Ricky Hayes v. Dearborn National Life Ins Co. ( 2018 )

Case: 17-30670 Document: 00514585542 Page: 1 Date Filed: 08/03/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 17-30670 FILED
Summary Calendar August 3, 2018
Lyle W. Cayce
Clerk
RICKY D. HAYES,
Plaintiff - Appellant
v.
DEARBORN NATIONAL LIFE INSURANCE COMPANY,
Defendant - Appellee
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 6:16-CV-214
Before WIENER, DENNIS, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
The defendant, an insurance-plan administrator, terminated the
plaintiff’s disability benefits because he did not submit evidence that physical
disabilities prevented him from performing gainful employment. The plaintiff
challenged the denial, and the district court awarded the defendant summary
judgment. We AFFIRM.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Ricky Hayes worked as an adjuster in charge for F.A. Richards
& Associates, Incorporated, from 1999 until 2010. While employed, he
participated in the company’s group long-term disability plan, which was
underwritten and administered by the defendant, Dearborn National Life
Insurance Company.
The policy provides that long-term disability benefits may be awarded
for twenty-four months if a participant is “continuously unable to perform the
Material and Substantial Duties of [his] Regular Occupation” due to sickness
or injury. After a participant receives twenty-four consecutive months of long-
term disability benefits, he may continue to receive benefits only if he is
“unable to engage in any Gainful Occupation.” Further, a participant may not
receive more than twenty-four months of benefits if his disability “is due to a
Mental Disorder of any type.” Accordingly, to receive disability benefits beyond
twenty-four months, the participant must have a physical disability that
prevents him from performing any gainful employment.
In October 2010, Hayes submitted a claim for short-term disability
benefits based on diagnoses of depression, anxiety, and sleep disorder.
Dearborn National approved Hayes for short-term disability benefits, and,
upon their expiration, approved him for long-term disability benefits, effective
April 2011. Dearborn National interviewed Hayes in connection with his
application for long-term benefits and learned Hayes had undergone a total
hip replacement in October 2008 and had worked for the two years between
his procedure and his disability claim.
Dearborn National’s letter approving Hayes’s long-term benefits advised
him that because his “primary disabling conditions” were mental disorders, the
policy limited his benefits to twenty-four months of payments, terminating in
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April 2013. Dearborn National reminded Hayes of the twenty-four month
limitation in two separate follow-up letters in 2012.
Hayes contended he had both mental and physical disabilities.
Accordingly, Dearborn National sought additional information from Hayes’s
treating physicians to determine whether he was eligible for a longer term of
benefits based on physical disabilities.
The records submitted included a June 2011 statement from Dr. Yerger,
the orthopedist who performed Hayes’s hip replacement in 2008. Dr. Yerger,
who had last seen Hayes on May 4, stated Hayes could sit for eight hours, walk
for four hours, and stand for four hours; occasionally, frequently, and
continuously carry or lift 125 pounds, 50 pounds, and 10 pounds, respectively;
and frequently climb, balance, kneel, crawl, and reach above his shoulder. He
further stated Hayes’s hip was stable with good alignment and a normal gait.
Dr. Yerger’s treatment notes from the May 4 encounter contained similar
observations and noted Hayes was disabled due to “severe anxiety and
depression.” Apparently displeased with the information submitted for his
disability claim, Hayes followed up with Dr. Yerger to explain he felt limited
by fatigue and he lacked the hip strength necessary to complete many of the
tasks listed on the disability form. Dr. Yerger then submitted another
statement listing Hayes’s subjective complaints but noted that his hip was in
good condition and required no medication or therapy.
Hayes’s file also contained records from Dr. Vanderlick, his internist,
who diagnosed him with general anxiety disorder, depression, and insomnia in
September 2010. In 2011, Dr. Vanderlick further diagnosed Hayes with right-
hip discomfort, chronic fatigue syndrome, fibromyalgia, hypertension, and
gastroesophageal reflux disease.
In April 2013, Dearborn National had Margarey Thompson, R.N., and
Dr. Miguel Velasquez conduct a clinical review of Hayes’s records. They
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determined no physical or objective findings supported Hayes’s claim for
physical disabilities that would prevent him from performing his occupation.
Accordingly, in May 2013, Dearborn National sent Hayes a letter advising him
of the results of the review and that his benefits were limited to the twenty-
four months already paid. But the letter further stated that, based on Hayes’s
advising Dearborn National that he was receiving Social Security disability
benefits for physical conditions, his claim for long-term benefits would remain
open for another thirty days so he could submit additional information.
In July 2013, Dearborn National sent Hayes another letter advising him
that, because it had not received any information from him, his claim would be
closed and his benefits terminated. Hayes then submitted reports from three
mental-health providers. Ms. Thompson and Dr. Velasquez conducted another
clinical review and again concluded no physical findings supported diagnoses
of physical ailments, and his mental-health providers could not credibly attest
to physical problems. Accordingly, Dearborn National notified Hayes that his
claim would remain closed.
In April 2014, Hayes appealed Dearborn National’s denial of benefits
and submitted additional medical information in support of his claim. In May,
Dearborn National asked Hayes to undergo a Functional Capacity Exam
(“FCE”), at Dearborn National’s expense, to assess Hayes’s physical condition.
Hayes refused. Dearborn National then sent Hayes’s records to Dr. Tanya
Lumpkins for an independent review. During her review, she spoke with Dr.
Yerger (Hayes’s orthopedist) and Dr. Vanderlick (Hayes’s internist). Dr.
Yerger confirmed that he did not believe Hayes was physically disabled, and
Dr. Vanderlick stated that, because he had not seen Hayes in two years, he
was unable to discuss Hayes’s current physical condition. Dr. Lumpkins then
accepted Hayes’s diagnoses of fibromyalgia, chronic fatigue syndrome, and hip
pain. He suggested certain restrictions should be placed on Hayes’s physical
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activities, including that he should “avoid working at unprotected heights,
driving a company vehicle, working with heavy machinery, or safety sensitive
materials,” and be “limited to light-duty levels of physical function in an
occupational setting.”
After receiving Dr. Lumpkins’ report, Dearborn National referred the
claim to Bob Zukowski, a vocational rehabilitation consultant, for an
employability analysis. Zukowski determined Hayes could not perform his
own occupation but identified seven occupations he could perform based on his
physical restrictions, experience, and training. Because Hayes had no physical
disabilities that would prevent him from performing any gainful employment,
Dearborn National issued its final decision affirming the termination of
Hayes’s benefits in September 2014.
Hayes filed this action in Louisiana state court, claiming wrongful denial
of disability benefits, negligence, bad faith, breach of contract, and breach of
fiduciary duty. Dearborn National removed the action to the Western District
of Louisiana, asserting both federal question and diversity jurisdiction. The
district court then granted Dearborn National summary judgment on the state
law claims as preempted by the Employee Retirement Income Security Act
(“ERISA”). See 29 U.S.C. § 1001 et seq.
Dearborn National moved for summary judgment on Hayes’s ERISA
claim, asserting its termination of benefits was supported by substantial
evidence. Hayes opposed the motion, contending Dearborn National’s conflict
of interest rendered its decisionmaking process procedurally unreasonable and
the denial was unsupported by the record. Treating the motions as cross
motions for summary judgment, the court concluded the denial was supported
by substantial evidence and awarded summary judgment to Dearborn
National. Hayes timely appealed.
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DISCUSSION
“This Court reviews summary judgments de novo in ERISA cases,
applying the same standards as the district court.” Corry v. Liberty Life
Assurance Co. of Boston, 499 F.3d 389, 397 (5th Cir. 2007). Because the
language of the “benefits plan grants the plan administrator discretionary
authority to interpret the plan and determine eligibility for benefits,” the
termination of benefits is reviewed for an abuse of discretion. Hagen v. Aetna
Ins. Co., 808 F.3d 1022, 1026 (5th Cir. 2015). Hayes “bears the burden to show
that the administrator abused its discretion.” George v. Reliance Standard Life
Ins. Co., 776 F.3d 349, 352 (5th Cir. 2015). An administrator abuses its
discretion only if there is no “rational connection between” the facts and the
decision. Id. at 353 (citation omitted). Conversely, there is no abuse of
discretion “where the decision is supported by substantial evidence.” Rossi v.
Precision Drilling Oilfield Servs. Corp. Empl. Benefits Plan, 704 F.3d 362, 365
(5th Cir. 2013).
I. The ERISA claim
A. Procedural Unreasonableness
Hayes first contends that, in light of Dearborn National’s conflict of
interest, the process it used to evaluate his claim was procedurally
unreasonable. Here, the plan administrator “both evaluates claims for benefits
and pays benefits claims.” Truitt v. Unum Life Ins. Co. of Am., 729 F.3d 497,
508 (5th Cir. 2013) (citation omitted). This conflict is “one factor among many”
that courts consider in evaluating whether the administrator abused its
discretion. Hagen, 808 F.3d at 1027 (citation omitted). “[A]ny one factor may
‘act as a tiebreaker when the other factors are closely balanced[.]’” Id. at 1027–
28 (quoting Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008)). A
conflict of interest will be more important “where circumstances suggest a
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higher likelihood that it affected the benefits decision,” and less important
“where the administrator has taken active steps to reduce potential bias and
to promote accuracy.” Glenn, 554 U.S. at 117. Accordingly, “a plan
administrator’s procedural unreasonableness informs how ‘much weight to
afford the apparent conflict.’” Truitt, 729 F.3d at 510 (citation omitted).
Hayes accuses Dearborn National of ignoring his Social Security benefits
award, changing reasons for termination of benefits, and cherry-picking the
record. He contends each is evidence of procedural unreasonableness.
The failure to address a Social Security disability award is a “factor that
can render the denial” of benefits an abuse of discretion. Schexnayder v.
Hartford Life & Accident Ins. Co., 600 F.3d 465, 471 (5th Cir. 2010) (citation
omitted). However, Dearborn National did not ignore Hayes’s Social Security
award, as Hayes asserts. Instead, it extended Hayes’s benefits and invited him
to submit additional documentation of physical disabilities for review. But, in
light of Hayes’s failure to submit documentation of physical disabilities and
the different eligibility criteria for Social Security benefits, Dearborn National
determined Hayes was not eligible for additional benefits under the policy.
We are similarly unpersuaded by Hayes’s assertion that Dearborn
National’s changing reasons for denial of benefits is evidence of procedural
unreasonableness. Hayes is correct that inconsistent reasons for benefit
denials may be evidence of procedural unreasonableness. This is because
ERISA procedures are meant to “ensure meaningful review of [a] denial [of
benefits].” Rossi, 704 F.3d at 367–68 (quoting Wade, 493 F.3d at 539). A plan
administrator’s “changing its basis for denial of benefits” prevents both the
applicant and the reviewer from contemplating the specific reasons for denial.
Id. at 368. Accordingly, where a plan administrator repeatedly moves the ball
to avoid a full and fair review, the court will vacate a denial of benefits for
procedural unreasonableness. See id. at 367–68.
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Here, the changing reasons for Dearborn National’s denial of benefits did
not prohibit, but instead provided evidence of, a “full and fair review.” 29
U.S.C. § 1133; cf. Rossi, 704 F.3d at 367–68. For example, Dearborn National
initially found insufficient evidence of physical disabilities but, upon receiving
further information and referring the file to an independent consultant,
accepted his physical limitations. Accordingly, Dearborn National referred the
case for an independent employability analysis. That it was ultimately
determined that he could perform seven occupations, and was therefore
ineligible for additional benefits, does not render the process unreasonable.
Finally, Hayes’s assertion that Dearborn National cherry-picked the
record appears to be an argument that substantial evidence supports a finding
that Hayes was entitled to benefits. But this does not help Hayes. So long as
substantial evidence supports Dearborn National’s decision, it must be upheld,
even if substantial evidence also supports Hayes. E.g., Gooden v. Provident
Life & Accident Ins. Co., 250 F.3d 329, 333–35 (5th Cir. 2001).
In sum, Dearborn National reviewed Hayes’s medical records and
submissions, and it used multiple independent consultants to evaluate Hayes’s
claim. It invited Hayes to submit additional evidence on multiple occasions,
attempted to arrange an FCE, and conducted an additional review after
learning Hayes had received Social Security benefits. Because these
circumstances do not “suggest a high[] likelihood that [the conflict] affected the
benefits decision,” we accord the conflict of interest little weight. See Glenn,
554 U.S. at 117. Hayes has not shown Dearborn National’s evaluation was so
procedurally unreasonable that it warrants vacatur.
B. Substantial Evidence
Hayes also appears to claim Dearborn National’s denial of benefits is
unsupported by substantial evidence. Dr. Lumpkins accepted Hayes’s
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diagnoses of fibromyalgia, chronic fatigue syndrome, and hip pain, and he
suggested certain restrictions should be placed on Hayes’s physical activities.
Even if physically disabled, though, Hayes was entitled only to a continuation
of benefits if those physical problems rendered him incapable of performing
any gainful occupation.
Accepting these restrictions, independent vocational rehabilitation
specialist Zukowski found Hayes was able to perform seven different jobs given
his education, training, and experience. Accordingly, Dearborn National’s
decision that Hayes did not meet the “any Gainful Occupation” requirement
bears a “rational connection” to Zukowski’s report. See George, 776 F.3d at
353. There was then, substantial evidence to support the denial of benefits.
II. Attorney’s Fees
ERISA permits the court to award “reasonable attorney’s fee[s] and costs
of action to either party.” 29 U.S.C. § 1132(g)(1). This is typically left to the
discretion of the district court, which did not reach the issue here. See Rhea v.
Alan Ritchey, Inc. Welfare Benefit Plan, 858 F.3d 340, 347 (5th Cir. 2017).
Regardless, “a fees claimant must show ‘some degree of success on the merits’
before a court may award attorney’s fees under § 1132(g)(1).” Hardt, 560 U.S.
at 255 (citation omitted). Hayes has not shown Dearborn National used
procedurally unreasonable methods in evaluating his claim or that its decision
was not supported by substantial evidence. See George, 776 F.3d at 352.
Because Hayes had no “degree of success on the merits,” he may not recover
fees. See Hardt, 560 U.S. at 255 (citation omitted).
AFFIRMED.
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