favor, but because it determined that the
surveillance results undermined the credibility of important
portions of that evidence. Because we review Liberty's decision
under an abuse of discretion standard, we must uphold it if we find
that it was "reasoned and supported by substantial evidence in the
record."4 Vlass, 244 F.3d at 30 (internal quotation marks
4
In our prior ERISA cases, we have variously described the
standard of review, applicable when an ERISA plan grants the plan
administrator the discretion to determine eligibility for benefits,
as review for "abuse of discretion," "arbitrariness and
capriciousness," and "substantial evidence." In the ERISA benefit-
-31-
omitted). "Evidence is substantial when it is reasonably
sufficient to support a conclusion. Evidence contrary to an
administrator's decision does not make the decision unreasonable,
provided substantial evidence supports the decision." Wright v. R.
R. Donnelley & Sons Co. Group Benefits Plan, 402 F.3d 67, 74 (1st
Cir. 2005). Because we cannot say that the evidence in this case
was insufficient to support Liberty's conclusion, we affirm
Liberty's decision to terminate Cusson's benefits.
D. Whether Liberty's Counterclaim Is Allowed
Liberty asserted a counterclaim to recover Cusson's SSDI
benefits under 29 U.S.C. § 1132(a)(3), which states that a plan
fiduciary can bring a civil action to obtain "appropriate equitable
relief . . . to enforce . . . the terms of the plan." Under the
LTD Plan, if Cusson received an overpayment on her disability claim
from any source, Liberty "ha[d] the right to recovery of such
overpayments from [Cusson] or [Cusson's] estate." Although Liberty
terminated Cusson's LTD benefits before Cusson was awarded SSDI
benefits, the SSA awarded benefits retroactive to March 15, 2002.
Liberty argues that because it paid STD and LTD benefits from this
date until December 8, 2004, the SSDI benefits Cusson received for
this period are an overpayment, and hence that § 1132(a)(3) allows
it to sue to enforce the right to recover the overpayment.
denial context, these terms are interchangeable. See Denmark III,
566 F.3d at 7.
-32-
Cusson argues that Liberty's counterclaim is a legal
claim, rather than an equitable claim, and hence that it is not
permitted under § 1132(a)(3). Cusson relies on Great West Life &
Annuity Insurance Co. v. Knudson, a case involving a similar
overpayment provision in an ERISA plan, in which the Supreme Court
held that the plan administrator could not use the overpayment
provision to recover the proceeds from the plan beneficiaries' tort
suit against a third party because the claim was a legal claim
rather than an equitable claim. 534 U.S. 204 (2002). However, the
district court, in allowing Liberty's claim, relied on Sereboff v.
Mid Atlantic Medical Services, Inc., in which the Court reached the
opposite result and allowed a plan to recover for overpayment of
medical expenses when the claimant received money from a third
party in tort. 547 U.S. 356 (2006).
In Knudson, the funds recovered in the suit were not
actually in the possession of the plan beneficiaries; rather, they
had been placed into a "Special Needs Trust" under California law.
534 U.S. at 214. Thus, the Court held that the plan's monetary
claim against the beneficiaries would effectively operate as "the
imposition of personal liability for the benefits that [the plan]
conferred upon [the beneficiaries]," which was a legal rather than
equitable claim. Id. In contrast, in Sereboff, the beneficiaries
had deposited the proceeds from the suit into their personal
investment account, and the plan specifically asserted a claim for
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some portion of those funds. 547 U.S. at 360, 362-63. Thus, the
Court held that the claim was a type of "equitable restitution"
because it was for "specifically identifiable funds that were
within the possession and control of the Sereboffs." Id. at 362-63
(internal quotation marks omitted).
We find that Sereboff, rather than Knudson, controls in
this case. Here, like in Sereboff, the LTD Plan targets specific
funds for recovery -- Cusson's LTD payments -- and identifies the
specific portion to which Liberty is entitled -- the amount of the
overpayment while Cusson was receiving benefits under the LTD Plan.
We are persuaded by the Eighth Circuit's holding in a similar case
that a claim such as this is a claim for equitable relief. See
Dillard's Inc. v. Liberty Life Assurance Co., 456 F.3d 894, 901
(8th Cir. 2006) (finding that Liberty's claim was equitable when it
sought "a particular share of a specifically identified fund -- all
overpayments resulting from the payment of social security
benefits"). Moreover, unlike in Knudson, the SSDI benefit was paid
to Cusson rather than into a separate trust over which she has no
control. It is true that, unlike the insurer in Sereboff, Liberty
has not identified a specific account in which the funds are kept
or proven that they are still in Cusson's possession. However, the
Court in Sereboff noted "'the familiar rul[e] of equity that a
contract to convey a specific object even before it is acquired
will make the contractor a trustee as soon as he gets a title to
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the thing.'" 547 U.S. at 363-64 (quoting Barnes v. Alexander, 232
U.S. 117, 141 (1914)). Here, the contract between Cusson and
Liberty put Cusson on notice that she would be required to
reimburse Liberty for an amount equal to what she might get from
Social Security. We therefore find that Liberty's counterclaim is
an equitable claim and is allowed under 29 U.S.C. § 1132(a)(3).
Cusson further argues that Liberty's claim is barred
under the Social Security Act, Title II, 47 U.S.C. §§ 401 et seq.
The Act provides, in relevant part:
The right of any person to any future payment
under this title shall not be transferable or
assignable, at law or in equity, and none of
the moneys paid or payable or rights existing
under this title shall be subject to
execution, levy, attachment, garnishment, or
other legal process, or to the operation of
any bankruptcy or insolvency law.
42 U.S.C. § 407(a). The district court held that this section of
the Act only applies to future payments, and not to retroactive
payments. However, Cusson argues that the reference to "moneys
paid or payable" indicates that the statute's protections apply to
all payments, whether future payments or retroactive payments.
We agree with the district court that 42 U.S.C. § 407(a)
does not bar Liberty's claim. However, we disagree with the
district court's reasoning in reaching this conclusion. The
district court held that because the statute bars the transfer or
assignment of the right to "future payment," it did not bar claims
for retroactive payments. However, the statute clearly goes on to
-35-
say that "none of the moneys paid or payable . . . shall be subject
to execution, levy, attachment, garnishment, or other legal
process." Id. Thus, the protections afforded by § 407(a) apply to
retroactive SSDI payments. See Philpott v. Essex County Welfare
Bd., 409 U.S. 413, 416 (1973) (holding that a state could not
recover SSDI benefits paid because "the protection afforded
by § 407(a) is to 'moneys paid'"); Hoult v. Hoult, 373 F.3d 47, 56
(1st Cir. 2004) ("There is no question that § 407(a) . . . applies
to benefits after they have been distributed to beneficiaries.").
Instead, we find that § 407(a) does not bar Liberty's
claim because Liberty is not attempting to recover Cusson's SSDI
benefits. Rather, Liberty seeks to recover in equity from funds
Liberty itself already paid under the LTD plan. Although the
amount in question happens to be the same as the amount of Cusson's
retroactive SSDI payment, the funds Liberty is targeting do not
come from SSDI, and thus § 407(a) does not prohibit Liberty's
claim. See Holmstrom v. Metro. Life Ins. Co., 615 F. Supp. 2d 722,
753 (N.D. Ill. 2009) (collecting cases in which courts have held
that § 407(a) does not bar recovery for overpayment).
III. Conclusion
For the foregoing reasons, the judgment of the district
court is affirmed.
Affirmed.
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