In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 07-1520

LISA PAKOVICH,

Plaintiff-Appellant,

v.

BROADSPIRE SERVICES, INC.,

Defendant-Appellee.

____________

Appeal from the United States District Court

for the Southern District of Illinois.

No. 05 C 445—Michael J. Reagan, Judge.

____________

ARGUED APRIL 14, 2008—DECIDED JULY 24, 2008

____________

Before FLAUM, EVANS, and TINDER, Circuit Judges.

FLAUM, Circuit Judge. Plaintiff Lisa Pakovich brought an

ERISA suit after Defendant Broadspire Services determined she was no longer entitled to long term disability

benefits. The lower court found in Pakovich’s favor,

determining that Broadspire had unreasonably concluded that Pakovich was able to perform the essential

functions of her sales position with Verizon Wireless, the

standard for receiving disability benefits for the first

24 months (“own occupation” standard). The district

court went further, however, and also determined that

Pakovich was not entitled to disability benefits beyond
2 No. 07-1520

the 24 month mark, where benefits were only available if

Pakovich was disabled from all occupations (“any occupation” standard). Pakovich appeals this latter ruling,

arguing that the district court’s decision should be

reversed and her benefits reinstated. For the following

reasons, we vacate that portion of the district court’s

decision appealed by Pakovich, with orders that the

determination of long term disability under the “any

occupation” standard be remanded to the Plan Administrator.

I. Background

Pakovich worked as a retail sales representative for

Verizon and applied for long term disability benefits in

September 2002 following a series of back surgeries. At

the time, the long term disability plan (“the Plan”) was

administered by Kemper National Services, which in

October 2002, found Pakovich to have been disabled as

of July 17, 2002. Under the long term disability policy’s

terms, benefits for the first 24 months were based upon

Pakovich’s inability to perform “the Essential Functions of

[her] Regular Occupation,” with continuing benefits

beyond the 24 month mark depending upon Pakovich

being “prevented from performing the Essential Functions of any Gainful Occupation that [her] training, education and experience would allow [her] to perform.” The

policy also provided that any benefits paid out by the

Plan would be offset by the receipt of Social Security

benefits. In November 2003, Pakovich was found to be

“totally disabled” by the Social Security Administration,

and thus was approved for Social Security benefits retroactive to July 2002. By the end of 2003, Broadspire

was administering the Plan.
No. 07-1520 3

Between February 2002 and March 2004, Pakovich was

examined by a host of different physicians, some of

whom noted that Pakovich was only capable of performing sedentary work. The records from these examinations were then reviewed by physicians selected by

Broadspire. In February 2004, Pakovich received a letter

from Broadspire indicating that, based upon the information at its disposal, it did not appear that Pakovich was

disabled under the Plan’s “own occupation” standard.

She also received a separate letter the same day informing

her that Broadspire would be conducting an evaluation

in the future to determine whether Pakovich would

continue to qualify for long term disability after July 17,

2004 under the “any occupation” standard. This “any

occupation” evaluation, however, never occurred. Instead,

on April 22, 2004, Pakovich was informed by letter

that after reviewing all her medical documentation,

Broadspire had concluded that she was no longer disabled under the “own occupation” standard and that her

benefits would be discontinued after April 30, 2004.

Pakovich appealed the decision, and on June 22, 2004,

was awarded further benefits from May 1 until May 14,

2004 due to a recent knee surgery, but nothing beyond that

date. Pakovich then brought suit in federal court pursuant

to Section 502(a) of the Employee Retirement Income

Security Act of 1974 (“ERISA”), challenging Broadspire’s

termination of her benefits.

In November 2006, the district court issued a memorandum and order on Pakovich’s Motion for Judgment under

FED. R. CIV. P. 52 and Broadspire’s Motion for Summary Judgment. The court concluded that Broadspire’s

decision to terminate Pakovich’s long term disability

benefits was arbitrary and capricious. The district court
4 No. 07-1520

1 Pakovich’s position required her to be able to lift up to fifty

pounds. Under federal regulations, “light work” is classified as

lifting no more than 20 pounds at a time, while “medium work”

is listed as involving lifting up to 50 pounds maximum. 20

C.F.R. § 416.967.

noted that many physicians had determined that Pakovich

was only capable of performing sedentary work, and

found that Broadspire had unreasonably characterized

Pakovich’s current position as one involving “light work,”

when by Defendant’s own analysis of the position, it

entailed lifting requirements near the high end of what is

classified as “medium work.”1

The district court’s entry of judgment in Pakovich’s favor

regarding her qualification for disability benefits under

the “own occupation” standard, however, did not end

the matter. Instead, the district court then went on to

determine for itself whether Pakovich was also entitled

to benefits under the “any occupation” standard. The

court, in a brief paragraph, stated that the evidence in

the record indicated that Pakovich could perform at least

sedentary work, and accordingly, found that Pakovich did

not qualify for disability benefits after July 2004, and thus

entered judgment for Broadspire on that issue. In sum,

these two rulings meant that Pakovich was entitled

to disability benefits from Broadspire between May 14,

2004 and July 16, 2004.

Following this Memorandum and Order, Pakovich filed

a Motion to Alter or Amend the Judgment under FED. R.

CIV. P. 59(e). In her motion, she argued that Broadspire

never addressed her qualification for benefits under the

“any occupation” standard, and moreover, that the district court’s finding that she could perform sedentary
No. 07-1520 5

work still did not mean that it had been found that there

was an occupation she could hold that would comport

with her “training, education and experience,” as required

by the Plan documents. Pakovich then asked that the

district court reinstate her benefits. The district court

denied this motion, stating that Pakovich was now proceeding with a new argument not fully presented originally, and explaining that the record indicated that

Pakovich had the “training, education and experience” to

perform sedentary work. This appeal followed.

II. Discussion

Pakovich appeals the district court’s finding that she

was not disabled from all occupations, as required by the

Plan in order to receive disability benefits beyond 24

months. As a preliminary matter, the parties dispute the

proper standard of review concerning this issue. Pakovich

asserts that the standard should be that for a motion for

summary judgment, while Broadspire claims that the

standard of review for judgment on the record under

FED. R. CIV. P. 52 controls. This dispute stems from the

procedural posture below—Broadspire initially filed a

motion for summary judgment, which Pakovich responded

to with her own motion for judgment under Rule 52. The

district court made clear, however, that it would “decide

this matter on the pending cross motions pursuant to

Rule 52 for judgment on the Administrative Record.”

Accordingly, because we are reviewing the district

court’s judgment on a Rule 52 motion, we review any

findings of fact or fact-law application for clear error. Sehie

v. City of Aurora, 432 F.3d 749, 751 (7th Cir. 2005). The

additional deference shown by this Court when reviewing the district court’s factual findings under Rule 52,
6 No. 07-1520

however, has no bearing on this particular case, since our

decision rests purely on legal conclusions, which we

review de novo. Id.; compare with Reich v. Ladish Co., 306

F.3d 519, 522 (7th Cir. 2002) (“We review the district

court’s grant of summary judgment de novo.”).

The focus of Pakovich’s appeal is on her contention that

ERISA requires plans to provide beneficiaries with the

specific reason for denying benefit coverage, and that

because the Plan itself did not provide a reason why

she was not entitled to benefits under the “any occupation” standard, the district court erred in finding for

Broadspire on this issue. Broadspire, however, claims

that Pakovich waived this issue below. Although the

district court, when addressing this claim as part of

Pakovich’s Rule 59(e) motion, also apparently viewed

this argument as waived, we do not find this to be the

case. Pakovich, in her Rule 52 motion and response to

Broadspire’s motion for summary judgment, stated that

she was also entitled to her “any occupation” benefits

because ERISA required that the Plan give all the reasons for her denial, and she was only given the reason

for denial under the “own occupation” standard. Although Pakovich developed this argument more fully in

her Rule 59(e) motion, contrary to the district court’s

waiver statement in its order on that motion, Pakovich’s

argument was sufficiently developed in her original

motion that the district court felt compelled to address

the claim (albeit in a footnote) in its Rule 52 order.

We now turn to the substance of Pakovich’s claim. Her

argument rests upon ERISA’s requirement that every

plan must “provide adequate notice in writing to any

participant or beneficiary whose claim for benefits under

the plan has been denied, setting forth the specific rea-
No. 07-1520 7

sons for such denial.” 29 U.S.C. § 1133(a); see 29 C.F.R.

§ 2560.503-1(g) (accompanying federal regulations); see

also Schneider v. Sentry Group Long Term Disability Plan,

422 F.3d 621, 627-28 (7th Cir. 2005) (discussing these

statutory and regulatory requirements). Pakovich thus

contends that in order for her disability benefits to be

denied beyond the 24 month mark under the “any occupation” standard, it was necessary for Broadspire to provide specific reasons why she was not deemed to be

“prevented from performing the Essential Functions of any

Gainful Occupation that [her] training, education and

experience would allow [her] to perform,” something

which indisputably did not occur.

Broadspire argues that the rule contemplated by

Pakovich is unworkable, since it would require plans

denying benefits under an “own occupation” standard

to also expend their resources evaluating participants

under the “any occupation” standard, solely in anticipation of a possible reversal on the “own occupation” issue

on appeal. According to Broadspire, such a rule would

inappropriately require it to make a determination that

had not yet ripened for consideration, since the rule

would mandate that plans make determinations under

the “any occupation” standard prior to that standard

first being triggered by 24 months of disability under

the “own occupation” standard.

We agree with Broadspire that it is unnecessary for plans

to hedge their bets on a possible reversal on appeal by

requiring that, after a plan has already found that an

employee does not qualify for disability benefits under

the “own occupation” standard, it also must determine

whether the employee is disabled from “any occupation.”

Requiring this further analysis would be impractical and
8 No. 07-1520

2 Broadspire argues that judicial estoppel prevents Pakovich

from arguing that it was improper for the district court to

decide the “any occupation” issue when Pakovich had earlier

sought that the district court grant it disability under the “any

occupation” standard. Judicial estoppel, however, does not

apply here. The doctrine of judicial estoppel provides that

“when a party prevails on one legal or factual ground in a

lawsuit, that party cannot later repudiate that ground in

subsequent litigation based on the underlying facts.” Urbania v.

Cent. States, Se. & Sw. Areas Pension Fund, 421 F.3d 580, 589 (7th

(continued...)

redundant. Here, for example, Broadspire had already

determined, albeit erroneously, that Pakovich was able

to perform the essential functions of her own occupation.

This finding, in and of itself, necessarily means that

Broadspire had already concluded that Pakovich was

not “prevented from performing the Essential Functions

of any Gainful Occupation that [her] training, education

and experience would allow [her] to perform,” and thus

would not qualify for disability benefits under the “any

occupation” standard either. Any finding to the contrary on Broadspire’s part at that stage of the proceedings

would have been internally inconsistent.

While Broadspire was not required to evaluate

Pakovich’s eligibility under the “any occupation” standard

contemporaneously with its determination that she was

not disabled from working her “own occupation,” such a

determination became necessary after the district court

found that Broadspire erred in denying Pakovich coverage

under the “own occupation” standard. At issue, then, is

whether the district court properly took it upon itself

to make this determination, or whether Broadspire

should have had the first attempt at the matter.2

 As the
No. 07-1520 9

2 (...continued)

Cir. 2005) (emphasis added). Thus, one of the requirements for

judicial estoppel to apply is that “the party to be estopped must

have prevailed upon the first court to adopt the position.” Id.

This did not occur here. Pakovich initially argued that she

should be granted disability benefits under the “any occupation” standard because the Plan failed to provide any reason

why she should be denied those benefits. The district court

plainly rejected that argument in its order on Pakovich’s Rule

52 motion. Accordingly, Pakovich did not prevail on this issue

in the first instance and judicial estoppel is thus inapplicable.

district court made clear, and the parties do not dispute

on appeal, the Plan gave the Administrator discretionary

authority, and thus its decisions were only to be reviewed

by the district court under an arbitrary and capricious

standard. See Herzberger v. Standard Ins. Co., 205 F.3d 327,

329 (7th Cir. 2000). Broadspire argues, however, that

since it passed on the opportunity to evaluate Pakovich’s

disability eligibility under the “any occupation” standard

in the spring and summer of 2004, it was then proper

for the district court to make that determination de novo.

Broadspire acknowledges that this Court has not directly

addressed this issue, but contends that its position is

supported by other Circuits’ decisions. See Gatti v. Reliance

Standard Life Insurance Co., 415 F.3d 978 (9th Cir. 2005); see

also Gilbertson v. Allied Signal, Inc., 328 F.3d 625 (10th Cir.

2003); see also Seman v. FMC Corp. Retirement Plan for

Hourly Employees, 334 F.3d 728 (8th Cir. 2003); see also

Gritzer v. CBS, Inc., 275 F.3d 291 (3rd Cir. 2002). This,

however, is not the case.

The cases cited by Broadspire address an issue distinct

from that found in this case—the proper standard of
10 No. 07-1520

review to be given to claims “deemed denied” by the

Plan’s administrative appeals board. Federal ERISA

regulations previously provided that, after an initial

benefits determination had been made by the plan administrator, an internal review could be requested by the

beneficiary, in which case, if a decision was not issued

within 120 days, the claim would be “deemed denied.” See

29 C.F.R. § 2560.503-1(h) (1999). The issue that arose in

many Circuits was what standard of review the federal

courts were to apply to these “deemed denied” claims,

given that the plans had discretionary authority and

thus, if the plan had issued a timely denial, its decision

would have only been subject to arbitrary and capricious

review. Courts split on this issue, with the majority finding that in such circumstances de novo review was appropriate, see Nichols v. Prudential Ins. Co. of Am., 406 F.3d

98, 109 (2nd Cir. 2005) (applying de novo review); see also

Gritzer, 275 F.3d at 296 (same); Gilbertson, 328 F.3d at 632

(same), while others held that deferential review still

applies. See Southern Farm Bureau Life Ins. Co. v. Moore, 993

F.2d 98, 101 (5th Cir. 1993) (applying deferential standard of review); see also Gatti, 415 F.3d at 982 (failure to

comply with 29 C.F.R. § 2560.503-1(h) (1999) does not alter

standard of review). In all those cases, however, the plan

administrator made an initial determination to deny

benefits, something which did not happen in this case

under the “any occupation” disability standard. The

question in those cases, then, was whether deference

was still owed to the plan when, on review, it had failed

to analyze the appeal before it, and instead let the issue

lapse. In other words, was deference owed to the plan

when it had failed to take a fulsome bite of the apple

that was before it? Here, however, the “any occupation”

issue did not ripen into an “apple” ready to be bitten until
No. 07-1520 11

the district court rendered a disability determination under

the “own occupation” standard. Thus, not only had the

Plan’s review board failed to address the issue, but the

issue was never properly put before the Plan Administrator.

An Eighth Circuit opinion is instructive in how to

address the situation in this case. In Seman, our sister

Circuit crafted a rule that distinguishes the case before

this Court from those involving a “deemed denied”

decision:

When a plan administrator fails to render any decision whatsoever on a participant’s application for

benefits, it leaves the courts with nothing to review

under any standard of review, so the matter must be

sent back to the administrator for a decision. When

a plan administrator denies a participant’s initial

application for benefits and the review panel fails to

act on the participant’s properly filed appeal, the

administrator’s decision is subject to judicial review,

and the standard of review will be de novo rather

than for abuse of discretion if the review panel’s

inaction raises serious doubts about the administrator’s

decision.

334 F.3d at 733 (harmonizing McGarrah v. Hartford Life Ins.

Co., 234 F.3d 1026 (8th Cir. 2000) and Shelton v. Contigroup

Co., 285 F.3d 640 (8th Cir. 2002)). Here, the Plan Administrator did not issue any decision on Pakovich’s eligibility

for disability benefits under the “any occupation” standard, which, like the former example above, left the district court with nothing to review. Although, based

upon scattered information in the record, the district

court was able to piece together its conclusion that

Pakovich was physically capable, and had the “training,
12 No. 07-1520

3 Pakovich argues that instead, the proper remedy is for this

Court to order reinstatement of benefits, with Broadspire then

being permitted to revisit Pakovich’s eligibility for those

benefits. See Schneider v. Sentry Group Long Term Disability Plan,

422 F.3d 621, 629-30 (7th Cir. 2005). This Court bases its remedy

determination in ERISA cases “ ‘on what is required in each case

to fully remedy the defective procedures given the status quo

prior to the denial or termination’ of benefits.” Id. at 629

(quoting Hackett v. Xerox Corp. Long-Term Disability Income

Plan, 315 F.3d 771, 776 (7th Cir. 2003)). In this case, we have

distinguished between Pakovich’s eligibility for disability

benefits for the first 24 months under the “own occupation”

standard, and her continued receipt of benefits beyond that

point under the “any occupation” standard. Thus, the status

quo, prior to Broadspire’s termination of Pakovich’s benefits,

was only her receipt of 24 months’ disability under the “own

occupation” standard. See Quinn v. Blue Cross & Blue Shield Ass’n,

161 F.3d 472, 477-78 (7th Cir. 1998) (remand was the proper

remedy when the wrongful termination of benefits occurred

two days before benefits would have ceased under the terms

(continued...)

education and experience” to perform sedentary work,

there was no decision by the Plan Administrator for the

Court to review and the record was not fully developed

on this issue. We therefore adopt the first part of the

Eighth Circuit’s rule for this Court, holding that when the

plan administrator has not issued a decision on a claim

for benefits that is now before the courts, the matter

must be sent back to the plan administrator to address

the issue in the first instance. Accordingly, we order

that the district court remand the case to the Plan Administrator to determine whether Pakovich was eligible for

disability benefits beyond July 17, 2004 under the Plan’s

“any occupation” standard.3
No. 07-1520 13

3 (...continued)

of the plan unless additional medical information was submitted). Furthermore, reinstatement would undermine our decision

that the Plan Administrator must have the first opportunity to

decide the “any occupation” issue, since “[i]n essence, . . .

awarding retroactive benefits . . . [would amount to] the district court decid[ing] that [Pakovich] was disabled, thus substituting its own judgment for that of [the Plan Administrator,

when] that was inappropriate in this case.” Id. at 478.

USCA-02-C-0072—7-24-08

III. Conclusion

For the foregoing reasons, we VACATE the district court’s

grant of summary judgment for Broadspire and denial

of motion for judgment for Pakovich with respect to

Pakovich’s eligibility for disability benefits beyond 24

months under the Plan’s “any occupation” standard,

and order this issue REMANDED to the Plan Administrator

for determination. We also DENY Pakovich’s request for

reasonable attorney’s fees, costs and expenses incurred

since the district court’s Order on November 7, 2006.