Bilyeu v. Morgan Stanley Long Term Disability Plan

FILED
NOT FOR PUBLICATION
SEP 11 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

LEAH A. BILYEU, No. 16-15254

Plaintiff-counter- D.C. No. 2:08-cv-02071-SRB
defendant-Appellant,

v. MEMORANDUM*

MORGAN STANLEY LONG TERM
DISABILITY PLAN; MORGAN
STANLEY LONG TERM DISABILITY
PLAN ADMINISTRATOR,

Defendants-Appellees,

FIRST UNUM LIFE INSURANCE
COMPANY,

Defendant-counter-claimant-
Appellee.

LEAH A. BILYEU, No. 16-15314

Plaintiff-counter- D.C. No. 2:08-cv-02071-SRB
defendant-Appellee,

v.

MORGAN STANLEY LONG TERM

*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
DISABILITY PLAN; MORGAN
STANLEY LONG TERM DISABILITY
PLAN ADMINISTRATOR,

Defendants-Appellants,

FIRST UNUM LIFE INSURANCE
COMPANY,

Defendant-counter-claimant-
Appellant.

Appeal from the United States District Court
for the District of Arizona
Susan R. Bolton, District Judge, Presiding

Argued and Submitted August 31, 2017
Pasadena, California

Before: FISHER and BYBEE, Circuit Judges, and BARTLE, District Judge.**

In this action under the Employee Retirement Income Security Act (ERISA),

Leah Bilyeu appeals the adverse judgment on her claim that First Unum Life

Insurance Company (Unum) improperly terminated her long-term disability

benefits under the plan’s mental health limitation. Unum cross-appeals the adverse

judgment on its counterclaim seeking to recover the value of benefits it paid to

Bilyeu. We have jurisdiction under 28 U.S.C. § 1291, we review the district

**
The Honorable Harvey Bartle III, United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.

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court’s legal conclusions de novo and its factual findings for clear error, see

Armani v. Nw. Mut. Life Ins. Co., 840 F.3d 1159, 1162 (9th Cir. 2016), and we

affirm.

1. Bilyeu contends the district court misapplied the summary judgment

standard by making credibility determinations, weighing the evidence and

resolving disputed issues of fact in granting judgment to Unum on her denial-of-

benefits claim. This argument fails because the district court did not grant

summary judgment but instead conducted a “trial on the record.” See Kearney v.

Standard Ins. Co., 175 F.3d 1084, 1094-95 (9th Cir. 1999) (en banc).

Bilyeu suggests the court erred by proceeding to a trial on the record without

affording her adequate notice. Even assuming the court erred, the error was

harmless because Bilyeu has not shown she would have made different arguments

in the absence of the alleged error. Further, the district court’s decision to proceed

to a trial on the record was consistent with the parties’ own joint proposed

scheduling order.

2. The district court did not clearly err by finding Bilyeu’s disability lacked

a physical component under Patterson v. Hughes Aircraft Co., 11 F.3d 948, 950-51

(9th Cir. 1993). The court carefully and thoroughly considered the medical

evidence in the record. Although Bilyeu’s position that her disability had a

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physical component was supported by her treating physician, Dr. Kenneth

Proefrock, the court, as factfinder, permissibly chose to credit the opinions of Drs.

Sharon Hogan and Norman Bress over that of Dr. Proefrock. See Kearney, 175

F.3d at 1095 (noting that in trials on the record, district courts may “evaluate the

persuasiveness of conflicting testimony and decide which is more likely true”).

3. Bilyeu’s contention that the district court improperly imposed an

additional eligibility requirement by requiring objective medical evidence is not

supported by the record. See Canseco v. Constr. Laborers Pension Tr. for S. Cal.,

93 F.3d 600, 608 (9th Cir. 1996) (holding a plan administrator “may not construe a

plan so as to impose an additional requirement for eligibility that clashes with the

terms of the plan”). Although the district court properly considered the existence

of objective medical evidence in weighing the evidence, the court did not treat

objective medical evidence as an additional eligibility requirement.

4. Bilyeu’s contention that the district court erred by disregarding the Social

Security Administration’s (SSA) disability finding also fails. Bilyeu never moved

to supplement the administrative record to include the SSA ruling. Furthermore,

even if the court erred by failing to consider the ruling, the error was harmless.

Although SSA rulings are highly relevant to an ERISA disability determination,

see Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 679 (9th Cir.

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2011); Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 635-36 (9th Cir.

2009), consideration of the ruling would have made no difference in this case,

given the court’s independent and thorough review of the medical evidence and the

fact that the SSA never addressed the key issue before the district court – whether

Bilyeu’s disability had a physical component. Bilyeu’s contention that the SSA

concluded her mental impairments were not alone sufficient to establish a

disability misapprehends the SSA’s ruling. At step three in the sequential process,

the SSA found only that Bilyeu’s mental impairments did not meet or equal a listed

impairment.

5. Bilyeu’s judicial estoppel arguments also fail. First, Bilyeu contends

that, “[o]nce a plan administrator aids and encourages a claimant to apply for

[social security disability] benefits to reduce the amount of the plan’s benefits, the

administrator is estopped from denying the benefits based on the same disability as

approved by the SSA.” The case law Bilyeu cites, however, does not support this

proposition. See Ladd v. ITT Corp., 148 F.3d 753, 756 (7th Cir. 1998) (concluding

in similar circumstances that an administrator’s inconsistent position may implicate

judicial estoppel, and may thus be relevant to whether an administrator abused its

discretion in denying claims, but that it “does not provide an independent basis for

rejecting” the administrator’s denial of claims).

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 Second, Bilyeu has not shown that Unum asserted “clearly inconsistent”

positions by seeking reimbursement under the plan’s “same disability” clause.

Milton H. Greene Archives, Inc. v. Marilyn Monroe LLC, 692 F.3d 983, 994 (9th

Cir. 2012). Because Unum took the position this clause applied to the same period

of disability, Unum’s contention that Bilyeu was entitled to social security

disability benefits was not clearly inconsistent with its position that Bilyeu was

subject to the plan’s mental health limitation.

6. The district court properly entered judgment in favor of Bilyeu on

Unum’s counterclaim. First, with respect to Unum’s “ill-gotten gains” theory of

recovery, the district court did not clearly err by finding Bilyeu did not deliberately

mislead Unum about her ability to work.1 The court emphasized that: (1) Bilyeu

did not withhold any medical records or information from Unum but instead

supplied Unum with all of her medical records; (2) Unum reviewed Bilyeu’s

medical records for itself and found her disabled; (3) Bilyeu did not provide any

false information to Unum; and (4) Unum neither alleged nor showed that Bilyeu

was not disabled or misrepresented that she was disabled; in fact, Unum, Bilyeu’s

1
We assume without deciding that Unum’s ill-gotten gains theory sought
“equitable relief” under ERISA, 29 U.S.C. § 1132(a)(3).

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employer and the SSA all agreed she was disabled. We find no clear error in the

court’s findings.

Second, with respect to Unum’s “money had and received” theory of

recovery, the district court properly concluded this claim sought legal rather than

equitable relief. A claim for “money had and received” is a claim for restitution,

and a claim for restitution can be either legal or equitable. “If restitution to the

claimant is accomplished exclusively by a judgment for money, without resort to

any of the ancillary remedial devices traditionally available in equity but not at

law, the remedy is presumptively legal.” Restatement (Third) of Restitution and

Unjust Enrichment § 4 cmt. d (2011). That is, “[t]he standard legal remedy for a

liability based on unjust enrichment is a judgment for money, to be satisfied from

the assets of the defendant by the ordinary procedures of execution.” Id. By

contrast, “the hallmark of equitable remedies in restitution cases is that they give

relief to the claimant via rights in identifiable assets.” Id. Here, Unum has not

shown that its claim for money had and received falls on the equitable side of

restitution. The district court therefore properly concluded this claim did not seek

equitable relief under 29 U.S.C. § 1132(a)(3).

AFFIRMED.

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