Court Opinion

ID: 4233794
Source: CourtListenerOpinion
Date Created: 2018-01-02 17:00:29.475737+00
Date Added: 2024-06-11T07:48:01.073081
License: Public Domain

FILED
                                                                  United States Court of Appeals
                                      PUBLISH                             Tenth Circuit

                     UNITED STATES COURT OF APPEALS                     January 2, 2018

                                                                      Elisabeth A. Shumaker
                            FOR THE TENTH CIRCUIT                         Clerk of Court

CARL VAN STEEN

      Plaintiff-Appellee/Cross-Appellant,

v.                                                    Nos. 16-1405 & 16-1421

LIFE INSURANCE COMPANY OF
NORTH AMERICA,

      Defendant-Appellant/Cross-
      Appellee.

           APPEAL FROM THE UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLORADO
                    (D.C. No. 1:15-CV-00137-WYD-MJW)

Kevin P. Ahearn (Bradley A. Levin with him on the brief) of Levin Sitcoff, PC, Denver,
Colorado, for Plaintiff-Appellee/Cross-Appellant.

Jack M. Englert, Jr., of Holland & Hart, LLP, Greenwood Village, Colorado, for
Defendant-Appellant/Cross-Appellee.

Before MATHESON, McKAY, and McHUGH, Circuit Judges.

McKAY, Circuit Judge.

      These cross-appeals arise out of Life Insurance Company of North America’s

termination of Carl Van Steen’s long-term disability benefits under Lockheed Martin’s
ERISA Plan. Life Insurance Company of North America appeals the district court’s

finding that its decision to terminate Mr. Van Steen’s benefits was arbitrary and

capricious. Mr. Van Steen, in turn, appeals the district court’s denial of his attorney’s

fees request. We affirm the district court on both issues.

                                             I.

       Mr. Van Steen is employed as a Systems Integration Business Analyst at

Lockheed Martin Corporation. As such, he is a participant in the Lockheed Martin Group

Benefits Plan, which is administered by Life Insurance Company of North America, or

LINA. LINA also funds Lockheed’s long-term disability policy. ERISA governs the

Plan and policy.

       In October 2011, Mr. Van Steen was physically assaulted during an altercation

while walking his dog. The assault resulted in a mild traumatic brain injury (mTBI) that

impacted Mr. Van Steen’s cognitive abilities. Following the incident, Mr. Van Steen

sought care from his primary treating physician, Dr. David Reinhard, neuropsychologist

Dr. James Berry, and a handful of other providers.

       The cognitive dysfunction from Mr. Van Steen’s mTBI prevented him from

returning to work1 until September 10, 2012, at which point Dr. Reinhard cleared him for

part-time work every other day. Mr. Van Steen was allowed to return to part-time work

on a daily basis roughly six weeks later. Even on a part-time schedule, however, Mr. Van

       1
        Mr. Van Steen made an attempt to return to part-time work shortly after his
accident, but Dr. Reinhard opted to take him back off work in January 2012 after Mr.
Van Steen reported difficulties functioning in his job.

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Steen experienced cognitive fatigue and headaches that required him to frequently rest.

He often worked from home where it was easier to take naps throughout the day. Due to

his inability to stay organized and keep track of deadlines after the assault, Mr. Van Steen

received poor feedback on his job performance.

       Mr. Van Steen’s claim for partial long-term disability benefits was approved on

March 30, 2012. Roughly a year later, LINA reviewed Mr. Van Steen’s file and

contacted Dr. Reinhard’s office for more information about Mr. Van Steen’s condition

and restrictions. Dr. Reinhard’s nurse told LINA that Mr. Van Steen’s restrictions were

basically permanent as he was “not likely to improve.” (Appellant’s App. at 620.)

Despite this prognosis, LINA sent Mr. Van Steen a letter one week later terminating his

long-term disability benefits, explaining that “the medical documentation on file does not

continue to support the current restrictions and limitations to preclude you from resuming

a full-time work schedule.” (Id. at 813.)

       Mr. Van Steen appealed this decision on November 25, 2013, providing a list of

his basic job duties and arguing that there was no evidence to support LINA’s

determination that he is or had been able to perform each and every material duty of his

regular occupation full-time. Mr. Van Steen supplemented this appeal with a

psychological and vocational evaluation from psychologist David Zierk. LINA denied

Mr. Van Steen’s appeal on February 27, 2014, asserting that “an explanation of [Mr. Van

Steen’s] functionality and how [his] functional capacity continuously prevented [him]

from performing the material duties of [his] occupation from March 16, 2013 through the

present and beyond was not clinically supported.” (Id. at 800-01.) Mr. Van Steen

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appealed again on August 8, 2014, with supplemental medical records, only to receive

LINA’s second denial on October 28, 2014.

       Having exhausted his administrative appeals under the Plan, Mr. Van Steen next

sought relief before the district court. The district court reversed LINA’s decision to

terminate Mr. Van Steen’s partial long-term disability benefits on the grounds that it was

arbitrary and capricious, but denied Mr. Van Steen’s request for attorney’s fees.

                                             II.

       “The district court’s determination of whether an ERISA benefits decision is

arbitrary and capricious is a legal conclusion subject to de novo review.” Graham v.

Hartford Life & Accident Ins. Co., 589 F.3d 1345, 1357 (10th Cir. 2009) (internal

quotation marks omitted). The arbitrary and capricious standard applies to review of a

plan administrator’s benefits decision when “the plan grants the administrator

discretionary authority to determine eligibility for benefits or to construe the plan’s

terms.” Id. (internal quotation marks omitted). Here, as Lockheed’s Plan Administrator,

LINA has full discretionary authority to interpret and construe the terms of the ERISA

Plan. Thus, the parties agree that we review LINA’s underlying termination decision

under the arbitrary and capricious standard. Under arbitrary and capricious review, this

court upholds LINA’s determination so long as it was made on a reasoned basis and

supported by substantial evidence. Id.

       In applying this standard, this court must also consider the possibility that LINA’s

dual role as “both insurer and administrator of the plan creates an inherent conflict of

interest between its discretion in paying claims and its need to stay financially sound,”

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id. at 1358 (internal quotation marks omitted), weighing the conflict “as a factor in

determining whether the plan administrator has abused its discretion in denying benefits.”

Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 108 (2008). The importance of a conflict of

interest is “proportionate to the likelihood that the conflict affected the benefits decision.”

Graham, 589 F.3d at 1358. In this case, LINA had a dual role as an insurer and

administrator of the Plan and took steps to mitigate any conflict. In any event, we need

not and do not rely on conflict of interest considerations to resolve this case.

       Lockheed’s Plan states that an employee is “Disabled if, because of Injury or

Sickness,

            1. he or she is unable to perform each and every material duty of his or
               her regular occupation; and
            2. after Monthly Benefits have been payable for 24 months, he or she is
               unable to perform each and every material duty of any occupation
               for which he or she may reasonably become qualified based on
               education, training or experience.”
(Appellant’s App. at 436.) An employee is “Residually Disabled” under the Plan “if,

during the Benefit Waiting Period and while Disability Benefits are payable, he or she is

unable to perform each and every material duty of his or her regular occupation on a Full-

time basis.” (Id.) “Full-time means the number of hours set by the Employer as a

regular work day for Employees in the Employee’s eligibility class.” (Id. at 431.) For

Mr. Van Steen’s position as a Systems Analyst, full-time work appears to refer to an

eight-hour day and a five-day work week. Thus, in order for this Court to uphold LINA’s

decision to terminate Mr. Van Steen’s long-term disability benefits, there must be

substantial evidence in the record supporting the determination that Mr. Van Steen is able

                                              5
to perform each and every material duty of a Systems Analyst for eight hours a day. A

thorough review of the record reveals no such evidence.

       When LINA first approved Mr. Van Steen’s claim for long-term disability benefits

in the spring of 2012, it noted his “deficits in executive functioning, attention, memory

and higher level attention/speed of processing.” (Id. at 606.) These limitations were

especially problematic for a return to work because Mr. Van Steen’s “occupation [as a

Systems Analyst] requires high executive function.” (Id.) When LINA asked Dr.

Reinhard for an update on Mr. Van Steen’s condition a year later, Dr. Reinhard explained

that Mr. Van Steen “is limited by cognitive fatigue and is simply unable to tolerate full

time work activities yet.” (Id. at 1260.) Mr. Van Steen’s limitations were believed to be

permanent, as his condition was unlikely to improve. The record does not reflect

significant improvements in Mr. Van Steen’s cognitive functioning between his part-time

return to work in September 2012 and LINA’s internal review of his claim status in

March 2013. Despite this, LINA terminated Mr. Van Steen’s long-term disability

benefits on April 8, 2013.

       LINA argues that its April 2013 termination was well-supported because it “based

its decision to end the payment of residual LTD benefits to Van Steen on updated

medical evidence and the review of that evidence by on-staff Nurse Case Managers, an

on-staff physician Board Certified in Occupational Medicine (Dr. Vatt), and an

independent Board Certified Clinical Neuropsychologist (Dr. Attfield).” (Appellant’s Br.

at 28.) Yet, none of these reviewers actually determined from the medical evidence that

Mr. Van Steen was capable of performing all of his material job duties on a full-time

                                             6
basis. For example, Dr. Attfield opined that Mr. Van Steen’s symptoms were not severe

enough “to preclude occupational function,” so “a structured, graduated schedule of work

reintroduction would appear prudent.” (Appellant’s App. at 608, 1280-81.) This

conclusion is hardly revelatory. Mr. Van Steen was already working part-time as part of

Dr. Reinhard’s graduated schedule of work reintroduction in which he would be

periodically reevaluated to see if he could handle working more hours.

       LINA further contends that its denials of Mr. Van Steen’s two appeals were also

reasonable based on “review of the medical evidence by two more independent Board

Certified Clinical Neuropsychologists (Dr. Kolbell and Dr. Fiano) and an independent

Board Certified Otolaryngologist (Dr. Grossman).” (Appellant’s Br. at 28.) Yet, none of

these reviewers remedy LINA’s evidentiary deficiency. Dr. Kristin Fiano, an outside

neuropsychologist, concluded that Mr. Van Steen’s “combination of psychological and

cognitive symptoms would not be considered to be at a level that would entirely preclude

continuous gainful employment.” (Appellant’s App. at 560, 564, 932-44.) Mr. Van

Steen’s part-time work status already made it obvious that his symptoms did not entirely

preclude him from engaging in “continuous gainful employment.” Like LINA’s other

evidence, Dr. Fiano’s analysis provides no insight into Mr. Van Steen’s ability to perform

all of his material job duties on a full-time basis.

       Dr. Kolbell acknowledged that Mr. Van Steen is “mildly impaired with respect to

rapid information processing” and “will require more time to complete complex tasks . . .

such as might be encountered in work settings,” but did not discuss how these

accommodations would impact Mr. Van Steen’s ability to perform his material job duties

                                               7
on a full-time basis. (Id. at 1034-36.) Dr. Grossman is LINA’s only expert to mention an

eight-hour work day, but he limited his opinion that Mr. Van Steen could “lift 10-20

pounds occasionally and could sit, stand and move around frequently over an eight-hour

day” to “an otolaryngologist perspective.” (Id. at 792, 928-29.) While this gets closer to

the type of evidence that would support LINA’s decision, it does not address how Mr.

Van Steen’s cognitive limitations would impact his job performance over an eight-hour

period, nor does it outline his key job responsibilities. See, e.g., Caldwell v. Life Ins. Co.

of N. Am., 287 F.3d 1276, 1285 (10th Cir. 2002) (a well-reasoned benefits decision must

consider all essential job duties). None of these reviewers concluded Mr. Van Steen was

capable of performing each and every material duty of his regular occupation on a full-

time basis.

       LINA argues that its medical reviewers did not opine about Mr. Van Steen’s

ability to perform his material job duties on a full-time basis because giving opinions on

disability or occupational status was not within their purview. Yet, none of LINA’s

vocational experts found that Mr. Van Steen was capable of performing each and every

one of his material duties on a full-time basis either. During the first appeal, LINA’s

reviewing vocational rehabilitation counselor determined that Mr. Van Steen’s cognitive

restrictions and limitations were “consistent with the required demans [sic] of his

occupation of systems analyst [and t]herefore [medical records] do not support functional

deficits that preclude [Mr. Van Steen] from [returning to work in] his own occupation.”

(Appellant’s App. at 576.) This evaluation made no distinction between Mr. Van Steen’s

ability to return to work on a full-time basis rather than a part-time basis.

                                              8
         Similarly, during the second appeal, LINA’s vocational rehabilitation counselor

concluded that “the [restrictions and limitations] of mild impairment in

directing/controlling/planning activities of others, having no impairment in dealing with

people, and no impairment in making judgements and decisions are consistent with the

customers[’] own occupation.” (Id. at 921.) This time, LINA provided a brief list of

tasks that Mr. Van Steen was capable of performing, but only in a broad, generalized

sense. The LINA reviewers failed to explain the connection between this list and Mr.

Van Steen’s actual material job duties, or his ability to sustain them for an eight-hour

work day. LINA claims that the list of Mr. Van Steen’s abilities and restrictions was

compared to the demands of his job as a Systems Analyst, but this occupational

assessment is not included anywhere in the record, and it is not clear from this description

whether the assessment considered the demands of Mr. Van Steen’s job on a full-time

basis.

         Ultimately, LINA’s experts—whether medical or vocational—failed to evaluate

Mr. Van Steen’s ability to perform his material job duties on full-time basis. LINA tries

to dismiss this shortfall as “semantics,” claiming that, in concluding that Mr. Van Steen

was capable of working in his occupation, its experts were impliedly referring to full-time

work. (Appellant’s Response and Reply Br. at 29-32.) The plain language of the Plan

cannot be dismissed so easily. The Plan’s residual disability clause requires a

determination as to whether a claimant is able to perform each and every material duty of

his job on a full-time basis. Here, where Mr. Van Steen is already working part-time,

clear support and analysis are required to show that his restrictions and limitations do not

                                              9
prevent him from performing his material job duties full-time. This distinction is

especially relevant for Mr. Van Steen’s case, as the record contains extensive descriptions

of his cognitive fatigue, even on a part-time schedule. LINA would have us believe that

Mr. Van Steen has the cognitive stamina to sustain an eight-hour work day for five days a

week, yet offers no evidence to support that conclusion.

       The physicians and experts who did analyze the distinction between a part-time

and full-time work schedule all concluded that Mr. Van Steen is not capable of working

an eight-hour day with his current limitations. Doctors Reinhard and Berry both wrote

letters to LINA in October 2013 opining that Mr. Van Steen could not manage a full-time

return to work and should have his benefits reinstated. Similarly, Dr. Zierk—a

psychologist who conducted a psychological and vocational evaluation of Mr. Van Steen

as part of the first appeal—concluded that “[b]ased on Mr. Van Steen’s diminished

cognitive functioning, it is recognized he is no longer capable of performing the higher

order cognitive functions associated with his customary occupation on a full-time,

uninterrupted basis and without the provision of considerable accommodations.”

(Appellant’s App. at 1056.)

       LINA has discretion in interpreting and administering the Plan, but this discretion

does not stretch so far as to ignore the language of the Plan itself. In order to be “well-

reasoned,” LINA’s decision to terminate benefits must be based on medical evidence that

Mr. Van Steen is capable of performing each and every material duty of his occupation as

a Systems Analyst on a full-time basis. LINA has provided no such evidence. For this

                                             10
reason, we echo the district court in concluding that LINA’s decision was “unsupported

by substantial evidence,” and is, therefore, arbitrary and capricious. (Id. at 233-35.)

                                             III.
       This court reviews a district court’s fee decision in an ERISA matter for an abuse

of discretion. Gordon v. U.S. Steel Corp., 724 F.2d 106, 108 (10th Cir. 1983). Pursuant

to 29 U.S.C. § 1132(g)(1), the “court in its discretion may allow a reasonable attorney’s

fee and costs of action to either party” in an ERISA matter. Courts generally analyze five

factors or guidelines in determining if an award is appropriate under 29 U.S.C.

§ 1132(g)(1):

       (1) the degree of the opposing parties’ culpability or bad faith;
       (2) the ability of the opposing parties to personally satisfy an award of attorney’s
           fees;
       (3) whether an award of attorney’s fees against the opposing parties would deter
           others from acting under similar circumstances;
       (4) whether the parties requesting fees sought to benefit all participants and
           beneficiaries of an ERISA plan or to resolve a significant legal question
           regarding ERISA; and
       (5) the relative merits of the parties’ positions.

Gordon, 724 F.2d at 109. Courts need not consider each factor, but no single factor

should be held dispositive. McGee v. Equicor-Equitable HCA Corp., 953 F.2d 1192,

1209 n.17 (10th Cir. 1992).

       The district court denied Mr. Van Steen’s request for attorney’s fees, finding that

(1) there was no compelling evidence LINA had acted culpably or in bad faith; (2) LINA

did have the ability to pay the fee; (3) an award would not deter others in similar

circumstances; (4) Mr. Van Steen’s claim did not seek to benefit all Plan participants or

resolve a significant legal question; (5) LINA’s arguments were not wholly without

                                             11
merit. Mr. Van Steen appeals this decision, arguing that the district court erred in its

analysis of the Gordon factors.

        “Under the abuse of discretion standard[,] a trial court’s decision will not be

disturbed unless the appellate court has a definite and firm conviction that the lower court

made a clear error of judgment or exceeded the bounds of permissible choice in the

circumstances.” Moothart v. Bell, 21 F.3d 1499, 1504 (10th Cir. 1994) (quoting McEwen

v. City of Norman, 926 F.2d 1539, 1553-54 (10th Cir. 1991)). While the district court

could well have weighed the Gordon factors differently, Mr. Van Steen’s arguments fail

to convince us that the district court’s decision was based on a clear error of judgment or

exceeded the bounds of permissible choice. Rather, our review of the record persuades

us that the district court did not abuse its discretion in applying the Gordon factors to this

case.

                                                   IV.
        We AFFIRM the district court’s decision to reverse LINA’s denial of Mr. Van

Steen’s long-term disability benefits. We further AFFIRM the district court’s denial of

Mr. Van Steen’s attorney’s fees request.

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